What changed in this filing

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Item 1. Financial Statements

2021-08-04 compared with 2021-05-05 · 184 added, 175 removed, 632 unchanged (36% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended Six Months Ended

(In millions, except per share amounts) April 2, 2021 April 3, 2020 April 2, 2021 April 3, 2020

Three Months Ended Nine Months Ended

(In millions, except per share amounts) July 2, 2021 July 3, 2020 July 2, 2021 July 3, 2020

Revenues, net $ 211.2 $ 171.2 $ 591.8 $ 568.3

$ 203.5 $ 197.0 $ 380.6 $ 397.1

Cost of revenues

3 unchanged sentences

Research and development

19.2 19.0 54.1 61.6

Selling, general and administrative

29.2 31.4 94.2 101.5

Impairment of intangible assets

Total operating expenses

48.4 53.1 148.3 165.8

Operating income 15.8 1.4 21.9 6.0

Operating income (loss) 25.7 ( 26.8 ) 47.6 ( 20.8 )

Interest income

1 unchanged sentence

( 10.6 ) ( 6.9 ) ( 31.3 ) ( 16.9 )

Other (expense) income, net ( 2.2 ) 2.0 ( 2.7 ) 1.6

Other income (expense), net 0.2 ( 6.1 ) ( 2.5 ) ( 4.5 )

Interest and other expense, net

1 unchanged sentence

Income (loss) before taxes 15.3 ( 39.8 ) 13.8 ( 42.1 )

Income tax expense — 0.7 1.6 0.7

Income tax expense (benefit) 3.1 ( 11.6 ) 4.7 ( 10.9 )

Net income (loss) 12.2 ( 28.2 ) 9.1 ( 31.2 )

10 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended Six Months Ended

(In millions) April 2, 2021 April 3, 2020 April 2, 2021 April 3, 2020

Three Months Ended Nine Months Ended

(In millions) July 2, 2021 July 3, 2020 July 2, 2021 July 3, 2020

Net income (loss) $ 12.2 $ ( 28.2 ) $ 9.1 $ ( 31.2 )

Other comprehensive (loss) income, net of tax:

Unrealized loss on interest rate swap contracts — ( 2.3 ) — ( 2.3 )

Unrealized gain (loss) on interest rate swap contracts — 0.3 — ( 2.0 )

Foreign currency translation adjustments — ( 3.7 ) ( 0.6 ) 0.6

6 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share amounts) April 2, 2021 October 2, 2020

(In millions, except share and per share amounts) July 2, 2021 October 2, 2020

Current assets:

Cash and cash equivalents $ 128.3 $ 100.6

Accounts receivable, net of allowance for credit losses of $ 0.8 million and $ 0.3 million at April 2, 2021 and October 2, 2020, respectively

Accounts receivable, net of allowance for credit losses of $ 0.8 million and $ 0.3 million at July 2, 2021 and October 2, 2020, respectively

Prepaid expenses and other current assets

25 unchanged sentences

150,000,000 shares authorized

Shares issued and outstanding - 39,300,288 and 39,059,094 at April 2, 2021 and October 2, 2020, respectively.

Shares issued and outstanding - 39,433,708 and 39,059,094 at July 2, 2021 and October 2, 2020, respectively.

Additional paid-in capital 446.1 434.4

1 unchanged sentence

Retained earnings 24.8 16.1

Total Varex equity 454.7 451.7

Total Varex stockholders' equity 471.5 451.7

Noncontrolling interests 13.2 14.1

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

(In millions) April 2, 2021 April 3, 2020

Nine Months Ended

(In millions) July 2, 2021 July 3, 2020

Cash flows from operating activities:

Net loss $ ( 3.1 ) $ ( 3.0 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Net income (loss) $ 9.1 $ ( 31.2 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Share-based compensation expense 10.6 10.2

4 unchanged sentences

Amortization of debt issuance costs and discounts 7.4 2.3

Impairment of assets — 5.4

Inventory write-down 3.5 15.8

13 unchanged sentences

Net cash used in investing activities

( 12.9 ) ( 23.2 )

Cash flows from financing activities:

1 unchanged sentence

Repayments of borrowing under credit agreements ( 2.2 ) ( 218.0 )

Proceeds from issuance of convertible debt — 200.0

Proceeds from issuance of warrants — 49.8

Purchases of hedges — ( 61.0 )

Payment of debt issuance costs — ( 8.5 )

3 unchanged sentences

Other financing activities ( 1.9 ) ( 0.6 )

Net cash used in financing activities ( 1.0 ) ( 12.1 )

Net cash (used in) provided by financing activities

Effects of exchange rate changes on cash and cash equivalents and restricted cash ( 0.1 ) ( 1.0 )

Net increase (decrease) in cash and cash equivalents and restricted cash 10.5 ( 5.7 )

Net increase in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash at beginning of period 102.1 31.3

Cash and cash equivalents and restricted cash at end of period $ 129.8 $ 88.8

$ 112.6 $ 25.6

Supplemental cash flow information:

5 unchanged sentences

VAREX IMAGING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Three Months Ended April 2, 2021

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income Retained Earnings Total Varex Equity Noncontrolling Interests Total Equity

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Three Months Ended July 2, 2021

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income Retained Earnings Total Varex Equity Noncontrolling Interests Total Stockholders' Equity

