Part I. Financial Information [Unaudited Financial Statements](index=2&type=section&id=Item%201.%20Unaudited%20Financial%20Statements) The unaudited financial statements for Q1 2021 show a year-over-year revenue decline and increased net loss, with stable assets but decreased operating cash flow [Condensed Consolidated Statements of Operations](index=2&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q1 2021, Varex reported decreased revenues and gross profit, with increased interest expense leading to a larger net loss Consolidated Statement of Operations Highlights (Unaudited) | (In millions, except per share data) | Three Months Ended Jan 1, 2021 | Three Months Ended Jan 3, 2020 | | :--- | :--- | :--- | | **Revenues, net** | **$177.1** | **$200.1** | | Gross profit | $57.2 | $61.1 | | Operating earnings | $6.1 | $4.6 | | Interest expense | $(10.3) | $(5.4) | | Loss before taxes | $(4.7) | $(1.2) | | **Net loss attributable to Varex** | **$(6.4)** | **$(1.3)** | | **Diluted net loss per share** | **$(0.16)** | **$(0.03)** | [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of January 1, 2021, total assets were $1.137 billion, slightly down from fiscal 2020, with stable cash and significant long-term debt Condensed Consolidated Balance Sheet Highlights (Unaudited) | (In millions) | January 1, 2021 | October 2, 2020 | | :--- | :--- | :--- | | **Current Assets** | | | | Cash and cash equivalents | $105.5 | $100.6 | | Accounts receivable, net | $121.0 | $123.8 | | Inventories | $269.8 | $271.9 | | **Total Assets** | **$1,137.1** | **$1,139.5** | | **Current Liabilities** | $152.5 | $160.6 | | **Long-term debt, net** | **$457.5** | **$452.8** | | **Total Liabilities** | **$672.7** | **$673.7** | | **Total Stockholders' Equity** | **$464.4** | **$465.8** | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly decreased to $7.1 million in Q1 2021, primarily due to working capital changes, resulting in a net cash increase of $4.9 million Consolidated Statement of Cash Flows Highlights (Unaudited) | (In millions) | Three Months Ended Jan 1, 2021 | Three Months Ended Jan 3, 2020 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$7.1** | **$23.0** | | Net cash used in investing activities | $(4.4) | $(10.6) | | Net cash provided by (used in) financing activities | $2.2 | $(12.0) | | **Net increase in cash and cash equivalents** | **$4.9** | **$0.1** | [Notes to the Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed information on accounting policies, revenue recognition, segment performance, and debt structure, including geographic and segment revenue breakdowns * The company operates in two reportable segments: **Medical** and **Industrial**, designing and manufacturing X-ray tubes, digital detectors, and components for medical imaging, security, inspection, and non-destructive testing applications[22](index=22&type=chunk)[23](index=23&type=chunk)[26](index=26&type=chunk) * **Canon Medical Systems Corporation** is a significant customer, accounting for **16.6% of revenues** in Q1 2021 and **18.8%** in Q1 2020[33](index=33&type=chunk) Revenue by Geographic Region (in millions) | Region | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Americas | $62.3 | $70.3 | | EMEA | $57.9 | $65.2 | | APAC | $56.9 | $64.6 | | **Total** | **$177.1** | **$200.1** | Segment Performance (in millions) | Segment | Q1 2021 Revenue | Q1 2020 Revenue | Q1 2021 Gross Profit | Q1 2020 Gross Profit | | :--- | :--- | :--- | :--- | :--- | | Medical | $139.2 | $155.6 | $44.1 | $43.8 | | Industrial | $37.9 | $44.5 | $13.1 | $17.3 | | **Total** | **$177.1** | **$200.1** | **$57.2** | **$61.1** | * Total debt outstanding, net of unamortized costs, was **$460.1 million** as of January 1, 2021, including **$200.0 million** of 4.0% Convertible Senior Unsecured Notes due 2025 and **$300.0 million** of 7.9% Senior Secured Notes due 2027[87](index=87&type=chunk)[88](index=88&type=chunk)[92](index=92&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 11.5% revenue decline to the COVID-19 pandemic and an extra week in the prior year, while gross margin improved due to cost reductions despite increased interest expense * The **COVID-19 pandemic** has caused disruptions, including reduced customer demand, delays in equipment installations, and supply chain challenges, with uncertainty expected to continue into mid-calendar year 2021[122](index=122&type=chunk)[124](index=124&type=chunk)[127](index=127&type=chunk) Revenues