Focusing Energy on Saving Lives - corporate-ir.net

Focusing Energy on Saving Lives

Year End ReviewInvestor Relations MeetingASTROOct. 30, 2007

ASTRO IR Day & FY2007 Year-End Review

Tim GuertinPresident and CEOASTRO IR DayOct. 30, 2007

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.

VARIAN MEDICAL SYSTEMS | A partner for life

Strategic Goals

Sustained profitable growthTechnical and clinical preeminenceSafety, integrity, and complianceTalented, productive, and inspired workforce



Best medicineBest-in-class capabilitiesClinical outcomes Patient comfort

Preeminence



Best economicsVersatilityThroughputAffordability

Preeminence



Best economicsVersatilityThroughputAffordability

Greatest ease-of-useReliability and serviceIntegration and automationTraining and Education

Preeminence


The Program

Profitable GrowthElisha Finney

X-Ray ProductsRobert Kluge

SecurityLester Boeh

Oncology SystemsDow Wilson

Booth Tour

ASTRO IR Day

Financial Performance

Elisha FinneySr. VP and CFO


($M) VMS OS XRP Other

Net Orders 2,075 14% 1,636 7% 273 13% 166 292%

Revenues 1,777 11% 1,440 8% 257 13% 79 135%

Gross Margin 41% 42% 40% 28%

R&D 117

SG&A 282

Op Earnings 335 19% ROS (+ 8%)

Interest Income 7EPS $1.83 (131M diluted shares)

Fiscal Year 2007 Results

GAAP to Non-GAAP ReconciliationEPS FY 2007 & FY 2006

(1) Represents fiscal year 2007 revenues and expenses associated with ACCEL Instruments GmbH and Bio-Imaging Research, Inc., which were acquired in fiscal year 2007.

(2) Represents fiscal year 2006 one-time tax benefits from the repatriation of foreign earnings under the Job Creations Act of 2004and a deferred tax asset adjustment and an amount related to the release of a reserve for certain contingencies with the saleof the Company’s Electron Device Business in 1995.

Q4 07 Q4 06%

Change FY 07 FY 06%

Change

EPS $0.61 $0.62 -- $1.83 $1.81 --

ACCEL/BIR (1) $0.02 -- -- $0.06 -- --

Tax/Disc Ops (2) -- ($0.08) -- -- ($0.16) --

Proforma EPS $0.63 $0.54 17.0% $1.89 $1.65 15.0%



Backlog Record $1,699M(As of 09/28/07)

0

200

400

600

800

1000

1200

1400

1600

1800

FY 2004 FY 2005 FY 2006 FY 2007

Q1Q2Q3Q4


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


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.

X-Ray Products

Robert KlugePresident, X-Ray ProductsASTRO IR Day Oct. 30, 2007


X-ray Tubes

Flat-panel digital X-rayimage detectors

Varian X-ray Products


Third year of double-digit sales growth (13%)• Continued growth of panel business• Solid growth in high-tier CT tubes

X-Ray Products Highlights



FY08/09 New Product Introductions• 14x17 and 17x17 Radiographic• 30x30 Fluoro• Mammo




FY08/09 New Product Introductions• 14x17 and 17x17 Radiographic• 30x30 Fluoro• Mammo

Salt Lake City factory expansioncompleteddpiX joint venture fab expansionin process



Transition to digital imaging• Imaging panels rapidly

replacing image intensifiers

• DR and CR imagingpanels replacing film

• DR will replace CR asDR costs drop

Digital imaging impactingX-ray Tube requirements

• Higher power in a smaller package

Growth Drivers

Estimated World FPD Market(Wholesale Value)

Market Overview

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$M

FY05 FY06 FY07 FY08 FY09 FY10 FY11

Mammo

Fluoro / Dental

RAD

CR



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

X-Ray Products Summary


Focusing Energy on Safer Ports and BordersLester Boeh

VP, Emerging Businesses

Security & Inspection Products


SIP Growth Drivers

FY-07Net orders up 105%Revenues up 70%EBIT up 10 pointsBorder security growingGrowth in all regionsInnovation in NDT