(In millions) Shares Amount

January 1, 2021 39.2 $ 0.4 $ 439.2 $ 0.9 $ 9.7 $ 450.2 $ 14.2 $ 464.4

April 2, 2021 39.3 $ 0.4 $ 441.3 $ 0.2 $ 12.8 $ 454.7 $ 14.2 $ 468.9

Net income — — — — 12.0 12.0 0.2 12.2

Common stock issued upon vesting of restricted shares 0.2 — — — — — — —

Shares withheld on vesting of restricted stock

Common stock issued under employee stock purchase plan

0.1 — 1.6 — — 1.6 — 1.6

1 unchanged sentence

— — 3.4 — — 3.4 — 3.4

Currency translation adjustments

— — ( 0.2 ) — — ( 0.2 ) ( 1.2 ) ( 1.4 )

— — — — — — ( 0.1 ) ( 0.1 )

April 2, 2021 39.3 $ 0.4 $ 441.3 $ 0.2 $ 12.8 $ 454.7 $ 14.2 $ 468.9

Three Months Ended April 3, 2020

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Retained Earnings Total Varex Equity Noncontrolling Interests Total Equity

July 2, 2021 39.4 $ 0.4 $ 446.1 $ 0.2 $ 24.8 $ 471.5 $ 13.2 $ 484.7

Three Months Ended July 3, 2020

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Varex Equity Noncontrolling Interests Total Stockholders' Equity

(In millions) Shares Amount

January 3, 2020 38.5 $ 0.4 $ 377.6 $ ( 2.6 ) $ 72.5 $ 447.9 $ 3.3 $ 451.2

Cumulative effect of accounting changes — — — — 0.3 0.3 — 0.3

April 3, 2020 38.7 $ 0.4 $ 379.5 $ 0.3 $ 70.9 $ 451.1 $ 3.2 $ 454.3

Net loss — — — — ( 28.3 ) ( 28.3 ) — ( 28.3 )

Exercise of stock options — — 0.3 — — 0.3 — 0.3

Common stock issued upon vesting of restricted shares

0.2 — — — — — — —

Shares withheld on vesting of restricted stock — — ( 1.7 ) — — ( 1.7 ) — ( 1.7 )

Common stock issued under employee stock purchase plan 0.1 — 1.8 — — 1.8 — 1.8

Share-based compensation — — 3.7 — — 3.7 — 3.7

1 unchanged sentence

— — — 0.3 — 0.3 — 0.3

Conversion feature of Convertible Notes, net of issuance costs — — 46.1 — — 46.1 — 46.1

Purchase of hedges — — ( 61.0 ) — — ( 61.0 ) — ( 61.0 )

Issuance of warrants — — 49.8 — — 49.8 — 49.8

Currency translation adjustments

— — — ( 3.7 ) — ( 3.7 ) — ( 3.7 )

April 3, 2020 38.7 $ 0.4 $ 379.5 $ 0.3 $ 70.9 $ 451.1 $ 3.2 $ 454.3

Shares issued to settle deferred consideration 0.3 — 7.4 — — 7.4 — 7.4

Other — — ( 0.1 ) — — ( 0.1 ) — ( 0.1 )

July 3, 2020 39.1 $ 0.4 $ 427.2 $ ( 3.1 ) $ 42.6 $ 467.1 $ 3.2 $ 470.3

See accompanying notes to the unaudited condensed consolidated financial statements.

VAREX IMAGING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Six Months Ended April 2, 2021

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Retained Earnings Total Varex Equity Noncontrolling Interests Total Equity

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Nine Months Ended July 2, 2021

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Retained Earnings Total Varex Equity Noncontrolling Interests Total Stockholders' Equity

(In millions) Shares Amount

October 2, 2020 39.1 $ 0.4 $ 434.4 $ 0.8 $ 16.1 $ 451.7 $ 14.1 $ 465.8

Net (loss) income — — — — ( 3.3 ) ( 3.3 ) 0.2 ( 3.1 )

Net income — — — — 8.7 8.7 0.4 9.1

Common stock issued upon vesting of restricted shares 0.2 — — — — — — —

4 unchanged sentences

Other — — ( 0.2 ) — — ( 0.2 ) ( 1.3 ) ( 1.5 )

April 2, 2021 39.3 $ 0.4 $ 441.3 $ 0.2 $ 12.8 $ 454.7 $ 14.2 $ 468.9

Six Months Ended April 3, 2020

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Varex Equity Noncontrolling Interests Total Equity

July 2, 2021 39.4 $ 0.4 $ 446.1 $ 0.2 $ 24.8 $ 471.5 $ 13.2 $ 484.7

Nine Months Ended July 3, 2020

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Varex Equity Noncontrolling Interests Total Stockholders' Equity

(In millions) Shares Amount

8 unchanged sentences

Unrealized loss on interest rate swap contracts, net of tax — — — ( 2.0 ) — ( 2.0 ) — ( 2.0 )

Conversion feature of Convertible Notes, net of issuance costs — — 46.1 — — 46.1 — 46.1

Purchase of hedges — — ( 61.0 ) — — ( 61.0 ) — ( 61.0 )

Issuance of warrants — — 49.8 — — 49.8 — 49.8

Currency translation adjustments — — — 0.6 — 0.6 — 0.6

Shares issued to settle deferred consideration 0.3 — 7.4 — — 7.4 — 7.4

Other — — ( 0.4 ) — — ( 0.4 ) — ( 0.4 )

April 3, 2020 38.7 $ 0.4 $ 379.5 $ 0.3 $ 70.9 $ 451.1 $ 3.2 $ 454.3

July 3, 2020 39.1 $ 0.4 $ 427.2 $ ( 3.1 ) $ 42.6 $ 467.1 $ 3.2 $ 470.3

See accompanying notes to the unaudited condensed consolidated financial statements.

