Varian Medical Systems Reports Robust Growth for Third Quarter of Fiscal Year 2006
biz.yahoo.com
Wednesday July 26, 4:01 pm ET
Varian Medical Systems Reports Third Quarter Net Earnings Per Diluted Share of $0.49 ($0.46 Per Diluted Share Excluding Impact of Stock Option Expensing and a Tax Benefit)
PALO ALTO, Calif., July 26 /PRNewswire-FirstCall/ -- Varian Medical Systems (NYSE: VAR) today is reporting strong growth in net earnings, revenues, net orders and backlog for the third quarter of fiscal year 2006.
"Compared to the same period last fiscal year, third-quarter revenues grew 14 percent to $396 million, net orders rose 19 percent to $443 million, and the quarter-ending backlog increased 22 percent to $1.3 billion," said Tim Guertin, president and CEO of Varian Medical Systems. "Excluding option expensing and a one-time tax benefit from repatriation of foreign earnings, third quarter net earnings per diluted share grew by a very strong 24 percent over the year-ago quarter."
The company generated net earnings of $66 million or $0.49 per diluted share for the quarter. Excluding stock option expenses totaling $0.05 per diluted share, and the one-time tax benefit of $0.08 per diluted share, net earnings for the third quarter were $62 million or $0.46 per diluted share (including a $0.02 tax benefit from the release of tax reserves related to the lapse of the statute of limitations in certain domestic jurisdictions). Net earnings for the third quarter of fiscal year 2005 were $51 million or $0.37 per diluted share.
"New products for image-guided radiation therapy (IGRT) for cancer, stereotactic radiosurgery, filmless X-rays, and security and inspection contributed to significant growth in net orders in all of our business segments," Guertin added.
The company generated strong cash flow from operations in the third quarter, ending the period with $371 million in cash and marketable securities. During the period, $75 million was spent to repurchase 1.5 million shares of common stock and $9 million was invested in the dpiX consortium to build a new semiconductor fab for the thin film transistor arrays used in digital image detectors for filmless X-rays.
Oncology Systems
Oncology Systems' third quarter revenues totaled $331 million, up 14 percent from the third quarter of last fiscal year. This business recorded third quarter net orders of $374 million, up 15 percent from the same period last year with 14 percent growth in North America and 17 percent growth in international markets.
"We believe we have expanded our share in radiation oncology and enhanced our leadership in IGRT," Guertin said. "We now have shipped more than 250 of our On-board Imager device for image-guided treatments. Our IGRT technology has been embraced by customers and is clearly moving into mainstream adoption. Doctors around the world are using our IGRT products to treat primary and metastatic cancers in virtually every part of the body, including the lung, prostate, breast, brain, liver, head and neck, and pancreas," Guertin said.
"Higher ramp-up costs to support rapid growth for the On-Board Imager device, a larger mix of international shipments, and an in increase in revenue deferrals pending completion of installations, contributed to a decline in gross margin for this business and the company during the quarter," said Guertin. "This was largely offset on our bottom line by slower growth in selling expenses and a lower corporate tax rate due to higher earnings in international jurisdictions."
X-Ray Products
Revenues for the X-Ray Products business, including X-ray tubes and flat panel digital image detectors for filmless X-rays, were $56 million for the third quarter, up 15 percent from the year-ago quarter. The X-Ray Products business recorded third quarter net orders of $61 million, up 37 percent from the same period last year, driven by dramatic growth in the flat panel product line.
"Revenues from shipments of our digital image detectors more than doubled versus the year-ago period, driven by accelerated demand for filmless imaging medical diagnostics, dental CT scanning, and veterinary care," Guertin said. "This business has continued to ramp up at a tremendous rate and new construction to expand manufacturing capacity for this product line is on schedule."
Other Businesses
The company's Security and Inspection Products business and the Ginzton Technology Center reported combined third quarter revenues of $9 million, up slightly from the total for the same period last fiscal year. "Net orders for the security and inspection business almost doubled in this third quarter versus the year-ago period," Guertin said.
Outlook
"For fiscal year 2006, we continue to believe that total company revenues should increase by about 14 percent above the fiscal 2005 total," Guertin said. "We are raising our expectations for growth in net earnings per diluted share for fiscal year 2006 to 18 to 19 percent over the fiscal year 2005 total, excluding the impact of expensing stock options and the one-time repatriation tax benefit.
"Very preliminary estimates for fiscal year 2007 indicate that total company revenue should increase in the low-double digits over the total for fiscal year 2006," Guertin added. "Net earnings per diluted share for fiscal year 2007 should grow at a mid-teens rate over the totals for fiscal year 2006 excluding the impact of stock option expensing and the one-time repatriation tax benefit."
The company expects that the annual impact of stock option expensing will be in the range of $0.19 to $0.22 per diluted share for both fiscal year 2006 and fiscal 2007 |
