Focusing Energy on Saving Lives. Year End Review Investor Relations Meeting ASTRO Oct. 30, 2007

Transcription

1 Focusing Energy on Saving Lives Year End Review Investor Relations Meeting ASTRO Oct. 30, 2007

2 ASTRO IR Day & FY2007 Year-End Review Tim Guertin President and CEO ASTRO IR Day Oct. 30, 2007

3 Forward-Looking Statements Except for historical information, the information that follows contains certain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include the matters described in the risk factors section of our information statement and other risks detailed from time to time in the company s filings with the Securities and Exchange Commission. For comparison purposes, the company makes reference to net earnings per diluted share results in the fourth quarters and full fiscal years 2006 and 2007 that are not consistent with accounting principles generally accepted in the United States (GAAP). These results are reflected and reconciled to GAAP in the table titled GAAP to Non-GAAP Reconciliation EPS FY 2007 & FY 2006 included in the financial section of this presentation. The company references these results to allow a better comparison between ongoing operations in the current and prior periods. The company's reference to these results should be considered in addition to results that are prepared under current accounting standards but should not be considered a substitute for results that are presented as consistent with GAAP.

4 Strategic Goals Sustained profitable growth Technical and clinical preeminence Safety, integrity, and compliance Talented, productive, and inspired workforce

5 Preeminence Best medicine Best-in-class capabilities Clinical outcomes Patient comfort

6 Preeminence Best medicine Best-in-class capabilities Clinical outcomes Patient comfort Best economics Versatility Throughput Affordability

7 Preeminence Best medicine Best-in-class capabilities Clinical outcomes Patient comfort Best economics Versatility Throughput Affordability Greatest ease-of-use Reliability and service Integration and automation Training and Education

8 ASTRO IR Day The Program Profitable Growth Elisha Finney X-Ray Products Robert Kluge Security Lester Boeh Oncology Systems Dow Wilson Booth Tour

9 Financial Performance Elisha Finney Sr. VP and CFO

10 Fiscal Year 2007 Results ($M) VMS OS XRP Other Net Orders 2,075 14% 1,636 7% % % Revenues 1,777 11% 1,440 8% % % Gross Margin 41% 42% 40% 28% R&D 117 SG&A 282 Op Earnings % ROS (+ 8%) Interest Income 7 EPS $1.83 (131M diluted shares)

11 GAAP to Non-GAAP Reconciliation EPS FY 2007 & FY 2006 Q4 07 Q4 06 % Change FY 07 FY 06 % Change EPS $0.61 $ $1.83 $ ACCEL/BIR (1) $ $ Tax/Disc Ops (2) -- ($0.08) ($0.16) -- Proforma EPS $0.63 $ % $1.89 $ % (1) Represents fiscal year 2007 revenues and expenses associated with ACCEL Instruments GmbH and Bio-Imaging Research, Inc., which were acquired in fiscal year (2) Represents fiscal year 2006 one-time tax benefits from the repatriation of foreign earnings under the Job Creations Act of 2004 and a deferred tax asset adjustment and an amount related to the release of a reserve for certain contingencies with the sale of the Company s Electron Device Business in 1995.

12 Backlog Record $1,699M (As of 09/28/07) FY 2004 FY 2005 FY 2006 FY 2007 Q1 Q2 Q3 Q4

13 Q4 FY07 Balance Sheet / Cash Flow Conservative balance sheet $263M cash $90M total debt $821M shareholder equity *DSO 88 days down 6 days from year ago quarter Strong cash flow $137M record cash flow from operations Spent $85M to repurchase 2M shares during the quarter (11M shares remain under current share repurchase authorization) *Days Sales Outstanding

14 Fiscal 2008 Outlook (As of end of Fourth Quarter, Fiscal 2007) Revenues growth estimated at ~ 10% to 11% for FY 2008 EPS estimated at ~ $2.04 to $2.06 for FY 2008 including ACCEL dilution Revenues growth estimated at ~ 12% to 13% for the First Quarter of FY 2008 EPS estimated at ~ $0.39 to $0.40 for the First Quarter of FY 2008 including ACCEL dilution Note: (1) Fiscal 2008 Outlook includes the impact of the acquisition of ACCEL Instruments and BIR. (2) Varian updates its outlook once per quarter when it reports financial results. This information is for reference purposes only and is not an affirmation of or an update to the outlook that Varian reported at the close of last quarter.

15 X-Ray Products Robert Kluge President, X-Ray Products ASTRO IR Day Oct. 30, 2007

16 Varian X-ray Products X-ray Tubes Flat-panel digital X-ray image detectors

17 X-Ray Products Highlights Third year of double-digit sales growth (13%) Continued growth of panel business Solid growth in high-tier CT tubes

18 X-Ray Products Highlights Third year of double-digit sales growth (13%) Continued growth of panel business Solid growth in high-tier CT tubes FY08/09 New Product Introductions 14x17 and 17x17 Radiographic 30x30 Fluoro Mammo

19 X-Ray Products Highlights Third year of double-digit sales growth (13%) Continued growth of panel business Solid growth in high-tier CT tubes FY08/09 New Product Introductions 14x17 and 17x17 Radiographic 30x30 Fluoro Mammo Salt Lake City factory expansion completed dpix joint venture fab expansion in process

20 Growth Drivers Transition to digital imaging Imaging panels rapidly replacing image intensifiers DR and CR imaging panels replacing film DR will replace CR as DR costs drop Digital imaging impacting X-ray Tube requirements Higher power in a smaller package