9 unchanged sentences

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information.

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information.

Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements.

10 unchanged sentences

Fiscal year 2020 was the 53-week period that ended on October 2, 2020.

The fiscal quarters ended April 2, 2021 and April 3, 2020 were both 13-week periods.

The two fiscal quarters ended April 2, 2021 and April 3, 2020 were 26 weeks and 27 weeks, respectively.

The fiscal quarters ended July 2, 2021 and July 3, 2020 were both 13-week periods.

The three fiscal quarters ended July 2, 2021 and July 3, 2020 were 39 weeks and 40 weeks, respectively.

Use of Estimates

3 unchanged sentences

Impact of COVID-19

The coronavirus (“COVID-19”) pandemic and the mitigation efforts by governments to control its spread have created uncertainties and disruptions in the economic and financial markets.

The coronavirus (“COVID-19”) pandemic, the emerging variants and uneven vaccination rates across the globe, and the mitigation efforts by governments to control its spread have created uncertainties and disruptions in the economic and financial markets.

The extent to which COVID-19 will continue to impact the Company’s business and financial results depends on numerous evolving factors including:

12 unchanged sentences

Cash and cash equivalents and restricted cash as reported within the condensed consolidated statements of cash flows consisted of the following:

Six Months Ended April 2, 2021 Six Months Ended April 3, 2020

Nine Months Ended Nine Months Ended

July 2, 2021 July 3, 2020

(In millions) Beginning of Period End of Period Beginning of Period End of Period

9 unchanged sentences

The Company obtains some of the components in its products from a limited group of suppliers or from a single-source supplier.

The Company has neither experienced nor expects any significant disruptions to its operations due to supplier concentration.

The Company has not experienced any significant disruptions to its operations due to supplier concentration.

Credit is extended to customers based on an evaluation of the customer’s financial condition, and collateral is not required.

In certain circumstances, a customer may be required to prepay all or a portion of the contract price prior to transfer of control.

During the periods presented, one of the Company's customers accounted for a significant portion of revenues, which is as follows:

Three Months Ended Six Months Ended

April 2, 2021 April 3, 2020 April 2, 2021 April 3, 2020

Three Months Ended Nine Months Ended

July 2, 2021 July 3, 2020 July 2, 2021 July 3, 2020

Canon Medical Systems Corporation

17.1 % 23.7 % 17.2 % 21.7 %

Canon Medical Systems Corporation accounted for 14.6 % and 12.0 % of the Company’s consolidated accounts receivable as of April 2, 2021 and October 2, 2020, respectively.

Canon Medical Systems Corporation accounted for 13.0 % and 12.0 % of the Company’s consolidated accounts receivable as of July 2, 2021 and October 2, 2020, respectively.

The Company accounts for its equity investments in privately-held companies under the equity method of accounting if the Company has the ability to exercise significant influence in these investments.

1 unchanged sentence

The Company reviews its equity investments in privately-held companies for impairment whenever events or changes in business circumstances are other than temporary and indicate that the carrying amount of the investments may not be fully recoverable.

There were no impairments recorded during the three and six months ended April 2, 2021 and April 3, 2020, respectively.

There were no impairments recorded during the three and nine months ended July 2, 2021 and July 3, 2020, respectively.

Loss Contingencies

11 unchanged sentences

The following table reflects the changes in the Company’s accrued product warranty:

Six Months Ended

(In millions) April 2, 2021 April 3, 2020

Nine Months Ended

(In millions) July 2, 2021 July 3, 2020

Accrued product warranty, at beginning of period

61 unchanged sentences

Deferred Revenues

Deferred revenue primarily represents (i) the amount received applicable to non-software products for which parts

and services under the warranty contracts have not been delivered, and (ii) the amount received for service contracts for

which the services have not been rendered.

Deferred revenue primarily represents (i) the amount received applicable to non-software products for which parts and services under the warranty contracts have not been delivered, and (ii) the amount received for service contracts for which the services have not been rendered.

Recently Adopted Accounting Pronouncements

19 unchanged sentences

Early adoption is permitted.

The Company is evaluating the impact of adopting this guidance to its condensed consolidated financial statements.

The Company does not expect that the new guidance will have a material impact on its financial position, results of operations or cash flows.

Disaggregation of Revenue

1 unchanged sentence

The following table disaggregates the Company’s revenue by geographic region:

Three Months Ended Six Months Ended

(In millions) April 2, 2021 April 3, 2020 April 2, 2021 April 3, 2020

Three Months Ended Nine Months Ended

(In millions) July 2, 2021 July 3, 2020 July 2, 2021 July 3, 2020

Americas $ 65.7 $ 58.7 $ 198.5 $ 191.5

2 unchanged sentences

$ 211.2 $ 171.2 $ 591.8 $ 568.3

Revenue in the United States of America was $ 69.2 million and $ 60.2 million for the three months ended April 2, 2021 and April 3, 2020, respectively.

Revenue in the United States of America was $ 130.3 million and $ 128.8 million for the six months ended April 2, 2021 and April 3, 2020, respectively.

Revenue in the United States of America was $ 64.0 million and $ 56.9 million for the three months ended July 2, 2021 and July 3, 2020, respectively.

Revenue in the United States of America was $ 194.2 million and $ 185.6 million for the nine months ended July 2, 2021 and July 3, 2020, respectively.

Refer to Note 15, Segment Information , for the disaggregation of the Company’s revenue based on reportable operating segments.

