Varian, Inc. Reports Fourth Quarter 2009 Results

PALO ALTO, Calif., Nov. 4 /PRNewswire-FirstCall/ -- Varian, Inc. (NasdaqGS: VARI) today reported fourth quarter fiscal year 2009 revenues of $196.5 million, a decrease of 30.4% from the fourth quarter of fiscal year 2008. Orders exceeded revenues by approximately $9 million in the fourth quarter of fiscal year 2009.

Non-GAAP (adjusted) diluted earnings per share for the fourth quarter of 2009 were $0.40, a decrease of 48.7% from the $0.78 in the fourth quarter of 2008. On a GAAP basis, diluted earnings per share in the fourth quarter of 2009 were $0.07 (including $0.28 of costs relating to the pending acquisition of the company by Agilent Technologies, Inc. ("Agilent")), compared to $0.69 in the fourth quarter of 2008.

Adjusted operating profit margin was 8.4% in the fourth quarter of 2009, compared to 13.0% in the prior-year quarter. On a GAAP basis, operating profit margin was 2.6% in the fourth quarter of 2009, compared to 11.6% in the same quarter a year ago.

Revenues in the fourth quarter of fiscal year 2009 were essentially flat on a sequential basis, but were lower than the prior-year quarter, primarily due to the global economic downturn as well as specific items impacting the comparability of the fourth quarter of fiscal year 2009 with the fourth quarter of fiscal year 2008. Revenues in the fourth quarter of fiscal year 2008 benefitted from (1) an extra week and (2) exceptionally strong shipments related to overcoming manufacturing transition and execution issues experienced in the third quarter of fiscal year 2008. In addition, revenues in the fourth quarter of fiscal year 2009 were negatively impacted by customers' uncertainty and other disruptions related to the announcement and pendency of the acquisition by Agilent. Compared to record adjusted operating profit margins in the prior-year quarter, adjusted operating margins in the fourth quarter of fiscal year 2009 were negatively impacted by the lower sales volumes, product mix and disruptions relating to the pending acquisition.

Free cash flow, which is defined as operating cash flow less net fixed asset purchases, was $29.7 million in the fourth quarter of 2009 and a record $94.3 million for the full fiscal year. The excellent free cash flow generated by the company in fiscal year 2009 demonstrates the fundamental strength and flexibility of the business through the challenging economic environment during that period.

Fiscal year 2009 sales totaled $806.7 million, a decrease of 20.3% compared to the $1.013 billion reported in fiscal year 2008. Adjusted net earnings in fiscal year 2009 decreased 26.2% to $58.0 million, compared to $78.7 million in the prior fiscal year. Adjusted diluted earnings per share were $2.01 in fiscal year 2009, representing a decrease of 23.3% compared to the $2.62 in fiscal year 2008. On a GAAP basis, net earnings were $38.6 million, or $1.34 diluted earnings per share, in fiscal year 2009, compared to $65.1 million, or $2.17 diluted earnings per share, in fiscal year 2008.

For a complete reconciliation of non-GAAP (adjusted) financial information used in this press release to the most directly comparable GAAP financial information, please refer to the attached Reconciliations of GAAP to Adjusted Results, Actual.

Results by Segment

Scientific Instruments revenues for the fourth quarter of 2009 were $164.7 million, a decrease of 30.3% from the fourth quarter of the prior year. Adjusted operating profit margin was 8.1% in the fourth quarter of 2009, compared to 12.7% in the fourth quarter of the prior year. On a GAAP basis, operating profit margin was 5.5% in the fourth quarter of 2009, compared to 11.1% in the same quarter a year ago.

For the full fiscal year 2009, Scientific Instruments revenues decreased 19.5% to $675.3 million, compared to $838.7 million in fiscal year 2008. Adjusted operating profit margin was 10.7% in fiscal year 2009, compared to 11.6% in fiscal year 2008. On a GAAP basis, operating profit margin was 8.0% in fiscal year 2009, compared to 9.6% in the prior fiscal year.