21 Market Overview Estimated World FPD Market (Wholesale Value) 2500 $M Mammo Fluoro / Dental RAD CR 0 FY05 FY06 FY07 FY08 FY09 FY10 FY11

22 X-Ray Products Summary Industry transition to digital imaging is a key growth driver Varian has invested in new products and production capacity and is well positioned to grow

23 Security & Inspection Products Focusing Energy on Safer Ports and Borders Lester Boeh VP, Emerging Businesses

24 SIP Growth Drivers FY-07 Net orders up 105% Revenues up 70% EBIT up 10 points Border security growing Growth in all regions Innovation in NDT

25 Cargo Inspection Market Strategy Systems Integrator Source Detector Imaging Software Systems Integration Global Sales/ Service Smiths Detection VAR Rapiscan VAR AS&E VAR L3 VAR SAIC VAR NUCTECH

26 Varian IntellX Container Inspection

27 Sample Images Quick Identification Density Evaluation

28 Automatic Detection

29 Security & Inspection Opportunity Millions $300 $250 $200 $150 $100 $50 $0 FY07 FY08 FY09 FY10 FY11 NDT Port & Border Air Cargo

30 New Directions in Cancer Care Dow Wilson President, Oncology Systems ASTRO IR Day Oct. 30, 2007

31 Oncology Systems Technology for more effective cancer therapies

32 Today s Oncology Agenda Brief 2007 Recap ASTRO Overview RapidArc Launch

33 Oncology Orders, V% International $673M $731M 8.5% Domestic $862M $905M 5.1% Total $1,535M $1,636M 6.6% Orders Growth = $101M

34 Tale of Two Halves $ in Millions Orders 1H 07 Orders 2H % $691 $703 $ % $

35 Q Orders Q4 06 V% Q4 07 V% International $170M -4.2% $214M 26.6% Domestic $300M 25.1% $308M 2.5% Total $470M 12.7% $522M 11.2% Strong in all geographies

36 Installation Times New Systems Upgrades 10 weeks 15 clinical days 5 weeks 5 clinical days 2006 IGRT 2007 IGRT 2006 OBI Upg 2007 OBI Upg Driving predictability & uptick in upgrades

37 ASTRO Launches Novalis Tx Brachytherapy Software AND

38 One revolution is all it takes.

39

40 Single Arc IMRT

41 RapidArc* Objectives Single arc IMRT IMRT quality Uniform target coverage Improved normal tissue sparing Treat in 2 minutes or less Highly efficient Low peripheral dose Simple planning and delivery

42 Treat in 2 Minutes or Less ~ 600 MU/ 2Gy Variable gantry speed Variable dose rate Inter-digitating MLC Dynamic MLC

43 RapidArc Efficiency Head & Neck RapidArc IMRT Conventional 7-field IMRT 496 MU ~ 70 seconds delivery time 1685 MU ~ minutes delivery time

44 RapidArc Low Dose Area Improvement RapidArc Single arc IMRT 496 MU Conventional 7-field IMRT 1685 MU

45 RapidArc Low Dose Area Improvement RapidArc Single arc IMRT 496 MU Conventional 7-field IMRT 1685 MU

46 Improved Critical Structure Sparing RapidArc (solid) IMRT (dashed) PTV 2 PTV 1 Mandible Larynx Brainstem Cord Lt Parotid Rt SMG Rt Parotid

47 RapidArc Efficiency -- Prostate RapidArc IMRT Conventional 5-field IMRT 603 MU ~ 70 seconds 915 MU ~ 6 minutes

48 RapidArc Efficiency -- Prostate

49 RapidArc Efficiency -- Prostate

50 RapidArc Hypofractionated Spine RapidArc IMRT Conventional 11-field IMRT 2174 MU 3072 MU ~ 4 minutes ~ 20 minutes A partner for life

51 IMRT Quality RapidArc IMRT Conventional 11-field IMRT

52 IMRT Quality

53 RapidArc Advantages < 2 minute treatments Enhance patient comfort More throughput < 600 MU / 2 Gy Low out of field dose Low leakage and scatter Full volume treatment ~ 25 x 40 cm2 cylinder No compromise Keep static fields Keep non-coplanar Keep electrons Keep motion management Use kv IGRT Simple Planning

54 RapidArc Comparison Varian Medical Systems RapidArc Tomotherapy Inc. Helical Arcs Number of projections 180 Number of projections 51 Helical pitch 1 Helical pitch ~0.33 Treatment Time <2 minutes Treatment Time ~ minutes Effective # projections Slice thickness (cm) 180 Volumetric Effective # projections 51/0.33 = 153 Slice thickness (cm) 5.0, 2.5, 1.0 MLC type Continuous MLC type Binary Leaf width (@ iso.) 5 mm Leaf width (@ iso.) 6.25 mm Dose rate modulation Yes Dose rate modulation No Optimization Aperture Optimization Fluence

55 RapidArc Comparison Varian Medical Systems RapidArc Elekta IMAT Number of arcs 1 Number of arcs 3-10 Treatment time 2-3 min Treatment time 4-15 min Monitor units / 2 Gy MU Monitor units / 2 Gy MU Effective projections 180 Effective projections MLC Interdigitation Yes MLC Interdigitation No Leaf width (@ iso.) 5 mm Leaf width (@ iso.) 10 mm Dose rate modulation Yes Dose rate modulation No Optimization Aperture Optimization Aperture

56 RapidArc Summary Treat in 2 minutes or less Single arc IMRT Uniform target coverage Improved normal tissue sparing Reduced peripheral dose Simple planning

57 One revolution is all it takes.

58 Thank You Year End Review Investor Relations Meeting ASTRO Oct. 30, 2007