2 unchanged sentences

Contract Assets

Six Months Ended

(In millions) April 2, 2021 April 3, 2020

Nine Months Ended

(In millions) July 2, 2021 July 3, 2020

Balance at beginning of fiscal year $ 24.6 $ 23.7

4 unchanged sentences

Contract Liabilities

Six Months Ended

(In millions) April 2, 2021 April 3, 2020

Nine Months Ended

(In millions) July 2, 2021 July 3, 2020

Balance at beginning of fiscal year $ 27.4 $ 26.4

3 unchanged sentences

Balance at end of period $ 27.8 $ 27.3

During the three and six months ended April 2, 2021, the Company recognized revenue of $ 0.4 million and $ 5.4 million related to deferred revenues which existed at October 2, 2020.

During the three and six months ended April 3, 2020, the Company recognized revenue of $ 1.3 million and $ 7.4 million related to deferred revenue which existed at September 27, 2019.

During the three and nine months ended July 2, 2021, the Company recognized revenue of $ 0.6 million and $ 6.0 million related to deferred revenues which existed at October 2, 2020.

During the three and nine months ended July 3, 2020, the Company recognized revenue of $ 0.5 million and $ 7.8 million related to deferred revenue which existed at September 27, 2019.

The Company has operating and finance leases for office space, warehouse and manufacturing space, vehicles and certain equipment.

The following table presents supplemental balance sheet information related to the Company's operating and finance leases:

(In millions) Balance Sheet Location April 2, 2021 October 2, 2020

(In millions) Balance Sheet Location July 2, 2021 October 2, 2020

Operating lease right-of-use assets Operating lease right-of-use assets $ 27.5 $ 27.7

5 unchanged sentences

The following table presents the weighted average remaining lease term and discount rate information related to the Company's operating and finance leases:

April 2, 2021 April 3, 2020

July 2, 2021 July 3, 2020

Operating lease weighted average remaining lease term (in years) 6.1 6.7

3 unchanged sentences

The following table provides information related to the Company’s operating and finance leases:

(In millions) Three Months Ended April 2, 2021 Three Months Ended April 3, 2020 Six Months Ended April 2, 2021 Six Months Ended April 3, 2020

Three Months Ended Nine Months Ended

(In millions) July 2, 2021 July 3, 2020 July 2, 2021 July 3, 2020

Total operating lease costs (a) $ 1.9 $ 2.0 $ 5.8 $ 6.0

3 unchanged sentences

Total cash paid for amounts included in the measurement of lease liabilities $ 2.2 $ 1.9 $ 6.0 $ 6.0

(a) Includes variable and short-term lease expense, which were immaterial for the three and six months ended April 2, 2021 and April 3, 2020.

As of April 2, 2021, the present value of operating lease and finance lease liabilities for each of the following five years and a total thereafter were as follows:

Noncash operating right-of-use assets obtained in exchange for new lease liabilities $ 2.4 $ 0.3 $ 4.6 $ 10.6

Noncash finance right-of-use assets obtained in exchange for new lease liabilities 0.1 — 0.2 0.2

Total right-of-use assets obtained in exchange for new lease liabilities $ 2.5 $ 0.3 $ 4.8 $ 10.8

(a) Includes variable and short-term lease expense, which were immaterial for the three and nine months ended July 2, 2021 and July 3, 2020.

As of July 2, 2021, the present value of operating lease and finance lease liabilities for each of the following five years and a total thereafter were as follows:

(In millions)

6 unchanged sentences

Present value of lease liabilities $ 28.9 $ 0.5

During the first quarter of fiscal year 2021, the Company entered into a lease agreement for a manufacturing facility in the Philippines that consists of three buildings.

During the second quarter of fiscal year 2021, the Company commenced leasing one of the three buildings.

The leases for the other two buildings are not expected to commence until the third quarter of fiscal year 2021.

These remaining two building leases have a stated term of five years and will result in an initial lease right-of-use asset and liability balance of approximately $ 2.4 million upon lease commencement.

RELATED PARTY TRANSACTIONS

4 unchanged sentences

When the Company recognizes its share of net profits or losses of dpiX Holding, profits or losses in inventory purchased from dpiX are eliminated.

During the three months ended April 2, 2021 and April 3, 2020, the Company recorded a loss on the equity investment in dpiX Holding of $( 0.4 )

million and $( 0.8 ) million, respectively.

During the six months ended April 2, 2021 and April 3, 2020, the Company recorded (loss) income on the equity investment in dpiX Holding of $( 1.9 ) million and $ 0.1 million, respectively.

Income and loss on the equity investment in dpiX Holding is included in other expense, net in the condensed consolidated statements of operations.

The carrying value of the equity investment in dpiX Holding was $ 45.6 million and $ 47.3 million at April 2, 2021 and October 2, 2020, respectively.

During the three months ended April 2, 2021 and April 3, 2020, the Company purchased glass transistor arrays from dpiX totaling $ 4.1 million and $ 5.3 million, respectively.

During the six months ended April 2, 2021 and April 3, 2020, the Company purchased glass transistor arrays from dpiX totaling $ 9.0 million and $ 10.9 million, respectively.

During the three months ended July 2, 2021 and July 3, 2020, the Company recorded a gain (loss) on the equity investment in dpiX Holding of $ 0.8 million and $( 0.5 ) million, respectively.

During the nine months ended July 2, 2021 and July 3, 2020, the Company recorded a gain (loss) on the equity investment in dpiX Holding of $( 1.1 ) million and $( 0.4 ) million, respectively.

