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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Varex Imaging Corporation | NASDAQ:VREX | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.305 | 2.11% | 14.755 | 14.71 | 14.74 | 14.755 | 14.50 | 14.56 | 12,468 | 14:43:43 |
ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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81-3434516
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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1678 S. Pioneer Road,
Salt Lake City, Utah
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84104
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(Address of principal executive offices)
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(Zip Code)
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Three Months Ended
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Six Months Ended
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||||||||||||
(In millions, except per share amounts)
|
March 30, 2018
|
|
March 31, 2017
|
|
March 30, 2018
|
|
March 31, 2017
|
||||||||
Revenues
|
$
|
201.2
|
|
|
$
|
154.8
|
|
|
$
|
377.4
|
|
|
$
|
312.2
|
|
Cost of revenues
|
131.1
|
|
|
97.2
|
|
|
245.8
|
|
|
195.8
|
|
||||
Gross margin
|
70.1
|
|
|
57.6
|
|
|
131.6
|
|
|
116.4
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||
Research and development
|
22.0
|
|
|
14.4
|
|
|
41.8
|
|
|
27.7
|
|
||||
Selling, general and administrative
|
30.9
|
|
|
19.7
|
|
|
59.1
|
|
|
46.8
|
|
||||
Total operating expenses
|
52.9
|
|
|
34.1
|
|
|
100.9
|
|
|
74.5
|
|
||||
Operating earnings
|
17.2
|
|
|
23.5
|
|
|
30.7
|
|
|
41.9
|
|
||||
Interest income
|
—
|
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
||||
Interest expense
|
(5.6
|
)
|
|
(1.0
|
)
|
|
(11.1
|
)
|
|
(1.6
|
)
|
||||
Other income (expense), net
|
4.1
|
|
|
(0.1
|
)
|
|
3.1
|
|
|
0.3
|
|
||||
Interest and other income (expense), net
|
(1.5
|
)
|
|
(1.1
|
)
|
|
(7.9
|
)
|
|
(1.2
|
)
|
||||
Earnings before taxes
|
15.7
|
|
|
22.4
|
|
|
22.8
|
|
|
40.7
|
|
||||
Income tax provision (benefit) on earnings
|
3.4
|
|
|
7.4
|
|
|
(1.1
|
)
|
|
14.5
|
|
||||
Net earnings
|
12.3
|
|
|
15.0
|
|
|
23.9
|
|
|
26.2
|
|
||||
Less: Net earnings attributable to noncontrolling interests
|
0.1
|
|
|
—
|
|
|
0.3
|
|
|
0.1
|
|
||||
Net earnings attributable to Varex
|
$
|
12.2
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|
|
$
|
15.0
|
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$
|
23.6
|
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$
|
26.1
|
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Net earnings per common share attributable to Varex
|
|
|
|
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|
|
|
||||||||
Basic
|
$
|
0.32
|
|
|
$
|
0.40
|
|
|
$
|
0.62
|
|
|
$
|
0.70
|
|
Diluted
|
$
|
0.32
|
|
|
$
|
0.40
|
|
|
$
|
0.62
|
|
|
$
|
0.69
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
||||||||
Basic
|
37.8
|
|
|
37.5
|
|
|
37.8
|
|
|
37.5
|
|
||||
Diluted
|
38.4
|
|
|
37.8
|
|
|
38.3
|
|
|
37.8
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(In millions)
|
March 30, 2018
|
|
March 31, 2017
|
|
March 30, 2018
|
|
March 31, 2017
|
||||||||
Net earnings
|
$
|
12.3
|
|
|
$
|
15.0
|
|
|
$
|
23.9
|
|
|
$
|
26.2
|
|
Other comprehensive earnings, net of tax:
|
|
|
|
|
|
|
|
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|
||||||
Unrealized gain on interest rate swap contracts, net of tax expense of $0.7 and $0 during the three months ended March 30, 2018 and $1.2 and $0 during the six months ended March 31, 2017, respectively
|
2.1
|
|
|
—
|
|
|
4.0
|
|
|
—
|
|
||||
Other comprehensive earnings, net of tax
|
2.1