by Segment (in millions) | Segment | Q1 2021 | Q1 2020 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Medical | $139.2 | $155.6 | $(16.4) | (10.5)% | | Industrial | $37.9 | $44.5 | $(6.6) | (14.8)% | | **Total** | **$177.1** | **$200.1** | **$(23.0)** | **(11.5)%** | Gross Profit and Margin by Segment | Segment | Q1 2021 Gross Profit (M) | Q1 2020 Gross Profit (M) | Q1 2021 Gross Margin | Q1 2020 Gross Margin | | :--- | :--- | :--- | :--- | :--- | | Medical | $44.1 | $43.8 | 31.7% | 28.1% | | Industrial | $13.1 | $17.3 | 34.6% | 38.9% | | **Total** | **$57.2** | **$61.1** | **32.3%** | **30.5%** | * Research and development expenses decreased by **23.0% to $16.7 million**, primarily due to cost actions and improved material cost management, while selling, general and administrative expenses remained relatively flat at **$34.4 million**[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) * Interest expense nearly doubled to **$10.3 million** from **$5.4 million** in the prior year, mainly due to the issuance of Convertible Notes in June 2020 and Senior Secured Notes in September 2020[148](index=148&type=chunk) * The company believes its operating cash flow, **$105.5 million** cash on hand, and availability under its **$100.0 million ABL Facility** are sufficient to meet operating needs for at least the next 12 months[151](index=151&type=chunk)[152](index=152&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces foreign currency, credit, interest rate, and commodity price risks, managing currency exposure with hedging instruments and monitoring credit risk, with minimal current interest rate risk * The company faces **foreign currency risk** due to significant international sales, which can lead to pricing pressure from a strong U.S. Dollar, partially hedged using derivatives like cross-currency swaps[168](index=168&type=chunk)[169](index=169&type=chunk) * **Interest rate risk** is related to the ABL Facility's floating rates, but there were no borrowings under this facility as of January 1, 2021[172](index=172&type=chunk) * The company is exposed to **commodity price risk** from raw materials such as tungsten, lead, and copper, but did not utilize any commodity derivative instruments during the quarter to manage this exposure[173](index=173&type=chunk) [Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were ineffective as of January 1, 2021, due to ongoing material weaknesses in internal control over financial reporting, for which remediation efforts are underway * The CEO and CFO concluded that **disclosure controls and procedures were not effective** as of January 1, 2021, due to ongoing material weaknesses in internal control over financial reporting[176](index=176&type=chunk) * Remediation efforts for previously identified material weaknesses are underway, including redesigning controls for inventory, enhancing controls over intercompany balances and journal entries, and developing a comprehensive internal finance training program[177](index=177&type=chunk)[178](index=178&type=chunk) * The material weaknesses will not be considered fully remediated until the applicable controls operate effectively for a sufficient period and are validated through testing[180](index=180&type=chunk) Part II. Other Information [Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal actions in the normal course of business but does not anticipate any material adverse effects on its operations or financial position * Varex states that it does not have any pending litigation expected to have a **material adverse effect** on its operations or financial position[182](index=182&type=chunk) [Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including the ongoing impact of COVID-19, reliance on key customers and suppliers, intense competition, regulatory changes, and material weaknesses in internal controls * The **COVID-19 pandemic** has adversely impacted operations, cash flow, and product demand, and these effects could continue[183](index=183&type=chunk)[186](index=186&type=chunk) * The company is heavily reliant on a **limited number of OEM customers**, with one customer accounting for **17% of revenue** in the quarter and the top ten customers accounting for **51%**[189](index=189&type=chunk) * Changes in **import/export regulations and tariffs**, particularly between the U.S. and China, have negatively impacted the business by increasing costs and causing some customers to reduce