Gain (loss) on the equity investment in dpiX Holding is included in other expense, net in the condensed consolidated statements of operations.

The carrying value of the equity investment in dpiX Holding was $ 47.2 million and $ 47.3 million at July 2, 2021 and October 2, 2020, respectively.

During the three months ended July 2, 2021 and July 3, 2020, the Company purchased glass transistor arrays from dpiX totaling $ 4.8 million and $ 4.9 million, respectively.

During the nine months ended July 2, 2021 and July 3, 2020, the Company purchased glass transistor arrays from dpiX totaling $ 13.8 million and $ 15.8 million, respectively.

These purchases of glass transistor arrays are included as a component of inventories on the condensed consolidated balance sheets or cost of revenues in the condensed consolidated statements of operations.

As of April 2, 2021, and October 2, 2020, the Company had accounts payable to dpiX totaling $ 3.9 million and $ 4.6 million, respectively.

In October 2013, the Company entered into an amended agreement with dpiX and other parties that, among other things, provides the Company with the right to 50 % of dpiX’s total manufacturing capacity produced after January 1, 2014.

In addition the amended agreement requires the Company to pay for 50 % of the fixed costs (as defined in the amended agreement), as determined at the beginning of each calendar year.

In January 2021, the fixed cost commitment was determined and approved by the dpiX board of directors to be $ 11.6 million for calendar year 2021.

As of April 2, 2021, the Company estimated it has fixed cost commitments of $ 8.7 million related to this amended agreement through the remainder of calendar year 2021.

The amended agreement will continue unless the ownership structure of dpiX changes as provided in the amended agreement.

As of July 2, 2021, and October 2, 2020, the Company had accounts payable to dpiX totaling $ 3.6 million and $ 4.6 million, respectively.

The Company has the right to 50 % of dpiX’s total manufacturing capacity.

In addition, the Company is required to pay for 50 % of DpiX's fixed costs, as determined at the beginning of each calendar year.

In January 2021, the Company's fixed cost commitment was determined and approved by the dpiX board of directors to be $ 11.6 million for calendar year 2021.

As of July 2, 2021, the Company estimated it has fixed cost commitments of $ 5.8 million related to dpiX through the remainder of calendar year 2021.

The Company has determined that dpiX Holding is a variable interest entity because at-risk equity holders, as a group, lack the characteristics of a controlling financial interest.

2 unchanged sentences

The Company’s exposure to loss as a result of its involvement with dpiX Holding is limited to the carrying value of the Company’s investment of $ 47.2 million and fixed cost commitments.

In November 2018, the Company and CETTEEN GmbH (“CETTEEN”), formed a German limited liability company that governs the affairs and conduct of the business of VEC Imaging GmbH & Co.

In November 2018, the Company (through one of its wholly-owned subsidiaries) and CETTEEN GmbH (“CETTEEN”), formed a German limited liability company that governs the affairs and conduct of the business of VEC Imaging GmbH & Co.

KG (“VEC”), a joint venture formed to develop technology for use in X-ray imaging components.

In accordance with the VEC agreement, net profits or losses are allocated to the members in accordance with their ownership interest.

The Company's investment in VEC is accounted for under the equity method.

As of April 2, 2021, the Company has made contributions totaling $ 4.0 million, and has committed to contribute an additional $ 1.2 million as milestones are achieved, and to provide certain full-time employees to support prototyping and manufacturing activities in exchange for a 50 % interest in VEC.

The Company's investment in VEC is accounted for under the equity method of accounting.

As of July 2, 2021, the Company has made equity contributions totaling $ 4.0 million, has committed to contribute an additional $ 1.2 million as milestones are achieved, and to provide certain full-time employees to support prototyping and manufacturing activities in exchange for a 50 % interest in VEC.

CETTEEN made contributions of certain assets including intellectual property in exchange for a 50 % interest in VEC.

During the six months ended April 2, 2021, the Company loaned $ 0.6 million to VEC.

During the three months ended April 2, 2021, and April 3, 2020, the Company recorded loss on the equity investment in VEC of $ 0.2 million and $ 0.6 million, respectively.

During the six months ended April 2, 2021 and April 3, 2020, the Company recorded loss on the equity investment in VEC of $ 0.5 million and $ 0.8 million, respectively.

The Company's investment in VEC was $ 2.2 million and $ 2.5 million at April 2, 2021 and October 2, 2020, respectively.

During the three months ended July 2, 2021, and July 3, 2020, the Company recorded a loss on the equity investment in VEC of $ 0.4 million and $ 0.2 million, respectively.

During the nine months ended July 2, 2021 and July 3, 2020, the Company recorded a loss on the equity investment in VEC of $ 0.9 million and $ 1.0 million, respectively.

The Company's investment in VEC was $ 1.9 million and $ 2.5 million at July 2, 2021 and October 2, 2020, respectively.

At July 2, 2021, the Company had loans outstanding to VEC totaling $ 0.8 million .

On July 27, 2021, the Company made its final required equity contribution of $ 1.2 million to VEC, and VEC repaid $ 0.6 million of its outstanding loans to the Company, leaving $ 0.2 million outstanding.

RESTRUCTURING

6 unchanged sentences

Cash outflows associated with these restructuring charges are limited to employee termination expenses, facility closure and equipment sales and disposals.