|
|
|
—
|
|
|
4.0
|
|
|
—
|
|
||||
Comprehensive earnings
|
14.4
|
|
|
15.0
|
|
|
27.9
|
|
|
26.2
|
|
||||
Less: Comprehensive earnings attributable to noncontrolling interests
|
0.1
|
|
|
—
|
|
|
0.3
|
|
|
0.1
|
|
||||
Comprehensive earnings attributable to Varex
|
$
|
14.3
|
|
|
$
|
15.0
|
|
|
$
|
27.6
|
|
|
$
|
26.1
|
|
(In millions, except share amounts)
|
March 30, 2018
|
|
September 29, 2017
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
55.4
|
|
|
$
|
83.3
|
|
Accounts receivable, net
|
129.2
|
|
|
163.6
|
|
||
Inventories, net
|
245.3
|
|
|
234.5
|
|
||
Prepaid expenses and other current assets
|
15.8
|
|
|
13.9
|
|
||
Total current assets
|
445.7
|
|
|
495.3
|
|
||
Property, plant and equipment, net
|
146.3
|
|
|
148.3
|
|
||
Goodwill
|
242.2
|
|
|
241.9
|
|
||
Intangibles assets
|
82.9
|
|
|
91.3
|
|
||
Investments in privately-held companies
|
51.7
|
|
|
52.3
|
|
||
Other assets
|
17.1
|
|
|
11.0
|
|
||
Total assets
|
$
|
985.9
|
|
|
$
|
1,040.1
|
|
Liabilities, Redeemable Noncontrolling Interests and Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
53.5
|
|
|
$
|
58.9
|
|
Accrued liabilities
|
53.5
|
|
|
62.4
|
|
||
Current maturities of long-term debt
|
20.0
|
|
|
20.0
|
|
||
Deferred revenues
|
10.0
|
|
|
10.5
|
|
||
Total current liabilities
|
137.0
|
|
|
151.8
|
|
||
Long-term debt
|
397.1
|
|
|
463.9
|
|
||
Deferred tax liabilities
|
19.6
|
|
|
29.5
|
|
||
Other long-term liabilities
|
7.9
|
|
|
4.7
|
|
||
Total liabilities
|
561.6
|
|
|
649.9
|
|
||
Commitments and contingencies (Note 11)
|
|
|
|
||||
Redeemable noncontrolling interests
|
11.7
|
|
|
11.2
|
|
||
Stockholders' equity:
|
|
|
|
||||
Preferred stock, $.01 par value: 20,000,000 shares authorized, none issued
|
—
|
|
|
—
|
|
||
Common stock, $.01 par value:
|
|
|
|
||||
Authorized shares - 150,000,000
|
|
|
|
||||
Issued shares - 37,878,841 and 37,633,747
|
|
|
|
||||
Outstanding shares - 37,878,841 and 37,633,747
|
0.4
|
|
|
0.4
|
|
||
Additional paid-in capital
|
348.8
|
|
|
342.7
|
|
||
Accumulated other comprehensive income
|
4.7
|
|
|
0.8
|
|
||
Retained earnings
|
58.7
|
|
|
35.1
|
|
||
Total stockholders' equity
|
412.6
|
|
|
379.0
|
|
||
Total liabilities, redeemable noncontrolling interests and Varex stockholders' equity
|
$
|
985.9
|
|
|
$
|
1,040.1
|
|
|
Six Months Ended
|
||||||
(In millions)
|
March 30, 2018
|
|
March 31, 2017
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net earnings
|
$
|
23.9
|
|
|
$
|
26.2
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|
|
|
|
|
||
Share-based compensation expense
|
4.7
|
|
|
3.6
|
|
||
Depreciation
|
10.5
|
|
|
8.5
|
|
||
Amortization of intangible assets
|
8.4
|
|
|
2.6
|
|
||
Deferred taxes
|
(11.1
|
)
|
|
6.9
|
|
||
Income from equity method investments
|
(3.2
|
)
|
|
(0.4
|
)
|
||
Amortization of deferred loan costs
|
1.2
|
|
|
—
|
|
||
Other, net
|
—
|
|
|
0.6
|
|
||
Changes in assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable
|
34.4
|
|
|
0.3
|
|
||
Inventories
|
(11.0
|
)
|
|
(15.2
|
)
|
||
Prepaid expenses and other assets
|
1.3
|
|
|
(7.8
|
)
|
||
Accounts payable
|
(7.2
|
)
|
|
7.3
|
|
||
Accrued operating liabilities and other long-term operating liabilities
|
(6.0
|
)
|
|
2.4
|
|
||
Deferred revenues
|
(0.4
|
)
|
|
(2.0
|
)
|
||
Net cash provided by operating activities
|
45.5
|
|
|
33.0
|
|
||
Cash flows from investing activities:
|
|
|
|
|
|
||
Purchases of property, plant and equipment
|
(6.9
|
)
|
|
(6.7
|
)
|
||
Net cash used in investing activities
|
(6.9
|
)
|
|
(6.7
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
|
||
Net transfers from parent
|
—
|
|
|
14.5
|
|
||
Distribution to Varian Medical Systems, Inc.