Vacuum Technologies revenues were $31.7 million in the fourth quarter of 2009, a decrease of 31.0% from the fourth quarter of 2008. Adjusted operating profit margin was 20.5% in the fourth quarter of 2009, compared to 22.0% in the fourth quarter of the prior year. On a GAAP basis, operating profit margin was 20.3% in the fourth quarter of 2009, compared to 22.0% in the prior-year quarter.

For the full fiscal year 2009, Vacuum Technologies revenues totaled $131.4 million, a decrease of 24.4% compared to the $173.8 million reported in fiscal year 2008. Adjusted operating profit margin was 20.1% in fiscal year 2009, compared to 19.8% in the prior fiscal year. On a GAAP basis, operating profit margin was 19.5% in fiscal year 2009, compared to 19.8% in fiscal year 2008.

Acquisition by Agilent

As previously announced, on July 26, 2009 the company entered into an Agreement and Plan of Merger with Agilent (the "Merger Agreement"), pursuant to which the company will, subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, be acquired by Agilent for $52.00 per share in cash. At a special meeting held on October 5, 2009, the company's stockholders approved the Merger Agreement. The transaction remains subject to regulatory approvals and other closing conditions.

No Conference Call

Due to the pending acquisition by Agilent, the company will not be holding an investor conference call to review its fourth quarter and full fiscal year 2009 results.

Non-GAAP (Adjusted) Financial Measures

This press release includes non-GAAP (adjusted) financial measures for cost of sales, selling, general and administrative expenses, research and development expenses, purchased in-process research and development expenses, operating earnings, operating profit margins, impairment of private company equity investments, income tax expense, net earnings, diluted earnings per share and free cash flow. With the exception of free cash flow, these non-GAAP financial measures exclude acquisition-related intangible and inventory write-up amortization and purchased in-process research and development expenses, costs related to the pending acquisition by Agilent, restructuring and other related costs, and impairment of private company equity investments. Reconciliations of each of these non-GAAP financial measures to the most directly comparable GAAP financial measures are detailed in the Reconciliations of GAAP to Adjusted Results attached to this press release. We believe that presentation of these non-GAAP financial measures provides useful information to investors regarding our results of operations and our cash flows.

We believe that excluding acquisition-related intangible and inventory write-up amortization and purchased in-process research and development expenses provides supplemental information and an alternative presentation useful to investors' understanding of the company's core operating results and trends. In addition, investors have indicated to us that they analyze the benefits of acquisitions based on the cash return on the investment made, and thus consider financial measures excluding acquisition-related intangible and inventory write-up amortization and purchased in-process research and development expenses as important, useful information.

We similarly believe that excluding costs related to the pending acquisition by Agilent, restructuring and other related costs (principally related to facility closures and employee terminations to reduce costs and improve operational efficiency) and impairment of private company equity investments provides supplemental information and an alternative presentation useful to investors' understanding of the company's core operating results and trends, especially when comparing those results on a consistent basis to results for previous periods and anticipated results for future periods. Investors have indicated that they consider financial measures of our results of operations excluding restructuring and other related costs and impairment of private company equity investments as important supplemental information useful to their understanding of our historical results and estimating of our future results.

We also believe that, in excluding acquisition-related intangible and inventory write-up amortization and purchased in-process research and development expenses, costs related to the pending acquisition by Agilent, restructuring and other related costs, and impairment of private company equity investments, our non-GAAP financial measures provide investors with transparency into what is used by management to measure and forecast our results of operations, to compare on a consistent basis our results of operations for the current period to that of prior periods, to compare our results of operations on a more consistent basis against that of other companies, in making financial and operating decisions and to establish certain management compensation.

We believe that the presentation of free cash flow provides investors with useful information on what is used by management to measure cash management performance, in making financial and operating decisions and to establish certain management compensation. Although we believe, for the foregoing reasons, that our presentation of non-GAAP financial measures provides useful supplemental information to investors regarding our results of operations and our cash flows, our non-GAAP financial measures should only be considered in addition to, and not as a substitute for or superior to, our financial measures prepared in accordance with GAAP.

About Varian, Inc.