Below is a detail of restructuring charges incurred during the three and six months ended April 2, 2021 and April 3, 2020, respectively, which predominantly relate to the Company's Medical segment:

Three Months Ended Six Months Ended

(In millions) Location of Restructuring Charges in Condensed Consolidated Statements of Operations April 2, 2021 April 3, 2020 April 2, 2021 April 3, 2020

Below is a detail of restructuring charges incurred during the three and nine months ended July 2, 2021 and July 3, 2020, respectively, which predominantly relate to the Company's Medical segment:

Three Months Ended Nine Months Ended

(In millions) Location of Restructuring Charges in Condensed Consolidated Statements of Operations July 2, 2021 July 3, 2020 July 2, 2021 July 3, 2020

Other assets impairment charges Selling, general and administrative $ 0.2 $ — $ 0.2 $ —

Accelerated depreciation Cost of revenues — 0.9 0.2 2.1

14 unchanged sentences

Interest rate swap contracts effectively fix the LIBOR component of variable interest rate debt for a specific period of time.

As of April 2, 2021, the Company had no outstanding derivatives designated as hedging instruments.

As of July 2, 2021, the Company had no outstanding derivatives designated as cash flow hedging instruments.

The following table summarizes the amount of pre-tax income recognized from derivative instruments for the periods indicated:

Amount of Gain (Loss) Recognized in OCI on Derivative

Three months ended Location of Gain or (Loss) Reclassified from Accumulated OCI into Income Amount of Gain (Loss) Reclassified from Accumulated OCI into Income

Amount of Loss Recognized in OCI on Derivative

Three Months Ended Location of Loss Reclassified from Accumulated OCI into Income Amount of Loss Reclassified from Accumulated OCI into Income

Three Months Ended

(In millions) April 2, 2021 April 3, 2020 April 2, 2021 April 3, 2020

(In millions) July 2, 2021 July 3, 2020 July 2, 2021 July 3, 2020

Interest Rate Swap Contracts $ — $ ( 0.3 ) Interest expense $ — $ ( 0.7 )

Amount of Gain (Loss) Recognized in OCI on Derivative

Six Months Ended Location of Gain or (Loss) Reclassified from Accumulated OCI into Income Amount of Gain (Loss) Reclassified from Accumulated OCI into Income

Six Months Ended

(In millions) April 2, 2021 April 3, 2020 April 2, 2021 April 3, 2020

Amount of Loss Recognized in OCI on Derivative

Nine Months Ended Location of Loss Reclassified from Accumulated OCI into Income Amount of Loss Reclassified from Accumulated OCI into Income

Nine Months Ended

(In millions) July 2, 2021 July 3, 2020 July 2, 2021 July 3, 2020

Interest Rate Swap Contracts $ — $ ( 3.3 ) Interest expense $ — $ ( 0.6 )

2 unchanged sentences

All changes in fair value of the derivatives designated as net investment hedges are reported in accumulated other comprehensive (loss) income along with the foreign currency translation adjustments on those investments.

As of April 2, 2021, the Company had the following outstanding derivatives designated as net investment hedging instruments:

As of July 2, 2021, the Company had the following outstanding derivatives designated as net investment hedging instruments:

(In millions, except number of instruments) Number of Instruments Notional Value

1 unchanged sentence

The following table summarizes the amount of pre-tax income recognized from derivative instruments for the periods indicated and the line items in the accompanying statements of operations where the results are recorded for net investment hedges:

Amount of Gain (Loss) Recognized in OCI on Derivative

Amount of Loss Recognized in OCI on Derivative

Three Months Ended Location of Gain or (Loss) Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing) Amount of Gain or (Loss) Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)

(In millions) April 2, 2021 April 3, 2020 April 2, 2021 April 3, 2020

(In millions) July 2, 2021 July 3, 2020 July 2, 2021 July 3, 2020

Cross Currency Swap Contracts $ ( 0.1 ) $ ( 2.2 ) Interest expense $ 0.3 $ 0.4

Amount of Gain (Loss) Recognized in OCI on Derivative

Six Months Ended Location of Gain or (Loss) Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing) Amount of Gain or (Loss) Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)

(In millions) April 2, 2021 April 3, 2020 April 2, 2021 April 3, 2020

Nine Months Ended Location of Gain or (Loss) Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing) Amount of Gain or (Loss) Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)

(In millions) July 2, 2021 July 3, 2020 July 2, 2021 July 3, 2020

Cross Currency Swap Contracts $ ( 1.3 ) $ 2.1 Interest expense $ 1.0 $ 1.1

3 unchanged sentences

(In millions) Derivative Assets and Liabilities

Derivatives designated as net investment hedges Balance sheet location April 2, 2021 October 2, 2020

Derivatives designated as net investment hedges Balance sheet location July 2, 2021 October 2, 2020

Cross Currency Swap Contracts Other current assets $ 1.3 $ 1.3

4 unchanged sentences

These forward contracts expire within 30 to 90 days.

These forward contracts are not designated for hedge accounting treatment, therefore, the change in fair value of these derivatives is recorded as a component of other income (expense), net and offsets the change in fair value of the foreign currency denominated assets and liabilities, which are also recorded in other income (expense), net.

These forward contracts are not designated for hedge accounting treatment;

therefore, the change in fair value of these derivatives is recorded as a component of other income (expense), net and offsets the change in fair value of the foreign currency denominated assets and liabilities, which are also recorded in other income (expense), net.

The Company does not and does not intend to use derivative financial instruments for speculative or trading purposes.