|
—
|
|
|
(200.0
|
)
|
||
Taxes related to net share settlement of equity awards
|
(2.3
|
)
|
|
(1.9
|
)
|
||
Borrowings under credit agreements
|
10.0
|
|
|
206.0
|
|
||
Repayments of borrowing under credit agreements
|
(78.0
|
)
|
|
(3.8
|
)
|
||
Proceeds from exercise of stock options
|
2.2
|
|
|
0.6
|
|
||
Proceeds from shares issued under employee stock purchase plan
|
1.4
|
|
|
—
|
|
||
Other financing activities
|
—
|
|
|
0.7
|
|
||
Net cash (used in) provided by financing activities
|
(66.7
|
)
|
|
16.1
|
|
||
Effects of exchange rate changes on cash and cash equivalents
|
0.2
|
|
|
0.7
|
|
||
Net (decrease) increase in cash and cash equivalents
|
(27.9
|
)
|
|
43.1
|
|
||
Cash and cash equivalents at beginning of period
|
83.3
|
|
|
36.5
|
|
||
Cash and cash equivalents at end of period
|
$
|
55.4
|
|
|
$
|
79.6
|
|
Supplemental cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
9.9
|
|
|
$
|
0.9
|
|
Cash paid for income tax
|
11.9
|
|
|
—
|
|
||
Supplemental non-cash activities:
|
|
|
|
||||
Purchases of property, plant and equipment financed through accounts payable
|
$
|
5.5
|
|
|
$
|
2.6
|
|
Transfers of property, plant and equipment from Varian Medical Systems, Inc.
|
—
|
|
|
14.7
|
|
||
Distribution payable to Varian Medical Systems, Inc.
|
—
|
|
|
27.1
|
|
||
Other non-cash transfers from parent
|
—
|
|
|
12.4
|
|
|
Six Months Ended
|
||
(In millions)
|
March 31, 2017
|
||
Revenue
|
$
|
383.7
|
|
Operating earnings
|
$
|
42.8
|
|
Net earnings
|
$
|
22.1
|
|
Net earnings per share, basic
|
$
|
0.59
|
|
Net earnings per share, diluted
|
$
|
0.58
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(In millions)
|
March 30, 2018
|
|
March 31, 2017
|
|
March 30, 2018
|
|
March 31, 2017
|
||||||||
Selling, general and administrative
|
$
|
—
|
|
|
$
|
0.5
|
|
|
$
|
—
|
|
|
$
|
12.4
|
|
Interest expense, net of interest income
|
—
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||
|
March 30, 2018
|
|
March 31, 2017
|
|
March 30, 2018
|
|
March 31, 2017
|
||
Revenues to Canon (formerly Toshiba Medical Systems)
|
17.3
|
%
|
|
19.3
|
%
|
|
19.2%
|
|
21.5%
|
(In millions, except for number of instruments)
|
|
Number of Instruments
|
|
Notional Value
|
|||
Interest Rate Swap Contracts
|
|
6
|
|
|
$
|
285.0
|
|
|
Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion) Three months ended
|
|
Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
|
|
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) Three months ended
|
|
Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion)
|
|
Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion)
Three months ended |
||||||||||||||||||
(In millions)
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
||||||||||||||
Interest Rate Swap Contracts
|
$
|
2.8
|
|
|
$
|
—
|
|
|
Interest expense
|
|
$
|
(0.1
|
)
|
|
$
|
—
|
|
|
Interest expense
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion) Six months ended
|
|
Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
|
|
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) Six months ended