Varian, Inc. is a leading worldwide supplier of scientific instruments and vacuum technologies for life science, environmental, energy, and applied research and other applications. The company provides complete solutions, including instruments, vacuum products, laboratory consumable supplies, software, training and support through its global distribution and support systems. Varian, Inc.'s common stock is traded on the NASDAQ Global Select Market under the symbol "VARI". Further information is available on the company's Web site at http://www.varianinc.com.

                     VARIAN, INC. AND SUBSIDIARY COMPANIES
             UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
                    (In thousands, except per share amounts)
                Fourth Quarter FY 2009 and Fourth Quarter FY 2008

                                                     Fiscal Quarter Ended
                                                 --------------------------
                                                 October 2,      October 3,
                                                   2009            2008
                                                 ---------       ---------
    Sales                                        $196,459        $282,470
    Cost of sales                                 113,263 (1)     156,377 (7)
                                                 ---------       ---------
    Gross profit                                   83,196         126,093
                                                 ---------       ---------
    Operating expenses
    Selling, general and administrative            64,644 (2)      75,098 (8)
    Research and development                       13,448 (3)      17,921 (9)
    Purchased in-process research and development       -             215 (10)
                                                 ---------       ---------
    Total operating expenses                       78,092          93,234
                                                 ---------       ---------

    Operating earnings                              5,104 (4)      32,859 (11)
    Interest income                                   375           1,042
    Interest expense                                 (395)           (382)
                                                 ---------       ---------
    Earnings before income taxes                    5,084          33,519
    Income tax expense                              3,144 (5)      13,142 (12)
                                                 ---------       ---------
    Net earnings                                 $  1,940 (6)    $ 20,377 (13)
                                                 =========       =========



    Net earnings per diluted share                  $0.07 (6)       $0.69 (13)
                                                 =========       =========
    Diluted shares outstanding                     29,138          29,367
                                                 =========       =========

    NON-GAAP (ADJUSTED) FINANCIAL MEASURES (see also attached reconciliations
    of GAAP to Adjusted results for each of these measures):

    (1)  $111,263 on an adjusted basis excluding $1,550 in acquisition-related
         intangible amortization, $72 in acquisition-related inventory
         write-up amortization and $378 in restructuring and other related
         costs.
    (2)  $55,063 on an adjusted basis excluding $9,155 in costs related to
         the pending acquisition by Agilent, $194 in acquisition-related
         intangible amortization and $232 in restructuring and other related
         costs.
    (3)  $13,694 on an adjusted basis excluding a credit of $246 in
         restructuring and other related costs.
    (4)  $16,439 on an adjusted basis excluding the adjustments described in
         items (1) - (3) above.
    (5)  $4,891 on an adjusted basis excluding the tax impact of the
         adjustments described in items (1) - (3) above.
    (6)  $11,528 and $0.40 per diluted share, respectively, on an adjusted
         basis excluding the adjustments (net of related tax effects)
         described in items (1) - (3) above.
    (7)  $154,076 on an adjusted basis excluding $1,663 in acquisition-
         related intangible amortization, $172 in acquisition-related
         inventory write-up amortization and $466 in restructuring and other
         related costs.
    (8)  $74,239 on an adjusted basis excluding $586 in acquisition-related
         intangible amortization and $273 in restructuring and other related
         costs.
    (9)  $17,420 on an adjusted basis excluding $501 in restructuring and
         other related costs.
    (10) $0 on an adjusted basis excluding $215 related to an acquisition-
         related in-process research and development charge.
    (11) $36,735 on an adjusted basis excluding the adjustments described in
         items (7) - (10) above.
    (12) $14,417 on an adjusted basis excluding the tax impact of the
         adjustments described in items (7) - (9) above.
    (13) $22,978 and $0.78 per diluted share, respectively, on an adjusted
         basis excluding the adjustments (net of related tax effects)
         described in items (7) - (10) above.
                  VARIAN, INC. AND SUBSIDIARY COMPANIES
            UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
                 (In thousands, except per share amounts)
                 Full Year FY 2009 and Full Year FY 2008