The following table shows the notional amounts of outstanding foreign currency contracts as of April 2, 2021:

The following table shows the notional amounts of outstanding foreign currency contracts as of July 2, 2021:

Notional Value of Derivatives not Designated as Hedging Instruments:

(In millions) Buy contracts Sell contract

Japanese yen $ — $ 1.4

Philippine peso $ 4.1 $ —

Swiss franc 0.9 —

Chinese renminbi 1.4 —

2 unchanged sentences

The fair values of certain of the Company’s financial instruments, including bank deposits included in cash and cash equivalents, accounts receivable and accounts payable, approximate their fair values due to their short maturities.

As of April 2, 2021, the fair values of the Company's Convertible Notes and Senior Secured Notes, as defined in Note 10.

As of July 2, 2021, the fair values of the Company's Convertible Notes and Senior Secured Notes, as defined in Note 10.

Borrowings, were $ 296.3 million and $ 339.3 million, respectively.

1 unchanged sentence

The Company has elected to use the income approach to value its derivative instruments using standard valuation techniques and Level 2 inputs, such as currency spot rates, forward points and credit default swap spreads.

There were no financial assets or liabilities measured on a recurring basis using significant unobservable inputs (Level 3) and there were no transfers in or out of Level 1, 2 or 3 during the six months ended April 2, 2021.

In the tables below, the Company has segregated all assets and liabilities that are measured at fair value on a recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date.

Fair Value Measurements at April 2, 2021

Fair Value at July 2, 2021

(In millions) Quoted Prices in Active Markets for Identical Assets and Liabilities

9 unchanged sentences

Total liabilities measured at fair value $ — $ 3.4 $ — $ 3.4

Fair Value Measurements at October 2, 2020

Fair Value at October 2, 2020

(In millions) Quoted Prices in Active Markets for Identical Assets and Liabilities

9 unchanged sentences

The following table summarizes the Company’s inventories:

(In millions) April 2, 2021 October 2, 2020

(In millions) July 2, 2021 October 2, 2020

Raw materials and parts

4 unchanged sentences

$ 243.2 $ 271.9

As a result of the economic downturn resulting from COVID-19, during the three months ended April 2, 2021, the Company discontinued certain products and wrote-down approximately $ 3.5 million of inventory associated with these discontinued products.

As a result of the economic downturn resulting from COVID-19, the Company discontinued certain products and wrote-down inventory associated with these discontinued products by $ 15.8 million for the three months ended July 3, 2020, and $ 3.5 million and $ 15.8 million for the nine months ended July 2, 2021 and July 3, 2020, respectively.

GOODWILL AND INTANGIBLE ASSETS

3 unchanged sentences

Foreign currency translation adjustments 0.2 0.2 0.4

Balance at April 2, 2021 $ 174.5 $ 118.8 $ 293.3

Balance at July 2, 2021 $ 174.6 $ 118.9 $ 293.5

The following table reflects the gross carrying amount and accumulated amortization of the Company’s intangible assets:

April 2, 2021 October 2, 2020

July 2, 2021 October 2, 2020

(In millions)

10 unchanged sentences

$ 139.2 $ ( 84.0 ) $ 55.2 $ 138.9 $ ( 71.4 ) $ 67.5

Amortization expense for intangible assets was $ 4.3 million and $ 4.4 million for the three months ended April 2, 2021 and April 3, 2020, respectively and $ 8.5 million and $ 8.9 million for the six months ended April 2, 2021 and April 3, 2020, respectively.

Amortization expense for intangible assets was $ 4.2 million for each of the three months ended July 2, 2021 and July 3, 2020, and $ 12.7 million and $ 13.1 million for the nine months ended July 2, 2021 and July 3, 2020, respectively.

For the three and nine months ended July 3, 2020, the Company recognized intangible asset impairment charges of $ 2.8 million, which are included in impairment of intangible assets in the condensed consolidated statements of operations.

These impairment charges related primarily to the Company's Medical reporting segment.

The following table summarizes the Company's short-term and long-term debt:

April 2, 2021 October 2, 2020

July 2, 2021 October 2, 2020

(In millions, except for percentages) Amount Amount Contractual Interest Rate Effective Interest Rate

Current maturities of long-term debt

Senior Secured Notes $ 30.0 $ —

Other debt $ 2.9 $ 2.5

14 unchanged sentences

The following table summarizes the Company's interest expense:

Three Months Ended Six Months Ended

April 2, 2021 April 3, 2020 April 2, 2021 April 3, 2020

Three Months Ended Nine Months Ended

July 2, 2021 July 3, 2020 July 2, 2021 July 3, 2020

Contractual interest coupon and other $ 8.0 $ 5.3 $ 23.9 $ 14.0

6 unchanged sentences

The Convertible Notes bear interest at the annual rate of 4.00 %, payable semiannually on June 1 and December 1 of each year, beginning on December 1, 2020, and will mature on June 1, 2025, unless earlier converted or repurchased by us.

Total interest expense related to the Convertible Notes for the three months ended April 2, 2021 was $ 4.2 million and was comprised of $ 2.0 million related to the contractual interest coupon and $ 2.2 million related to the amortization of the issuance costs and discount on the liability component.

Total interest expense related to the Convertible Notes for the six months ended April 2, 2021 was $ 8.3 million and was comprised of $ 4.0 million related to the contractual interest coupon and $ 4.3 million related to the amortization of the issuance costs and discount on the liability component.

On June 4, 2020 and June 5, 2020, in connection with the offering of the Convertible Notes, Varex entered into privately negotiated convertible note hedge transactions (collectively, the “Hedge Transactions”).

7 unchanged sentences

The number of shares underlying the Warrant Transactions is 9.6 million.