|
|
Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion)
|
|
Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion)
Six months ended |
||||||||||||||||||
(In millions)
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
||||||||||||||
Interest Rate Swap Contracts
|
$
|
4.8
|
|
|
$
|
—
|
|
|
Interest expense
|
|
$
|
(0.3
|
)
|
|
$
|
—
|
|
|
Interest expense
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Derivative Assets
|
|
Derivative Liabilities
|
||||||||||||||||
(In millions)
|
|
|
|
March 30, 2018
|
|
September 29, 2017
|
|
|
|
March 30, 2018
|
|
September 29, 2017
|
||||||||
Derivatives designated as cash flow hedges
|
|
Balance sheet location
|
|
|
|
|
|
Balance sheet location
|
|
|
|
|
||||||||
Interest rate swap contracts
|
|
Other current assets
|
|
$
|
1.2
|
|
|
$
|
—
|
|
|
Other current liabilities
|
|
$
|
—
|
|
|
$
|
(0.6
|
)
|
Interest rate swap contracts
|
|
Other non-current assets
|
|
4.9
|
|
|
1.6
|
|
|
Other non-current liabilities
|
|
—
|
|
|
—
|
|
||||
|
|
|
|
$
|
6.1
|
|
|
$
|
1.6
|
|
|
|
|
$
|
—
|
|
|
$
|
(0.6
|
)
|
(In millions)
|
Fair Value Measurements at March 30, 2018
|
||||||||||||||
|
Quoted Prices in Active Markets for Identical Assets and Liabilities
(Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant Unobservable Inputs
(Level 3) |
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents - Money market funds
|
$
|
—
|
|
|
$
|
13.3
|
|
|
$
|
—
|
|
|
$
|
13.3
|
|
Interest rate swap contracts
|
—
|
|
|
6.1
|
|
|
—
|
|
|
6.1
|
|
||||
Total assets measured at fair value
|
$
|
—
|
|
|
$
|
19.4
|
|
|
$
|
—
|
|
|
$
|
19.4
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Interest rate swap contracts
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(In millions)
|
Fair Value Measurements at September 29, 2017
|
||||||||||||||
|
Quoted Prices in Active Markets for Identical Assets and Liabilities
(Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant Unobservable Inputs
(Level 3) |
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents - Money market funds
|
$
|
—
|
|
|
$
|
11.4
|
|
|
$
|
—
|
|
|
$
|
11.4
|
|
Interest rate swap contracts
|
—
|
|
|
1.6
|
|
|
—
|
|
|
1.6
|
|
||||
Total assets measured at fair value
|
$
|
—
|
|
|
$
|
13.0
|
|
|
$
|
—
|
|
|
$
|
13.0
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Interest rate swap contracts
|
$
|
—
|
|
|
$
|
0.6
|
|
|
$
|
—
|
|
|
$
|
0.6
|
|
(In millions)
|
March 30, 2018
|
|
September 29, 2017
|
||||
Raw materials and parts, net
|
$
|
148.7
|
|
|
$
|
164.5
|
|
Work-in-process, net
|
33.1
|
|
|
20.3
|
|
||
Finished goods, net
|
63.5
|
|
|
49.7
|
|
||
Total inventories, net
|
$
|
245.3
|
|
|
$
|
234.5
|
|
(In millions)
|
Medical
|
|
Industrial
|
|
Total
|
||||||
Balance at September 29, 2017
|
$
|
146.9
|
|
|
$
|
95.0
|
|
|
$
|
241.9
|
|
Settlement of post-close working capital adjustment
|
0.2
|
|
|
0.1
|
|
|
0.3
|
|
|||
Balance at March 30, 2018
|
$
|
147.1
|
|
|
$
|
95.1
|
|
|
$
|
242.2
|
|
(In millions)
|
March 30, 2018
|
|
September 29, 2017
|
||||