                                                   Fiscal Year Ended
                                                --------------------------
                                                October 2,      October 3,
                                                   2009           2008
                                                -----------    -----------
    Sales                                      $  806,744     $1,012,515
    Cost of sales                                 452,054 (1)    560,061 (7)
                                                -----------    -----------
    Gross profit                                  354,690        452,454
                                                -----------    -----------
    Operating expenses
    Selling, general and administrative           239,282 (2)    277,478 (8)
    Research and development                       56,425 (3)     71,810 (9)
    Purchased in-process research and
     development                                        -          1,703 (10)
                                                -----------    -----------
    Total operating expenses                      295,707        350,991
                                                -----------    -----------

    Operating earnings                             58,983 (4)    101,463 (11)
    Impairment of private company equity
     investment                                         -         (3,018) (12)
    Interest income                                 1,650          5,930
    Interest expense                               (1,486)        (1,656)
                                                -----------    -----------
    Earnings before income taxes                   59,147         102,719
    Income tax expense                             20,527 (5)      37,605 (13)
                                                -----------    -----------
    Net earnings                               $   38,620 (6) $    65,114 (14)
                                                ===========    ===========


    Net earnings per diluted share                  $1.34 (6)       $2.17 (14)
                                                ===========    ===========
    Diluted shares outstanding                     28,936          30,072
                                                ===========    ===========

    NON-GAAP (ADJUSTED) FINANCIAL MEASURES (see also attached reconciliations
    of GAAP to Adjusted results for each of these measures):

    (1)  $441,730 on an adjusted basis excluding $6,117 in acquisition-
         related intangible amortization, $131 in acquisition-related
         inventory write-up amortization and $4,076 in restructuring and
         other related costs.
    (2)  $224,255 on an adjusted basis excluding $9,155 in costs related to
         the pending acquisition by Agilent, $1,118 in acquisition-related
         intangible amortization and $4,754 in restructuring and other
         related costs.
    (3)  $55,583 on an adjusted basis excluding $842 in restructuring and
         other related costs.
    (4)  $85,176 on an adjusted basis excluding the adjustments described in
         items (1) - (3) above.
    (5)  $27,294 on an adjusted basis excluding the tax impact of the
         adjustments described in items (1) - (3) above.
    (6)  $58,046 and $2.01 per share, respectively, on an adjusted basis
         excluding the adjustments (net of related tax effects) described in
         items (1) - (3) above.
    (7)  $550,465 on an adjusted basis excluding $6,547 in acquisition-related
         intangible amortization, $1,408 in acquisition-related inventory
         write-up amortization and $1,641 in restructuring and other related
         costs.
    (8)  $273,072 on an adjusted basis excluding $1,825 in acquisition-related
         intangible amortization and $2,581 in restructuring and other related
         costs.
    (9)  $70,556 on an adjusted basis excluding $1,254 in restructuring and
         other related costs.
    (10) $0 on an adjusted basis excluding $1,703 related to an acquisition-
         related in-process research and development charge.
    (11) $118,422 on an adjusted basis excluding the adjustments described in
         items (7) - (10) above.
    (12) $0 on an adjusted basis excluding $3,018 related to the impairment of
         a private company equity investment.
    (13) $44,007 on an adjusted basis excluding the tax impact of the
         adjustments described in items (7) - (9) and (12) above.
    (14) $78,689 and $2.62 per share, respectively, on an adjusted basis
         excluding the adjustments (net of related tax effects) described in
         items (7) - (10) and (12) above.

                     VARIAN, INC. AND SUBSIDIARY COMPANIES

                 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
                    (In thousands, except par value amounts)

                                                October 2,      October 3,
                                                   2009            2008
                                                 ---------       ---------
    ASSETS

    Current assets
    Cash and cash equivalents                    $209,348        $103,895
    Accounts receivable, net                      159,958         199,420
    Inventories                                   136,704         161,039
    Deferred taxes                                 38,349          32,287
    Prepaid expenses and other current assets      15,488          15,663
                                                 ---------       ---------
    Total current assets                          559,847         512,304
    Property, plant and equipment, net            114,363         110,343
    Goodwill                                      216,223         218,208
    Intangible assets, net                         28,334          36,972
    Other assets                                   25,420          24,089
                                                 ---------       ---------
    Total assets                                 $944,187        $901,916
                                                 =========       =========