purchases[250](index=250&type=chunk)[251](index=251&type=chunk) * The company has identified **material weaknesses in its internal control over financial reporting**, which, if not remediated, could result in a loss of investor confidence[292](index=292&type=chunk) * Varex has **significant debt obligations** of approximately **$513.8 million** that could adversely affect its business and flexibility, including Convertible Notes and Senior Secured Notes[293](index=293&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=59&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds reported during the period * The company reported **no unregistered sales of equity securities** or use of proceeds during the quarter[329](index=329&type=chunk) [Defaults Upon Senior Securities](index=60&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities reported during the period * The company reported **no defaults upon senior securities**[330](index=330&type=chunk) [Mine Safety Disclosures](index=60&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations * Mine safety disclosures are **not applicable** to Varex[331](index=331&type=chunk) [Other Information](index=60&type=section&id=Item%205.%20Other%20Information) No other information was reported for the period * The company reported **no other information** for the quarter[332](index=332&type=chunk) [Exhibits](index=61&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files * The exhibits filed with the report include **CEO and CFO certifications** (Exhibits 31.1, 31.2, 32.1, 32.2) and **interactive data files (XBRL)**[333](index=333&type=chunk)

Part I [Business](index=7&type=section&id=Item%201.%20Business) Varex manufactures X-ray imaging components for medical and industrial OEMs, with FY20 results impacted by COVID-19 and a concentrated customer base - Varex is a leading designer and manufacturer of X-ray imaging components for medical, industrial, and security applications, serving global Original Equipment Manufacturers (OEMs)[20](index=20&type=chunk) - The business is organized into two reportable segments: **Medical and Industrial**, with the Medical segment serving applications like CT and mammography, and the Industrial segment serving security and non-destructive testing markets[29](index=29&type=chunk)[30](index=30&type=chunk)[38](index=38&type=chunk) - The COVID-19 pandemic negatively impacted the business, leading to lower customer demand, supply chain disruptions, and a **$15.8 million pre-tax charge** for inventory write-downs and restructuring in Q3 2020[24](index=24&type=chunk) - The company has a high customer concentration, with the top five customers accounting for approximately **40% of total revenue** in fiscal year 2020, and Canon Medical Systems representing about **21% of total revenue**[42](index=42&type=chunk) - To mitigate the impact of US-China trade tariffs and be closer to its customer base, Varex is expanding its manufacturing capabilities and implementing local sourcing strategies in China, Germany, and the Philippines[37](index=37&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) The company faces material risks from the COVID-19 pandemic, high customer concentration, significant debt, and material weaknesses in internal controls - The COVID-19 pandemic has adversely affected operations, cash flow, and financial position due to decreased product demand and disruptions in manufacturing and supply chains[103](index=103&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk) - Varex has a high dependency on a limited number of OEM customers, with one customer accounting for **21% of revenue** in FY2020 and the top ten accounting for **52%**[106](index=106&type=chunk)[107](index=107&type=chunk) - The company has identified **material weaknesses in its internal control** over financial reporting related to its risk assessment process, control environment, inventory, and financial reporting, which could result in a loss of investor confidence[212](index=212&type=chunk) - Significant debt obligations of approximately **$511.3 million** could adversely affect the business, and the associated credit facilities impose significant operating and financial restrictions[213](index=213&type=chunk)[219](index=219&type=chunk) - Changes in import/export regulations and tariffs, particularly between the U.S. and China, have negatively impacted the business by increasing costs and causing some customers to reduce purchases[167](index=167&type=chunk)[168](index=168&type=chunk)[170](index=170&type=chunk) [Unresolved Staff Comments](index=63&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - None[243](index=243&type=chunk) [Properties](index=63&type=section&id=Item%202.