Acquired existing technology
|
$
|
57.0
|
|
|
$
|
57.0
|
|
Patents, licenses and other
|
19.4
|
|
|
19.4
|
|
||
Customer contracts and supplier relationship
|
42.1
|
|
|
42.1
|
|
||
Accumulated amortization
|
(39.6
|
)
|
|
(31.2
|
)
|
||
Total intangible assets with finite lives
|
78.9
|
|
|
87.3
|
|
||
In-process research and development with indefinite lives
|
4.0
|
|
|
4.0
|
|
||
Total intangible assets
|
$
|
82.9
|
|
|
$
|
91.3
|
|
(In millions)
|
Warranty Allowance
|
||
Accrued product warranty, September 29, 2017
|
$
|
7.0
|
|
Charged to cost of revenues
|
5.9
|
|
|
Product warranty expenditures
|
(5.1
|
)
|
|
Accrued product warranty, March 30, 2018
|
$
|
7.8
|
|
(Dollars in millions)
|
March 30, 2018
|
|
September 29, 2017
|
|
$ Change
|
||||||
Current portion of Term Facility
|
$
|
20.0
|
|
|
$
|
20.0
|
|
|
$
|
—
|
|
Revolving Credit Facility
|
46.0
|
|
|
104.0
|
|
|
(58.0
|
)
|
|||
Long-Term portion of Term Facility
|
360.0
|
|
|
370.0
|
|
|
(10.0
|
)
|
|||
Total debt outstanding, gross
|
426.0
|
|
|
494.0
|
|
|
(68.0
|
)
|
|||
Debt issuance costs
|
(8.9
|
)
|
|
(10.1
|
)
|
|
1.2
|
|
|||
Total debt outstanding, net
|
$
|
417.1
|
|
|
$
|
483.9
|
|
|
$
|
(66.8
|
)
|
(In millions)
|
Redeemable Noncontrolling Interests
|
||
Balance at beginning of period, September 29, 2017
|
$
|
11.2
|
|
Net earnings attributable to noncontrolling interests
|
0.3
|
|
|
Other, including foreign currency remeasurement
|
0.2
|
|
|
Balance at end of period, March 30, 2018
|
$
|
11.7
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(In millions, except per share amounts)
|
March 30, 2018
|
|
March 31, 2017
|
|
March 30, 2018
|
|
March 31, 2017
|
||||||||
Net earnings attributable to Varex
|
$
|
12.2
|
|
|
$
|
15.0
|
|
|
$
|
23.6
|
|
|
$
|
26.1
|
|
Weighted average shares outstanding - basic
|
37.8
|
|
|
37.5
|
|
|
37.8
|
|
|
37.5
|
|
||||
Dilutive effect of potential common shares
|
0.6
|
|
|
0.3
|
|
|
0.5
|
|
|
0.3
|
|
||||
Weighted average shares outstanding - diluted
|
38.4
|
|
|
37.8
|
|
|
38.3
|
|
|
37.8
|
|
||||
Net earnings per share attributable to Varex - basic
|
$
|
0.32
|
|
|
$
|
0.40
|
|
|
$
|
0.62
|
|
|
$
|
0.70
|
|
Net earnings per share attributable to Varex - diluted
|
$
|
0.32
|
|
|
$
|
0.40
|
|
|
$
|
0.62
|
|
|
$
|
0.69
|
|
Anti-dilutive employee shared based awards, excluded
|
0.1
|
|
|
1.0
|
|
|
1.0
|
|
|
1.0
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(In millions)
|
March 30, 2018
|
|
March 31, 2017
|
|
March 30, 2018
|
|
March 31, 2017
|
||||||||
Cost of revenues
|
$
|
0.4
|
|
|
$
|
0.1
|
|
|
$
|
0.6
|
|
|
$
|
0.3
|
|
Research and development
|
0.5
|
|
|
0.4
|
|
|
0.8
|
|
|
0.7
|
|
||||
Selling, general and administrative
|
1.7
|
|
|
0.9
|
|
|
3.3
|
|
|
2.6
|
|
||||
Total share-based compensation expense
|
$
|
2.6
|
|
|
$
|
1.4
|
|
|
$
|
4.7
|
|
|
$
|
3.6
|
|
|
Options Outstanding
|
|||||||||||
(In thousands, except per share amounts and the remaining term)
|
Number of Shares
|
|
Weighted Average
Exercise Price |
|
Weighted Average Remaining Term (in years)
|
|