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities
    Current portion of long-term debt            $  6,250        $      -
    Accounts payable                               63,368          70,923
    Deferred profit                                 8,935          10,957
    Accrued liabilities                           171,103         167,173
                                                 ---------       ---------
    Total current liabilities                     249,656         249,053
    Long-term debt                                 12,500          18,750
    Deferred taxes                                  2,505           4,341
    Other liabilities                              41,255          43,431
                                                 ---------       ---------
    Total liabilities                             305,916         315,575
                                                 ---------       ---------

    Stockholders' equity
    Preferred stock-par value $0.01,
     authorized-1,000 shares; issued-none               -               -
    Common stock-par value $0.01, authorized-
     99,000 shares; issued and outstanding-
     28,971 shares at October 2, 2009 and
     28,917 shares at October 3, 2008             368,324         356,192
    Retained earnings                             220,068         184,678
    Accumulated other comprehensive income         49,879          45,471
                                                 ---------       ---------
    Total stockholders' equity                    638,271         586,341
                                                 ---------       ---------
    Total liabilities and stockholders' equity   $944,187        $901,916
                                                 =========       =========
                     VARIAN, INC. AND SUBSIDIARY COMPANIES

             UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                (In thousands)

                                   Fiscal Quarter Ended   Fiscal Year Ended
                                    ------------------- -------------------
                                  October 2, October 3, October 2, October 3,
                                       2009      2008      2009      2008
                                    --------- --------- --------- ---------
    Cash flows from
     operating activities
    Net earnings                    $  1,940  $ 20,377  $ 38,620  $ 65,114
    Adjustments to reconcile net
     earnings to net cash provided
     by operating activities:
    Depreciation and amortization      6,470     8,128    26,783    29,346
    Gain on disposition of
     property, plant and equipment       (90)      (22)     (230)     (474)
    Impairment of private company
     equity investment                     -         -         -     3,018
    Purchased in-process research
     and development                       -       215         -     1,703
    Share-based compensation expense   1,672     2,466     7,705     9,673
    Excess tax benefit from
     share-based plans                  (705)     (894)     (705)     (894)
    Deferred taxes                   (11,157)   (1,251)  (12,211)   (1,791)
    Unrealized loss (gain) on
     currency remeasurement              929    (7,959)      525    (5,286)
    Changes in assets and
     liabilities, excluding effects
     of acquisitions:
      Accounts receivable, net         1,093   (22,940)   42,387   (12,205)
      Inventories                     12,812    11,618    24,663   (19,428)
      Prepaid expenses and other
       current assets                    386     2,811       403     3,300
      Other assets                     1,531      (736)      168    (1,462)
      Accounts payable                 9,260    (2,293)   (8,663)   (1,072)
      Deferred profit                 (1,289)      440    (2,103)   (3,526)
      Accrued liabilities             11,196    10,853    (3,061)   14,053
      Other liabilities                 (490)   (1,416)   (1,394)   (1,048)
                                   --------- --------- --------- ---------
    Net cash provided by
     operating activities             33,558    19,397   112,887    79,021
                                   --------- --------- --------- ---------
    Cash flows from
     investing activities
    Proceeds from sale of property,
     plant and equipment                 344       470     6,454     1,735
    Purchase of property, plant
     and equipment                    (4,245)   (7,286)  (25,073)  (23,960)
    Acquisitions, net of
     cash acquired                       (20)   (2,269)   (2,449)  (55,167)
    Private company
     equity investments                    -         -         -       (18)
                                   --------- --------- --------- ---------
    Net cash used in
     investing activities             (3,921)   (9,085)  (21,068)  (77,410)
                                   --------- --------- --------- ---------
    Cash flows from
     financing activities
    Repayments of debt                     -         -         -    (6,250)
    Repurchase of common stock           (24)  (24,968)   (7,647) (106,859)
    Issuance of common stock           4,856     2,467     8,139    18,228
    Excess tax benefit from
     share-based plans                   705    (2,258)      705       894
    Transfers to Varian Medical
     Systems, Inc.                      (204)        -      (645)     (600)
                                   --------- --------- --------- ---------
    Net cash provided by (used in)
     financing activities              5,333   (24,759)      552   (94,587)
                                   --------- --------- --------- ---------
    Effects of exchange rate
     changes on cash and
     cash equivalents                  8,001    (9,872)   13,082       475
                                   --------- --------- --------- ---------
    Net increase (decrease) in cash
     and cash equivalents             42,971   (24,319)  105,453   (92,501)
    Cash and cash equivalents at
     beginning of period             166,377   128,214   103,895   196,396
                                   --------- --------- --------- ---------
    Cash and cash equivalents at
     end of period                  $209,348  $103,895  $209,348  $103,895
                                   ========= ========= ========= =========
                     VARIAN, INC. AND SUBSIDIARY COMPANIES
              RECONCILIATION OF GAAP TO ADJUSTED RESULTS - ACTUAL
                        UNAUDITED RESULTS OF OPERATIONS
                                 (In thousands)
               Fourth Quarter FY 2009 and Fourth Quarter FY 2008
                                      and
                    Full Year FY 2009 and Full Year FY 2008

