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Varian Medical Systems Inc. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: November 21, 2012 10:06PM
Varian Medical Systems Inc. (VAR) filed Annual Report for the period ended 2012-09-28. Varian Medical Systems, Inc. has a market cap of $7.52 billion; its shares were traded at around $68.86 with a P/E ratio of 17.9 and P/S ratio of 2.7. Varian Medical Systems, Inc. had an annual average earning growth of 15.7% over the past 10 years. GuruFocus rated Varian Medical Systems, Inc. the business predictability rank of 4.5-star.
Highlight of Business Operations:Revenues from our Oncology Systems business segment represented 78%, 78% and 79% of total revenues for fiscal years 2012, 2011 and 2010, respectively. Our Oncology Systems business segment revenues include both products and service revenues. Product revenues in Oncology Systems accounted for 54%, 55% and 57% of total revenues for fiscal years 2012, 2011 and 2010, respectively. Service revenues in Oncology Systems accounted for 24%, 23% and 22% of total revenues for fiscal years 2012,
constituted 46%, 32%, 16% and 6%, respectively, of Oncology Systems revenues during fiscal year 2012; 48%, 32%, 15% and 5%, respectively, of Oncology Systems revenues during fiscal year 2011; and 46%, 33%, 17% and 4%, respectively, of Oncology Systems revenues during fiscal year 2010.
Total revenues for our X-ray Products segment were $493 million, $469 million and $403 million for fiscal years 2012, 2011 and 2010, respectively. We divide our market segments for X-ray Products revenues by region into North America, Europe, Asia and rest of the world, and these regions constituted 26%, 24%, 48% and 2%, respectively, of X-ray Products revenues during fiscal year 2012; 29%, 21%, 49% and 1%, respectively, of X-ray Products revenues during fiscal year 2011 and 32%, 17%, 50% and 1%, respectively, of X-ray Products revenues during fiscal year 2010.
The $40 million increase in selling, general and administrative expenses for fiscal year 2012 compared to fiscal year 2011 was primarily attributable to: (a) a $15 million net increase in employee-related costs, in part for increased headcount to support our growing sales, marketing and other business activities particularly the in international region; (b) an $8 million increase in bad debt expense to increase the allowance for doubtful accounts related to a limited number of customers; (c) a $6 million increase in selling, general and administrative expenses associated with the recently acquired Calypso and InfiMed; (d) a $5 million net increase in legal expenses relating to ongoing litigation; (e) a $4 million decrease in the income recognized on our equity investment in dpiX Holding LLC and (f) a $2 million increase in restructuring charge primarily for a workforce reduction in North America that accompanied the realignment of resources to support sales and marketing activities in emerging market countries. These increases were partially offset by a decrease of $4 million in contingent liability charge in fiscal year 2012 compared to fiscal year 2011.
The trailing 12 months growth in net orders for Oncology Systems for the three immediately prior fiscal quarters ends were: a 6% total increase, with a 1% increase in North America and an 11% increase for the international region, as of June 29, 2012; an 8% total increase, with flat net orders in North America and a 16% increase for the international region, as of March 30, 2012; an 8% total increase, with a 1% decrease in North America and a 17% increase for the international region, as of December 30, 2011. We expect that Oncology Systems net orders will continue to experience regional fluctuations, even with an overall shift of orders towards the international region and emerging markets. In addition, the availability of government programs that stimulate the purchase of healthcare products, such as the one in place in 2010 in Japan, and, in the United States, uncertainty created by healthcare reform and actual and proposed reductions in Medicare reimbursement rates for radiotherapy and radiosurgery have in the past affected and could in the future affect the demand for our Oncology Systems products and/or revenues recognized from period to period, and could therefore make it difficult to compare our financial results.
Stocks Discussed: VAR,