Aggregate Intrinsic Value (1)
|
|||||
Balance at September 29, 2017
|
1,926
|
|
|
$
|
29.11
|
|
|
|
|
|
||
Granted
|
232
|
|
|
37.12
|
|
|
|
|
|
|||
Canceled, expired or forfeited
|
(2
|
)
|
|
30.74
|
|
|
|
|
|
|||
Exercised
|
(83
|
)
|
|
26.42
|
|
|
|
|
|
|||
Balance at March 30, 2018
|
2,073
|
|
|
$
|
30.11
|
|
|
5.1
|
|
$
|
12,058
|
|
|
|
|
|
|
|
|
|
|||||
Exercisable at March 30, 2018
|
965
|
|
|
$
|
27.99
|
|
|
4.0
|
|
$
|
7,519
|
|
(In thousands, except per share amounts)
|
Number of Shares
|
|
Weighted Average
Grant-Date Fair Value |
|||
Balance at September 29, 2017
|
525
|
|
|
$
|
29.76
|
|
Granted
|
336
|
|
|
37.11
|
|
|
Vested
|
(183
|
)
|
|
29.35
|
|
|
Canceled or expired
|
—
|
|
|
—
|
|
|
Balance at March 30, 2018
|
678
|
|
|
$
|
33.49
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
March 30, 2018
|
|
March 31, 2017
|
|
March 30, 2018
|
|
March 31, 2017
|
||||
Estimated effective tax rate
|
21.7
|
%
|
|
33.0
|
%
|
|
(4.8
|
)%
|
|
35.6
|
%
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(In millions)
|
March 30, 2018
|
|
March 31, 2017
|
|
March 30, 2018
|
|
March 31, 2017
|
||||||||
Revenues
|
|
|
|
|
|
|
|
||||||||
Medical
|
$
|
158.5
|
|
|
$
|
125.7
|
|
|
$
|
297.7
|
|
|
$
|
257.4
|
|
Industrial
|
42.7
|
|
|
29.1
|
|
|
79.7
|
|
|
54.8
|
|
||||
Total revenues
|
201.2
|
|
|
154.8
|
|
|
$
|
377.4
|
|
|
$
|
312.2
|
|
||
Gross margin
|
|
|
|
|
|
|
|
||||||||
Medical
|
53.5
|
|
|
44.6
|
|
|
$
|
99.9
|
|
|
$
|
91.5
|
|
||
Industrial
|
16.6
|
|
|
13.0
|
|
|
31.7
|
|
|
24.9
|
|
||||
Total gross margin
|
$
|
70.1
|
|
|
$
|
57.6
|
|
|
$
|
131.6
|
|
|
$
|
116.4
|
|
Total operating expenses
|
52.9
|
|
|
34.1
|
|
|
100.9
|
|
|
74.5
|
|
||||
Interest and other income (expenses), net
|
(1.5
|
)
|
|
(1.1
|
)
|
|
(7.9
|
)
|
|
(1.2
|
)
|
||||
Earnings before taxes
|
15.7
|
|
|
22.4
|
|
|
22.8
|
|
|
40.7
|
|
||||
Taxes on earnings
|
3.4
|
|
|
7.4
|
|
|
(1.1
|
)
|
|
14.5
|
|
||||
Net earnings
|
12.3
|
|
|
15.0
|
|
|
23.9
|
|
|
26.2
|
|
||||
Less: Net earnings attributable to noncontrolling interests
|
0.1
|
|
|
—
|
|
|
0.3
|
|
|
0.1
|
|
||||
Net earnings attributable to Varex
|
$
|
12.2
|
|
|
$
|
15.0
|
|
|
$
|
23.6
|
|
|
$
|
26.1
|
|
(In millions)
|
March 30, 2018
|
|
September 29, 2017
|
||||
Identifiable assets
|
|
|
|
||||
Medical
|
$
|
778.9
|
|
|
$
|
832.1
|
|
Industrial
|
207.0
|
|
|
208.0
|
|
||
Total reportable segments
|
$
|
985.9
|
|
|
$
|
1,040.1
|
|
|
Three Months Ended
|
|
|
|
|
|||||||||
(In millions)
|
March 30, 2018
|
|
March 31, 2017
|
|
$ Change
|
|
% Change
|
|||||||
Medical
|
$
|
158.5
|
|
|
$
|
125.7
|
|
|
$
|
32.8
|
|
|
26.1
|
%
|
Industrial
|
42.7
|
|
|
29.1
|
|
|
13.6
|
|
|
46.7
|
%
|
|||
Total revenues
|
$
|
201.2
|
|
|
$
|
154.8
|
|
|
$
|
46.4
|
|
|
30.0
|
%
|
Medical as a percentage of total revenues
|
79
|
%
|
|
81
|
%
|
|
|
|
|
|||||
Industrial as a percentage of total revenues
|
21
|
%
|
|
19
|
%
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|||||||||
(In millions)
|
March 30, 2018
|
|
March 31, 2017
|
|
$ Change
|
|
% Change
|
|||||||
Medical