                                   Fiscal Quarter Ended  Fiscal Year Ended
                                    ------------------  ------------------
                                  October 2, October 3, October 2, October 3,
                                      2009      2008      2009      2008
                                    --------  --------  --------  --------
    TOTAL COMPANY
    -------------

    Cost of Sales
      U.S. GAAP as reported         $113,263  $156,377  $452,054  $560,061
      Adjustments:
        Acquisition-related
         intangible amortization      (1,550)   (1,663)   (6,117)   (6,547)
        Acquisition-related
         inventory write-up
         amortization                    (72)     (172)     (131)   (1,408)
        Restructuring and other
         related costs                  (378)     (466)   (4,076)   (1,641)
                                    --------  --------  --------  --------
      As adjusted                   $111,263  $154,076  $441,730  $550,465
                                    ========  ========  ========  ========

    Selling, General
     and Administrative
      U.S. GAAP as reported         $ 64,644  $ 75,098  $239,282  $277,478
      Adjustments:
        Acquisition-related
         intangible amortization        (194)     (586)   (1,118)   (1,825)
        Costs related to pending
         acquisition by Agilent       (9,155)        -    (9,155)        -
        Restructuring and other
         related costs                  (232)     (273)   (4,754)   (2,581)
                                    --------  --------  --------  --------
     As adjusted                    $ 55,063  $ 74,239  $224,255  $273,072
                                    ========  ========  ========  ========

    Research and Development
      U.S. GAAP as reported         $ 13,448  $ 17,921  $ 56,425  $ 71,810
      Adjustments:
        Restructuring and other
         related costs                   246      (501)     (842)   (1,254)
                                    --------  --------  --------  --------
      As adjusted                   $ 13,694  $ 17,420  $ 55,583  $ 70,556
                                    ========  ========  ========  ========

    Purchased In-Process Research
     and Development
      U.S. GAAP as reported         $      -  $    215  $      -  $  1,703
      Adjustments:
        Acquisition-related in-
         process research
         and development charge            -      (215)        -    (1,703)
                                    --------  --------  --------  --------
      As adjusted                   $      -  $      -  $      -  $      -
                                    ========  ========  ========  ========

                      VARIAN, INC. AND SUBSIDIARY COMPANIES
                RECONCILIATION OF GAAP TO ADJUSTED RESULTS - ACTUAL
                        UNAUDITED RESULTS OF OPERATIONS
                      (In thousands, except per share data)
               Fourth Quarter FY 2009 and Fourth Quarter FY 2008
                                      and
                    Full Year FY 2009 and Full Year FY 2008

                                   Fiscal Quarter Ended  Fiscal Year Ended
                                     -----------------   -----------------
                                  October 2, October 3, October 2, October 3,
                                      2009      2008      2009      2008
                                     -------   -------   -------   -------
    TOTAL COMPANY (Continued)
    -------------------------

