Focusing Energy on Saving Lives. Tim Guertin, CEO Elisha Finney, CFO JP Morgan Health Care Conference San Francisco January 7, 2008

Transcription

1 Focusing Energy on Saving Lives Tim Guertin, CEO Elisha Finney, CFO JP Morgan Health Care Conference San Francisco January 7, 2008

2 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.

3 Varian Businesses SEGMENT FY07 ORDERS % OF ORDERS Oncology Systems $1,636M 79% Radiation Therapy Brachytherapy Radiosurgery X-Ray Products $ 273M 13% Tubes Flat Panel Imagers Other $ 166M 8% Ginzton Technology Center Security and Inspection Products ACCEL TOTAL $ 2,075M 100%

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 The Drive For Conformal Dose Late 1990s IMRT IGRT Stereotactic Treatments Rapid Arc Proton T R E N D I M P R O V I N G P R E C I S I O N A N D S P E E D H I G H E R A V E R A G E S E L L I N G P R I C E S

9 One revolution is all it takes.

10 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 510(k) Clearance Granted

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

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

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

14 RapidArc Efficiency -- Prostate

15 Image-Guided RapidArc IMRT 3D images in 2 minutes Treat in 2 minutes or less Better targeting More conformal Less motion Simpler planning

16 Other New Oncology Products Novalis Tx Brachytherapy Software

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

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

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

20 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

21 X-Ray Product 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

22 Market Overview Estimated Wholesale World Flat Panel Detector Market $M Mammo Fluoro / Dental RAD CR FY05 FY06 FY07 FY08 FY09 FY10 FY11

23 Security and Inspection Products FY-07 Net orders up 105% Revenues up 70% EBIT up 10 points Border security growing Growth in all regions Innovation in NDT

24 Varian IntellX Container Inspection

25 Sample Images Quick Identification Density Evaluation

26 Automatic Detection

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

28 Financial Performance Elisha Finney Sr. VP and CFO

29 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)

30 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.

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

32 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

33 Thank You Tim Guertin, CEO Elisha Finney, CFO JP Morgan Health Care Conference San Francisco January 7, 2008