%20Properties) Varex's primary owned facility is in Salt Lake City, Utah, and the company owns or leases 34 other facilities globally totaling over 2 million square feet - The company's main property is an owned facility in Salt Lake City, Utah, with approximately **494,000 square feet** of space on 37 acres, used for manufacturing, administration, and R&D[244](index=244&type=chunk) - Varex owns or leases 34 other facilities globally, including primary owned sites in Las Vegas, Nevada, and Franklin Park, Illinois, and primary leased facilities in the Philippines, China, and Germany[244](index=244&type=chunk)[245](index=245&type=chunk)[246](index=246&type=chunk) [Legal Proceedings](index=65&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently involved in any litigation expected to have a material adverse effect on its financial position or operations - Varex is subject to various claims in the normal course of business but does not believe any currently pending litigation will have a material adverse effect[247](index=247&type=chunk) [Mine Safety Disclosures](index=65&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[247](index=247&type=chunk) Part II [Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=66&type=section&id=Item%205.%20Market%20for%20the%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Varex's common stock trades on NASDAQ under 'VREX', and the company has no current plans to pay cash dividends - The company's common stock is traded on the NASDAQ under the symbol **'VREX'**[249](index=249&type=chunk) - Varex has never paid cash dividends and does not plan to in the near future[249](index=249&type=chunk) [Selected Financial Data](index=67&type=section&id=Item%206.%20Selected%20Financial%20Data) The company presents five years of financial data, showing a revenue decline and a significant net loss of $57.9 million in fiscal year 2020 Five-Year Financial Summary | Fiscal Year | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $738.3M | $780.6M | $773.4M | $698.1M | $620.1M | | **Gross Profit** | $190.2M | $256.7M | $253.9M | $253.5M | $248.4M | | **Net (Loss) Earnings Attributable to Varex** | $(57.9)M | $15.5M | $27.5M | $51.6M | $68.5M | | **Diluted (Loss) Earnings Per Share** | $(1.49) | $0.40 | $0.72 | $1.36 | $1.82 | | **Total Assets** | $1,139.5M | $1,038.9M | $987.9M | $1,040.1M | $622.4M | | **Total Debt (long-term)** | $452.8M | $364.4M | $364.8M | $463.9M | $0M | Fiscal Year 2020 Quarterly Results | Quarter (FY 2020) | Q1 | Q2 | Q3 | Q4 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $200.1M | $197.0M | $171.2M | $170.0M | | **Gross Profit** | $61.1M | $57.6M | $26.3M | $45.2M | | **Net Loss Attributable to Varex** | $(1.3)M | $(1.9)M | $(28.3)M | $(26.4)M | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=69&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) FY20 revenues decreased 5% due to COVID-19, gross margin fell to 26%, and the company reported a net loss while undertaking significant debt refinancing Results of Operations | Metric | FY 2020 | FY 2019 | % Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | $738.3M | $780.6M | (5)% | | Medical Revenues | $584.5M | $596.8M | (2)% | | Industrial Revenues | $153.8M | $183.8M | (16)% | | **Gross Profit** | $190.2M | $256.7M | (26)% | | Gross Margin | 26% | 33% | -7 p.p. | | **Operating (Loss) Earnings** | $(33.7)M | $45.7M | N/A | - The decrease in gross margin was primarily due to **$22.2 million of restructuring** and product discontinuation charges, higher manufacturing costs, and an unfavorable product mix[288](index=288&type=chunk) Cash Flow Summary | Cash Flow Activity (in millions) | FY 2020 | FY 2019 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $13.2 | $71.9 | | **Net cash used in investing activities** | $(26.9) | $(93.2) | | **Net cash provided by financing activities** | $83.6 | $(0.1) | - The company significantly altered its capital structure by issuing **$200.0 million in Convertible Notes** and **$300.0 million in Senior Secured Notes**, using the proceeds to terminate and repay its previous credit agreement[304](index=304&type=chunk)[305](index=305&type=chunk) - Total order backlog decreased by **21.7%** from $265.2 million at the end of FY 2019 to **$207.6 million** at the end of FY 2020[328](index=328&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=82&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to market risks including foreign currency, credit, interest rate, and commodity price volatility, and uses derivatives to hedge - Primary market risks are identified as **foreign currency exchange rate risk**, credit and counterparty risk, interest rate risk, and commodity price risk[331](index=331&type=chunk) - The company uses foreign currency forward and option contracts to hedge against exchange rate risks associated with assets, liabilities, and net investments in foreign subsidiaries[333](index=333&type=chunk) [Financial Statements and Supplementary Data](index=83&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The report includes audited financial statements for FY2018-2020, with an unqualified opinion on financials but an adverse opinion on internal controls [Report of Independent Registered Public Accounting Firm](index=95&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The auditor issued an unqualified opinion on financial statements but an adverse opinion on internal controls due to identified material weaknesses - The auditor, PricewaterhouseCoopers LLP, concluded that the company **did not maintain effective internal control** over financial reporting as of October 2, 2020[382](index=382&type=chunk) - **Material weaknesses** were identified in: (i) the control environment due to insufficient resources, (ii) the risk assessment process, (iii) controls for inventory accounting, and (iv) controls over the financial reporting close process[382](index=382&type=chunk)[383](index=383&type=chunk) [Consolidated Financial Statements](index=98&type=section&id=Consolidated%20Financial%20Statements) FY20 results show a net loss of $57.9 million on $738.3 million in revenue, with total assets of $1.14 billion and equity of $465.8 million Consolidated Statements of Operations | (In millions) | FY 2020 | FY 2019 | FY 2018 | | :--- | :--- | :--- | :--- | | **Revenues, net** | $738.3 | $780.6 | $773.4 | | **Gross profit** | $190.2 | $256.7 | $253.9 | | **Operating (loss) earnings** | $(33.7) | $45.7 | $44.5 | | **Net (loss) earnings attributable to Varex** | $(57.9) | $15.5 | $27.5 | Consolidated Balance Sheets | (In millions) | Oct 2, 2020 | Sep 27, 2019 | | :--- | :--- | :--- | | **Total current assets** | $522.0 | $438.4 | | **Total assets** | $1,139.5 | $1,038.9 | | **Total current liabilities** | $160.6 | $175.1 | | **Total liabilities** | $673.7 | $580.2 | | **Total stockholders' equity** | $465.8 | $448.2 | [Notes to Consolidated Financial Statements](index=104&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail the adoption of a new lease standard, a 2019 acquisition, significant 2020 debt refinancing, and an impairment charge for R&D - The company adopted the new lease standard ASC 842 in fiscal year 2020, resulting in the recognition of operating lease right-of-use assets of **$26.8 million** and lease liabilities of **$27.5 million** upon transition[471](index=471&type=chunk)[473](index=473&type=chunk) - In April 2019, Varex acquired 98.2% of Direct Conversion AB for **$69.5 million in cash**, assumption of debt, and deferred consideration, adding **$47.2 million in goodwill** and **$32.9 million in intangible assets**[490](index=490&type=chunk)[492](index=492&type=chunk) - In June 2020, the company issued **$200.0 million of 4.00% convertible senior unsecured notes** due 2025, and in September 2020, it issued **$300.0 million of 7.875% senior secured notes** due 2027[523](index=523&type=chunk)[537](index=537&type=chunk)[545](index=545&type=chunk) - Due to COVID-19 impacts, an interim impairment test was performed in Q3 2020, and while no goodwill impairment was found, a **$2.8 million impairment charge** was recorded for in-process R&D intangible assets[556](index=556&type=chunk)[558](index=558&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=83&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[340](index=340&type=chunk) [Controls and Procedures](index=83&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were not effective as of October 2, 2020 - Management concluded that disclosure controls and procedures were **not effective** as of October 2, 2020, due to material weaknesses in internal control over financial reporting[342](index=342&type=chunk) - Management's