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


Varian IntellX Container Inspection


Sample Images

Quick Identification

Density Evaluation


Automatic Detection


Security & Inspection Opportunity

$0

$50

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FY07 FY08 FY09 FY10 FY11

NDT Port & Border Air Cargo

Millions


New Directions in Cancer Care

Dow WilsonPresident , Oncology SystemsASTRO IR DayOct. 30, 2007

Oncology Systems

Technology for more effective cancer therapies



Today’s Oncology Agenda

• Brief 2007 Recap• ASTRO Overview…RapidArc Launch


Oncology Orders, 2007


International $673M $731M 8.5%

Domestic $862M $905M 5.1%

Total $1,535M $1,636M 6.6%

2006 2007 V%

Orders Growth = $101M


Tale of Two Halves


1.7%

10.6%

Orders 1H’07 Orders 2H’07

$691 $703

2006 2007

$844

$933

2006 2007

$ in Millions


Q4 2007 Orders

International $170M -4.2% $214M 26.6%

Domestic $300M 25.1% $308M 2.5%

Total $470M 12.7% $522M 11.2%

Q4’06 V% Q4’07 V%


Strong in all geographies


Installation Times

New Systems Upgrades

10

5

2006 IGRT 2007 IGRT

15

5

2006 OBI Upg 2007 OBI Upg

clinical days

clinical days


weeks

weeks

Driving predictability & uptick in upgrades


ASTRO Launches

Novalis Tx Brachytherapy Software

AND…


One revolution is all it takes.



Single Arc IMRT


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


Treat in 2 Minutes or Less

• ~ 600 MU/ 2Gy• Variable gantry

speed• Variable dose rate• Inter-digitating MLC• Dynamic MLC


RapidArc Efficiency – Head & Neck

RapidArc IMRT Conventional 7-field IMRT

1685 MU~ 12-15 minutes delivery time

496 MU~ 70 seconds delivery time


RapidArc Low Dose Area Improvement

RapidArcSingle arc IMRT


Conventional7-field IMRT

Conventional7-field IMRT 1685 MU1685 MU496 MU496 MU




Conventional7-field IMRT

Conventional7-field IMRT 1685 MU1685 MU496 MU496 MU

RapidArc Low Dose Area Improvement


Improved Critical Structure Sparing

RapidArc (solid)RapidArc (solid) IMRT (dashed)IMRT (dashed)

PTV 1PTV 1PTV 2PTV 2

BrainstemBrainstem

CordCordLt ParotidLt Parotid

Rt ParotidRt ParotidRt SMGRt SMG

LarynxLarynxMandibleMandible


RapidArc Efficiency -- Prostate


915 MU~ 6 minutes

603 MU~ 70 seconds






RapidArc – Hypofractionated Spine


3072 MU~ 20 minutes

2174 MU~ 4 minutes


IMRT Quality



IMRT Quality


RapidArc Advantages

< 2 minute treatmentsEnhance patient comfortMore throughput

< 600 MU / 2 GyLow out of field doseLow leakage and scatter

Full volume treatment~ 25 x 40 cm2 cylinder

No compromiseKeep static fieldsKeep non-coplanarKeep electronsKeep motion managementUse kV IGRTSimple Planning


Tomotherapy Inc.Helical Arcs

RapidArc ComparisonVarian Medical Systems

RapidArcNumber of projections 180

Helical pitch 1

Treatment Time <2 minutes

180

Volumetric

MLC type Continuous

5 mm

YesAperture

Effective # projections

Slice thickness (cm)

Leaf width (@ iso.)

Dose rate modulationOptimization

Number of projections 51

Helical pitch ~0.33

Treatment Time ~ 15-18 minutes

Effective # projections 51/0.33 = 153

Slice thickness (cm) 5.0, 2.5, 1.0

MLC type Binary

Leaf width (@ iso.) 6.25 mm

Dose rate modulation NoOptimization Fluence


Elekta IMAT

RapidArc ComparisonVarian Medical Systems

RapidArcNumber of arcs 1

Treatment time 2-3 min

Monitor units / 2 Gy 500-700 MU

180

Yes

Leaf width (@ iso.) 5 mm

YesAperture

Effective projections

MLC Interdigitation

Dose rate modulationOptimization

Number of arcs 3-10

Treatment time 4-15 min

Monitor units / 2 Gy 1000-4000 MU

Effective projections 36-180

MLC Interdigitation No

Leaf width (@ iso.) 10 mm

Dose rate modulation NoOptimization Aperture


RapidArc Summary

• Treat in 2 minutes or less

• Single arc IMRT • Uniform target coverage• Improved normal tissue

sparing• Reduced peripheral dose• Simple planning


One revolution is all it takes.


Thank You

Year End ReviewInvestor Relations MeetingASTROOct. 30, 2007

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Focusing Energy on Saving Lives - corporate-ir.net