Varian Medical Systems Expects 12 Percent Net Orders Growth for Second Quarter Fiscal 2007 with Softness in Oncology Systems and Strength in All Other Businesses

Varian Medical Systems (NYSE: VAR) today announced that it expects to report that total net orders in the second quarter of fiscal year 2007, including orders generated in the quarter by the newly acquired ACCEL Instruments business, grew by 12 percent over the year-ago quarter to about $480 million with 2 percent growth in Oncology Systems and strong growth in all other businesses.

"For the second quarter Oncology Systems should have 19 percent growth in international orders and a 10 percent decline in North America -- an unpredicted reversal of what occurred in the first quarter when we had strong North American business and delays in international orders," said Tim Guertin, president and CEO of Varian Medical Systems. "We are experiencing greater variability in the length of our sales cycles caused by bigger deal sizes for more sophisticated equipment and more complex customer decision processes."

Compared to the second quarter of last year, net orders for the company's security and inspection business are expected to rise by more than 225 percent, and Varian's X-Ray Products business should have an estimated 16 percent increase in net orders, driven largely by demand for flat panel image detectors for filmless X-ray imaging. The company expects to report $22 million in net orders in the quarter for proton therapy and instrumentation products received subsequent to the ACCEL acquisition. Including consolidation of approximately $47 million in acquired backlog from ACCEL, the company estimates total orders for the second quarter should increase 23 percent and the quarter-ending backlog should increase 19 percent from the year ago period.

Second quarter revenues, including those from ACCEL, should increase by about 7 percent. "Excluding ACCEL, revenues for the quarter were a couple of percentage points weaker than expected due in part to construction delays at Oncology Systems customer sites," Guertin said. "While we are disappointed at the slowness in Oncology Systems for the first half of the fiscal year, it is gratifying to see how much growth these emerging businesses can contribute to our company. We remain confident in our long-term prospects, and we believe we can sustain 10 to 15 percent long-term growth for the company with contributions from our emerging businesses," Guertin said.

"Earnings per diluted share for the second quarter should be slightly ahead of previous guidance," Guertin said. The results provided in this release are preliminary numbers and the company will provide more detailed information on Wednesday, April 25 when it reports the full results for the quarter.