assessment concluded that internal control over financial reporting was **not effective** as of October 2, 2020[345](index=345&type=chunk) - **Material weaknesses** were identified in the Control Environment, Risk Assessment, Inventory and cost of revenues, and the Financial Reporting close process[347](index=347&type=chunk)[350](index=350&type=chunk) - The company has substantially completed remediation for material weaknesses reported in the prior fiscal year (FY 2019) related to revenue, certain inventory controls, and aspects of the financial close process[349](index=349&type=chunk)[352](index=352&type=chunk) [Other Information](index=87&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[354](index=354&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=88&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors and corporate governance is incorporated by reference from the company's 2021 proxy statement - Information required by this item is incorporated by reference from the definitive proxy statement for the 2021 Annual Meeting of Stockholders[357](index=357&type=chunk) [Executive Compensation](index=88&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's 2021 proxy statement - Information required by this item is incorporated by reference from the definitive proxy statement for the 2021 Annual Meeting of Stockholders[360](index=360&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=88&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section provides details on equity compensation plans, with other ownership information incorporated by reference from the 2021 proxy statement Equity Compensation Plan Information | Plan Category | Securities to be issued upon exercise (thousands) | Weighted-average exercise price | Securities remaining for future issuance (thousands) | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 3,677 | $29.23 | 5,328 | | Equity compensation plans not approved by security holders | — | — | — | | **Total** | **3,677** | **$29.23** | **5,328** | - Information regarding security ownership of certain beneficial owners and management is incorporated by reference from the definitive proxy statement[363](index=363&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=89&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related party transactions and director independence is incorporated by reference from the 2021 proxy statement - Information required by this item is incorporated by reference from the definitive proxy statement for the 2021 Annual Meeting of Stockholders[364](index=364&type=chunk) [Principal Accountant Fees and Services](index=89&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's 2021 proxy statement - Information required by this item is incorporated by reference from the definitive proxy statement for the 2021 Annual Meeting of Stockholders[365](index=365&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=90&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the consolidated financial statements and all exhibits filed as part of the annual report - This item lists the consolidated financial statements and exhibits filed with the Form 10-K[367](index=367&type=chunk)[368](index=368&type=chunk) [Form 10-K Summary](index=92&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no Form 10-K summary - None[372](index=372&type=chunk)

Financial Data and Key Metrics Changes - In Q4 2020, total revenues were $170 million, comparable to Q3 2020, but a 16% decline year-over-year due to COVID impacts [12][26][31] - GAAP gross margin for Q4 was 27%, while non-GAAP gross margin improved to 28%, up two percentage points from Q3 2020 [27][28] - GAAP net loss for Q4 was $26 million or $0.66 per diluted share, compared to a non-GAAP net loss of $2 million or $0.04 per diluted share [31] Business Line Data and Key Metrics Changes - Medical segment revenues in Q4 were $136 million, while Industrial segment revenues were $34 million [25] - Strong sales in the Medical segment were noted for CT tubes, while other medical imaging products continued to decline [14] - Industrial segment sales were down year-over-year, but early signs of recovery were observed in nondestructive testing verticals [21] Market Data and Key Metrics Changes - Q4 revenues were geographically distributed as follows: $64 million in the Americas, $55 million in EMEA, and $51 million in APAC [26] - The China market represented 11% of total revenues in