|
$
|
53.5
|
|
|
$
|
44.6
|
|
|
$
|
8.9
|
|
|
20.0
|
%
|
Industrial
|
16.6
|
|
|
13.0
|
|
|
3.6
|
|
|
27.7
|
%
|
|||
Total gross margin
|
$
|
70.1
|
|
|
$
|
57.6
|
|
|
$
|
12.5
|
|
|
21.7
|
%
|
Medical gross margin %
|
33.8
|
%
|
|
35.5
|
%
|
|
|
|
|
|||||
Industrial gross margin %
|
38.9
|
%
|
|
44.7
|
%
|
|
|
|
|
|||||
Total gross margin %
|
34.8
|
%
|
|
37.2
|
%
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|||||||||
(In millions)
|
March 30, 2018
|
|
March 31, 2017
|
|
$ Change
|
|
% Change
|
|||||||
Research and development
|
$
|
22.0
|
|
|
$
|
14.4
|
|
|
$
|
7.6
|
|
|
52.8
|
%
|
As a percentage of total revenues
|
10.9
|
%
|
|
9.3
|
%
|
|
|
|
|
|||||
Selling, general and administrative
(1)
|
$
|
30.9
|
|
|
$
|
19.7
|
|
|
$
|
11.2
|
|
|
56.9
|
%
|
As a percentage of total revenues
|
15.4
|
%
|
|
12.7
|
%
|
|
|
|
|
|||||
Operating expenses
|
$
|
52.9
|
|
|
$
|
34.1
|
|
|
$
|
18.8
|
|
|
55.1
|
%
|
As a percentage of total revenues
|
26.3
|
%
|
|
22.0
|
%
|
|
|
|
|
|
Three Months Ended
|
|
|
||||||||
(In millions)
|
March 30, 2018
|
|
March 31, 2017
|
|
$ Change
|
||||||
Interest income
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest expense
|
(5.6
|
)
|
|
(1.0
|
)
|
|
(4.6
|
)
|
|||
Other
|
4.1
|
|
|
(0.1
|
)
|
|
4.2
|
|
|||
Interest and other income (expense), net
|
$
|
(1.5
|
)
|
|
$
|
(1.1
|
)
|
|
$
|
(0.4
|
)
|
|
Six Months Ended
|
|
|
|
|
|||||||||
(In millions)
|
March 30, 2018
|
|
March 31, 2017
|
|
$ Change
|
|
% Change
|
|||||||
Medical
|
$
|
297.7
|
|
|
$
|
257.4
|
|
|
$
|
40.3
|
|
|
15.7
|
%
|
Industrial
|
79.7
|
|
|
54.8
|
|
|
24.9
|
|
|
45.4
|
%
|
|||
Total revenues
|
$
|
377.4
|
|
|
$
|
312.2
|
|
|
$
|
65.2
|
|
|
20.9
|
%
|
Medical as a percentage of total revenues
|
79
|
%
|
|
82
|
%
|
|
|
|
|
|||||
Industrial as a percentage of total revenues
|
21
|
%
|
|
18
|
%
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|||||||||
(In millions)
|
March 30, 2018
|
|
March 31, 2017
|
|
$ Change
|
|
% Change
|
|||||||
Medical
|
$
|
99.9
|
|
|
$
|
91.5
|
|
|
$
|
8.4
|
|
|
9.2
|
%
|
Industrial
|
31.7
|
|
|
24.9
|
|
|
6.8
|
|
|
27.3
|
%
|
|||
Total gross margin
|
$
|
131.6
|
|
|
$
|
116.4
|
|
|
$
|
15.2
|
|
|
13.1
|
%
|
Medical gross margin %
|
33.6
|
%
|
|
35.5
|
%
|
|
|
|
|
|||||
Industrial gross margin %
|
39.8
|
%
|
|
45.4
|
%
|
|
|
|
|
|||||
Total gross margin %
|
34.9
|
%
|
|
37.3
|
%
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|||||||||
(In millions)
|
March 30, 2018
|
|
March 31, 2017
|
|
$ Change
|
|
% Change
|
|||||||
Research and development
|
$
|
41.8
|
|
|
$
|
27.7
|
|
|
$
|
14.1
|
|
|
50.9
|
%
|
As a percentage of total revenues
|
11.1
|
%
|
|
8.9
|
%
|
|
|
|
|
|||||
Selling, general and administrative
(1)
|
$
|
59.1
|
|
|
$
|
46.8
|
|
|
$
|
12.3
|
|
|
26.3
|
%
|
As a percentage of total revenues
|
15.7
|
%
|
|
15.0
|
%
|
|
|
|
|
|||||
Operating expenses
|
$
|
100.9
|
|
|
$
|
74.5
|
|
|
$
|
26.4
|
|
|
35.4
|
%
|
As a percentage of total revenues
|
26.7
|
%
|
|
23.9
|
%
|
|
|
|
|
|
Six Months Ended
|
|
|
||||||||
(In millions)
|
March 30, 2018