    Net Earnings
      U.S. GAAP as reported          $ 1,940   $20,377   $38,620   $65,114
      Adjustments:
        Acquisition-related in-
         process research
         and development charges           -       215         -     1,703
        Acquisition-related
         intangible amortization       1,217     1,526     4,925     5,617
        Acquisition-related inventory
         write-up amortization            52        97        94       923
        Costs related to pending
         acquisition by Agilent        8,110         -     8,110         -
        Impairment of private company
         equity investment                 -         -         -     1,871
        Restructuring and other
         related costs                   209       763     6,297     3,461
                                     -------   -------   -------   -------
      As adjusted                    $11,528   $22,978   $58,046   $78,689
                                     =======   =======   =======   =======


    Diluted Earnings Per Share
      U.S. GAAP as reported          $  0.07   $  0.69   $  1.34   $  2.17
      Adjustments:
        Acquisition-related in-
         process research
         and development charges           -      0.01         -      0.06
        Acquisition-related
         intangible amortization        0.04      0.05      0.17      0.18
        Acquisition-related inventory
         write-up amortization          0.00      0.00      0.00      0.03
        Costs related to pending
         acquisition by Agilent         0.28         -      0.28         -
        Impairment of private company
         equity investment                 -         -         -      0.06
        Restructuring and other
         related costs                  0.01      0.03      0.22      0.12
                                     -------   -------   -------   -------
      As adjusted                    $  0.40   $  0.78   $  2.01   $  2.62
                                     =======   =======   =======   =======


    Free Cash Flow
      U.S. GAAP as reported - Net
       cash provided by
       operating activities          $33,558   $19,396  $112,887   $79,021
      Adjustments:
        Proceeds from sale of
         property, plant
         and equipment                   344       470     6,454     1,735
        Purchase of property, plant
         and equipment                (4,245)   (7,286)  (25,073)  (23,960)
                                      ------    ------   -------   -------
      As adjusted - Free Cash Flow   $29,657   $12,580   $94,268   $56,796
                                     =======   =======   =======   =======


                    VARIAN, INC. AND SUBSIDIARY COMPANIES
            RECONCILIATION OF GAAP TO ADJUSTED RESULTS - ACTUAL
                     UNAUDITED RESULTS OF OPERATIONS
                    (In thousands, except margin data)

             Fourth Quarter FY 2009 and Fourth Quarter FY 2008
                                   and
                  Full Year FY 2009 and Full Year FY 2008

                                 Fiscal Quarter Ended    Fiscal Year Ended
                                 --------------------    -----------------
                                  October 2, October 3, October 2, October 3,
                                      2009      2008      2009      2008
                                     -------   -------   -------   -------
    TOTAL COMPANY (Continued)
    -------------------------
    Operating Earnings
      U.S. GAAP as reported     $5,104    $32,859    $58,983    $101,463
      Adjustments:
        Acquisition-related
         in-process research
         and development charges     -        215          -       1,703
        Acquisition-related
         intangible amortization 1,744      2,249      7,235       8,372
        Acquisition-related
         inventory write-up
         amortization               72        172        131       1,408
        Costs related to
         pending acquisition
         by Agilent              9,155          -      9,155           -
        Restructuring and
         other related costs       364      1,240      9,672       5,476
                               -------    -------    -------    --------
      As adjusted              $16,439    $36,735    $85,176    $118,422
                               =======    =======    =======    ========

    Operating Margins
      U.S. GAAP as reported        2.6  %    11.6  %     7.3  %     10.0  %
      Adjustments:
        Acquisition-related
         in-process research
         and development charges     -        0.1          -         0.2
        Acquisition-related
         intangible amortization   0.9        0.8        1.0         0.9
        Acquisition-related
         inventory write-up
         amortization              0.0        0.1        0.0         0.1
        Costs related to
         pending acquisition
         by Agilent                4.7          -        1.1           -
        Restructuring and other
         related costs             0.2        0.4        1.2         0.5
                                   ---        ---        ---         ---
      As adjusted                  8.4  %    13.0  %    10.6  %     11.7  %
                                   ===       ====       ====        ====

    Impairment of Private
     Company Equity
     Investment
      U.S. GAAP as reported    $     -    $     -    $      -     $3,018
      Adjustments:
        Impairment of
         private company
         equity investment           -          -           -     (3,018)
                                   ---        ---         ---      ------
      As adjusted              $     -    $     -    $      -     $    -
                                   ===        ===         ===        ===