FY 2020, with strong sales of CT systems by local manufacturers [22][23] Company Strategy and Development Direction - The company aims to accelerate organic growth and improve operating margins through operational transformation, referred to as Varex 2.0 [43][44] - Focus on innovation with investments in R&D, particularly in Photon counting detectors and Nanotube x-ray sources [45] - A new capital structure has been established to enhance liquidity and flexibility [10][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in future growth as the economy recovers from COVID impacts, with expectations for increased demand for X-ray imaging equipment [43][44] - The company is shifting to quarterly guidance to better reflect business performance in the current uncertain environment [41] Other Important Information - The company completed the closure of its Santa Clara facility ahead of schedule, expected to yield $28 million in annual cost savings [10][37] - Cash flow from operations was negative $12 million for Q4 but positive $13 million for the full fiscal year [33] Q&A Session Summary Question: Trends in Industrial business amid COVID resurgence - Management noted that the Industrial business is recovering at different rates across various verticals, with strength in electronics and battery inspection [50][53] Question: Status of the China market - Management confirmed that the China market has returned to pre-COVID levels, with ongoing investments in healthcare [54][55] Question: Operating expenses and guidance for Q1 - Management indicated a reduction in operating expenses to $44 million to $45 million for Q1, down from $48 million in Q4 [58] Question: Revenue guidance range for Q1 - The company provided a revenue guidance range of $160 million to $180 million for Q1, reflecting uncertainties due to COVID [42][62] Question: Nanotube technology commercialization timeline - Management expects it will take 2-3 years for the new Nanotube technology to reach the market [100] Question: Cash flow expectations for next year - Management anticipates being cash flow breakeven after the next quarter, contingent on cost reductions and recovery [102]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________________ FORM 10-Q ____________________________________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 3, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-37860 _____________ ...

Varex Imaging Corporation (NASDAQ:VREX) Q3 2020 Earnings Conference Call August 12, 2020 5:00 PM ET Company Representatives Sunny Sanyal - President, Chief Executive Officer Sam Maheshwari - Chief Financial Officer Clarence Verhoef - Retiring Chief Financial Officer Howard Goldman - Director of Investor Relations Conference Call Participants Larry Solow - CJS Securities Anthony Petrone - Jefferies Suraj Kalia - Northland Security Jim Sidoti - Sidoti & Company Mark Strouse - JP Morgan Operator Greetings! And ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________________ FORM 10-Q ____________________________________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 3, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-37860 ____________ ...

Varex Imaging Corporation (NASDAQ:VREX) Q2 2020 Earnings Conference Call May 12, 2020 5:00 PM ET Company Representatives Sunny Sanyal - President, Chief Executive Officer Clarence Verhoef - Chief Financial Officer Howard Goldman - Director of Investor Relations Conference Call Participants Anthony Petrone - Jefferies Larry Solow - CJS Securities Suraj Kalia - Oppenheimer Mark Strouse - JP Morgan Jim Sidoti - Sidoti & Company Operator Greetings! And welcome to Varex Imaging Corporation, Second Quarter Fiscal ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________________ FORM 10-Q ____________________________________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 3, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-37860 __________ ...

Varex Imaging Corporation (NASDAQ:VREX) Q1 2020 Earnings Conference Call February 11, 2020 5:00 PM ET Company Participants Howard Goldman - Director of IR Sunny Sanyal - President and CEO Clarence Verhoef - CFO Conference Call Participants Anthony Petrone - Jefferies Larry Solow - CJS Securities Suraj Kalia - Oppenheimer Mark Strouse - JP Morgan Jim Sidoti - Sidoti & Co Operator Greetings and welcome to the Varex Imaging Corporation First Quarter Fiscal Year 2020 Conference Call. At this time, all participa ...