|
|
March 31, 2017
|
|
$ Change
|
||||||
Interest income
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
Interest expense
|
(11.1
|
)
|
|
(1.6
|
)
|
|
(9.5
|
)
|
|||
Other
|
3.1
|
|
|
0.3
|
|
|
2.8
|
|
|||
Interest and other income (expense), net
|
$
|
(7.9
|
)
|
|
$
|
(1.2
|
)
|
|
$
|
(6.7
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
March 30, 2018
|
|
March 31, 2017
|
|
March 30, 2018
|
|
March 31, 2017
|
||||
Estimated effective tax rate
|
21.7
|
%
|
|
33.0
|
%
|
|
(4.8
|
)%
|
|
35.6
|
%
|
(In millions)
|
March 30, 2018
|
|
September 29, 2017
|
|
$ Change
|
||||||
Cash and cash equivalents
|
$
|
55.4
|
|
|
$
|
83.3
|
|
|
$
|
(27.9
|
)
|
(Dollars in millions)
|
March 30, 2018
|
|
September 29, 2017
|
|
$ Change
|
||||||
Current portion of Term Facility
|
$
|
20.0
|
|
|
$
|
20.0
|
|
|
$
|
—
|
|
Revolving Credit Facility
|
46.0
|
|
|
104.0
|
|
|
(58.0
|
)
|
|||
Long-Term portion of Term Facility
|
360.0
|
|
|
370.0
|
|
|
(10.0
|
)
|
|||
Total debt outstanding, gross
|
426.0
|
|
|
494.0
|
|
|
(68.0
|
)
|
|||
Debt issuance costs
|
(8.9
|
)
|
|
(10.1
|
)
|
|
1.2
|
|
|||
Total debt outstanding, net
|
$
|
417.1
|
|
|
$
|
483.9
|
|
|
$
|
(66.8
|
)
|
|
Six Months Ended
|
||||||
(In millions)
|
March 30, 2018
|
|
March 31, 2017
|
||||
Net cash flow provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
45.5
|
|
|
$
|
33.0
|
|
Investing activities
|
(6.9
|
)
|
|
(6.7
|
)
|
||
Financing activities
|
(66.7
|
)
|
|
16.1
|
|
||
Effects of exchange rate changes on cash and cash equivalents
|
0.2
|
|
|
0.7
|
|
||
Net increase in cash and cash equivalents
|
$
|
(27.9
|
)
|
|
$
|
43.1
|
|
•
|
Net earnings of
$23.9 million
vs
$26.2 million
|
•
|
Non-cash adjustments to net earnings of
$10.5 million
vs
$21.8 million
|
•
|
Operating assets and liabilities activity:
|
◦
|
Accounts receivable
decreased
$34.4 million
vs
$0.3 million
. The fourth quarter of fiscal year 2017 had a higher level of sales and resulted in increased collections of accounts receivable in
six months ended March 30, 2018
.
|
◦
|
Inventories
increased
$11.0 million
vs
$15.2 million
. Increases in inventories in the first half of each fiscal year is normal as we begin to right-size our inventories for the upcoming quarters.
|
◦
|
Other items increased
$12.3 million
vs decreases of
$0.1 million
. These items include changes in prepaid expenses, accounts payable, accrued liabilities, deferred revenues, which fluctuate due to timing of expenses and payments.
|
Exhibit
No. |
|
Description
|
10.1*
†
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
101.INS*
|
|
XBRL Instance Document
|
|
|
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
*
|
|
Filed herewith.
|
†
|
|
Management contract or compensatory agreement
|
|
|
|
VAREX IMAGING CORPORATION
|
|
|
|
|
|
|
|
|
Date:
|
May 8, 2018
|
By:
|
/s/ CLARENCE R. VERHOEF
|
|
|
|
Clarence R. Verhoef
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
(Duly Authorized Officer and Principal Financial Officer)
|
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