    Income Tax Expense
      U.S. GAAP as reported     $3,144    $13,142    $20,527     $37,605
    Adjustments:
      Tax impact of
       adjustments:
        Acquisition-related
         intangible
         amortization              527        723      2,310       2,755
        Acquisition-related
         inventory write-up
         amortization               20         75         37         485
        Costs related to
         pending acquisition
         by Agilent              1,045          -      1,045           -
        Impairment of
         private company
         equity investment           -          -          -       1,147
        Restructuring and
         other related costs       155        477      3,375       2,015
                                ------    -------    -------     -------
    As adjusted                 $4,891    $14,417    $27,294     $44,007
                                ======    =======    =======     =======


                    VARIAN, INC. AND SUBSIDIARY COMPANIES
            RECONCILIATION OF GAAP TO ADJUSTED RESULTS - ACTUAL
                        UNAUDITED RESULTS OF OPERATIONS
                       (In thousands, except margin data)
                Fourth Quarter FY 2009 and Fourth Quarter FY 2008
                                       and
                    Full Year FY 2009 and Full Year FY 2008

                                   Fiscal Quarter Ended  Fiscal Year Ended
                                   --------------------  -----------------
                                  October 2, October 3, October 2, October 3,
                                      2009      2008      2009      2008
                                     -------   -------   -------   -------
    SCIENTIFIC
     INSTRUMENTS SEGMENT
    --------------------

    Operating Earnings
      U.S. GAAP as reported          $ 9,041   $26,191   $53,890   $80,700
      Adjustments:
        Acquisition-related in-
         process research and
         development charges               -       215         -     1,703
        Acquisition-related
         intangible amortization       1,744     2,249     7,235     8,372
        Acquisition-related
         inventory write-
         up amortization                  72       172       131     1,408
        Costs related to
         pending acquisition
         by Agilent                    2,157         -     2,157         -
        Restructuring and
         other related costs             304     1,240     8,871     5,476
                                     -------   -------   -------   -------
      As adjusted                    $13,318   $30,067   $72,284   $97,659
                                     =======   =======   =======   =======

    Operating Margins
      U.S. GAAP as reported              5.5 %    11.1 %     8.0 %     9.6 %
      Adjustments:
        Acquisition-related in-
         process research and
         development charges               -       0.1         -       0.2
        Acquisition-related
         intangible amortization         1.1       0.9       1.1       0.9
        Acquisition-related
         inventory write-
         up amortization                 0.0       0.1       0.0       0.2
        Costs related to
         pending acquisition
         by Agilent                      1.3         -       0.3         -
        Restructuring and
         other related costs             0.2       0.5       1.3       0.7
                                     -------   -------   -------   -------
      As adjusted                        8.1 %    12.7 %    10.7 %    11.6 %
                                     =======   =======   =======   =======

    VACUUM TECHNOLOGIES
     SEGMENT
    -------------------

    Operating Earnings
      U.S. GAAP as reported          $ 6,432   $10,123   $25,665   $34,384
      Adjustments:
        Restructuring and
         other related costs              60         -       802         -
                                     -------   -------   -------   -------
      As adjusted                    $ 6,492   $10,123   $26,467   $34,384
                                     =======   =======   =======   =======

    Operating Margins
      U.S. GAAP as reported             20.3 %    22.0 %    19.5 %    19.8 %
      Adjustments:
        Restructuring and
         other related costs             0.2         -       0.6         -
                                     -------   -------   -------   -------
      As adjusted                       20.5 %    22.0 %    20.1 %    19.8 %
                                     =======   =======   =======   =======

    GENERAL (UNALLOCATED)
     CORPORATE
    ---------------------
    Operating Earnings
      U.S. GAAP as reported         $(10,369)  $(3,455) $(20,572) $(13,621)
      Adjustments:
        Costs related to
         pending acquisition
         by Agilent                    6,998         -     6,998         -
                                     -------   -------   -------   -------
      As adjusted                   $ (3,371)  $(3,455) $(13,574) $(13,621)
                                     =======   =======  ========  ========
    For Information Contact:
    Investor Relations
    Varian, Inc.
    650.424.5471
    ir@varianinc.com

SOURCE Varian, Inc.



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