Financial Performance - Total revenues for fiscal year 2019 were $780.6 million, a 0.3% increase from $773.4 million in 2018[209]. - Gross margin for fiscal year 2019 was $256.7 million, compared to $253.9 million in 2018, reflecting a slight improvement[209]. - Net earnings attributable to Varex for fiscal year 2019 were $15.5 million, down 43.6% from $27.5 million in 2018[209]. - Basic net earnings per share for fiscal year 2019 were $0.41, a decrease from $0.73 in 2018[209]. - Total assets at the end of fiscal year 2019 were $1,038.9 million, an increase from $987.9 million in 2018[209]. - Working capital decreased to $263.3 million in 2019 from $306.1 million in 2018[209]. Customer and Market Dynamics - Varex's top five customers accounted for approximately 38% of total revenues in fiscal year 2019, with Canon Medical Systems being the largest, contributing about 17%[35]. - Revenues from international customers accounted for approximately 65% of Varex's total revenues during fiscal years 2019, 2018, and 2017[102]. - The market for border protection systems has slowed significantly, impacting customer deployments and tenders, particularly in oil-based economies and war zones[74]. - The demand for Varex's products is affected by government budgets and economic conditions, causing customers to delay purchases[164]. Research and Development - The company employs over 500 engineers and continues to invest in research and development to enhance product performance and innovation[23]. - Research and development efforts focus on improving imaging component technology, including advancements in X-ray source and digital detector technologies[46]. - Varex's success depends on the timely development and commercialization of new products and enhancements[99]. Regulatory Compliance - Compliance with extensive U.S. regulations, including those from the FDA and NRC, is required for the marketing and sale of medical devices, ensuring safety and effectiveness[49]. - The company must adhere to international regulations, including obtaining CE marks for products sold in the EU, which requires compliance with quality management systems[63]. - Varex's manufacturing operations are subject to FDA inspections, and non-compliance could lead to enforcement actions that materially affect its financial results[145]. - The company is subject to environmental laws that impose compliance costs and potential liabilities related to hazardous substances used in manufacturing[188]. Competition and Market Risks - The digital detector market has experienced price erosion, particularly in the competitive radiographic detector segment, which is expected to continue[27]. - Competition from major diagnostic imaging systems companies that manufacture in-house components poses a risk to Varex's sales[92]. - Varex's ability to compete in high-growth markets may be limited compared to competitors with government support[94]. - Increased scrutiny and liability risks are associated with expanding business in higher-risk countries, which may delay market entry and affect operations[71]. Legal and Liability Risks - The company faces potential product liability claims related to the manufacture and sale of X-ray imaging devices, which could result in significant legal costs and damage to reputation[48]. - Varex maintains limited product liability insurance, which may prove inadequate for potential claims, leading to substantial damages that could adversely affect its financial position[175]. - Legal proceedings involving Varex can be lengthy and costly, potentially resulting in significant damages and adverse publicity that could impact its operations[184]. Operational Challenges - Varex's manufacturing operations are concentrated in Salt Lake City, Utah, and disruptions could materially affect its ability to meet customer demand[124]. - The company faces risks from reliance on limited or sole-source suppliers, which could restrict manufacturing capabilities and increase costs[131]. - The inability to match manufacturing capacity with product demand may negatively affect Varex's financial results and overall business[162]. Trade and Economic Factors - The escalation of trade conflicts, particularly between the United States and China, has negatively impacted the company's business[218]. - Tariffs imposed by the United States and China have increased costs and negatively impacted Varex's gross margins on certain products[97]. - Changes in international trade agreements and tariffs could lead to decreased demand for Varex's products[96]. Intellectual Property - The company holds over 290 patents in the United States and over 370 patents globally, with an additional 160 patent applications pending[76]. - Varex's competitive position may be harmed if it cannot maintain its intellectual property rights, leading to increased legal expenses[167]. - Third parties may claim that Varex infringes upon their intellectual property, resulting in significant litigation or licensing expenses[169]. Workforce and Employment - The company employs approximately 2,000 full-time and part-time employees worldwide, with no unionized employees in the U.S.[79]. - Varex's future success depends on its ability to attract and retain qualified personnel, with competition for talent potentially increasing compensation-related costs[185].