The number of warrants outstanding as of April 2, 2021, was 9.6 million.

The number of warrants outstanding as of July 2, 2021, was 9.6 million.

Senior Secured Notes

1 unchanged sentence

Interest payments are paid semiannually on April 15 and October 15 of each year, beginning on April 15, 2021.

Total interest expense related to the Senior Secured Notes for the three months ended April 2, 2021 was $ 6.1 million and was comprised of $ 5.9 million related to the contractual interest coupon and $ 0.2 million related to the amortization of issuance costs.

Total interest expense related to the Senior Secured Notes for the six months ended April 2, 2021 was $ 12.1 million and was comprised of $ 11.8 million related to the contractual interest coupon and $ 0.3 million related to the amortization of issuance costs.

On July 1, 2021, the Company announced its intent to complete the partial redemption, in the principal amount of $ 30 million, of the Senior Secured Notes, in accordance with the terms and conditions of the governing indenture.

The redemption price of the redeemed notes was 103 % of the principal amount, plus accrued and unpaid interest from, and including, April 15, 2021 to, but excluding, the redemption date of July 15, 2021.

On July 15, 2021, the Company redeemed $ 30 million of Senior Secure Notes by paying cash of $ 31.5 million, inclusive of the redemption premium and accrued interest, and recognized a $ 1.4 million loss related to the redemption premium and the write-off of previously recorded debt issuance costs.

Asset-Based Loan

On September 30, 2020, the Company entered into a new revolving credit agreement consisting of a $ 100.0 million asset-based loan revolving credit facility (the “Asset-Based Loan”, or "ABL Facility").

Borrowings under the Asset-Based Loan will be expected to bear interest at floating rates based on LIBOR, or comparable rate, or a base rate, and an applicable margin based on Average Daily Excess Availability (as defined in the Asset-Based Loan Agreement).

On September 30, 2020, the Company entered into a revolving credit agreement consisting of a $ 100.0 million asset-based loan revolving credit facility (the “Asset-Based Loan”, or "ABL Facility").

Borrowings under the Asset-Based Loan will be expected to bear interest at floating rates based on LIBOR, or a comparable rate, or a base rate, and an applicable margin based on Average Daily Excess Availability (as defined in the Asset-Based Loan Agreement).

In addition, the Company is required to pay a quarterly commitment fee of 0.375 % to 0.5 %, based on the aggregate unused commitments under the Asset-Based Loan.

The ABL Facility matures on the earlier of September 30, 2025 or 91 days prior to the maturity of the Convertible Notes, at which time all outstanding amounts under the ABL Facility will be due and payable.

The aggregate commitment under our ABL Facility is $ 100.0 million;

The maximum availability under our ABL Facility is $ 100.0 million;

however, the borrowing base under the ABL Facility fluctuates from month-to-month depending on the amount of eligible accounts receivable, inventory, and real estate.

As of April 2, 2021, no draws had been made on the ABL Facility.

As of July 2, 2021 the amount available under our ABL Facility was $ 70 million and the ABL Facility remains undrawn.

The ABL Facility includes various restrictive covenants that limit our ability to engage in certain transactions, including the incurrence of debt, payment of dividends and other restrictive payments, existence of restrictions affecting subsidiaries, sales of stock and assets, certain affiliate transactions, modifications of debt documents and organizational documents, changes to line of business and fiscal year, incurrence of liens, making fundamental changes, prepayments of junior indebtedness, and certain other transactions.

1 unchanged sentence

In April 2019, a subsidiary of Varex acquired 98.2 % of the outstanding shares of common stock of Direct Conversion.

The Company has subsequently acquired additional shares of Direct Conversion such that the Company now owns 98.7 % of the outstanding shares of common stock of Direct Conversion.

As the Company has majority voting rights it has consolidated Direct Conversion's operations in its condensed consolidated financial statements and records the noncontrolling interest in the equity section of the Company's condensed consolidated balance sheet.

Income representing the noncontrolling interest's portion of Direct

Conversion's income from operations is included in the Company's condensed consolidated statements of operations.

In April 2021, the Company acquired the remaining 1.3 % of noncontrolling interest for approximately $ 1 million.

In April 2021, the Company acquired all of the remaining shares representing the noncontrolling interests in Direct Conversion such that

the Company now owns 100 % of the outstanding shares of common stock of Direct Conversion.

As a result, the Company consolidates Direct Conversion's operations in its condensed consolidated financial statements and no longer records any noncontrolling interest in the equity section of the Company's condensed consolidated balance sheet related to Direct Conversion.

In September 2018, the Company entered into a partnership in Saudi Arabia.

7 unchanged sentences

In return, the DPLTA grants the noncontrolling shareholders of MeVis an annual recurring net compensation of € 0.95 per MeVis share.

At April 2, 2021, noncontrolling shareholders together held approximately 0.5 million shares of MeVis, representing 26.3 % of the outstanding shares.

At July 2, 2021, noncontrolling shareholders together held approximately 0.5 million shares of MeVis, representing 26.3 % of the outstanding shares.

Changes in noncontrolling interests were as follows:

2 unchanged sentences

Net income attributable to noncontrolling interests 0.4

Balance at April 2, 2021 $ 14.2

Other, including foreign currency remeasurement

Balance at July 2, 2021 $ 13.2

NET INCOME (LOSS) PER SHARE

2 unchanged sentences

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per common share is as follows:

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

(In millions, except per share amounts)

April 2, 2021 April 3, 2020 April 2, 2021 April 3, 2020

July 2, 2021 July 3, 2020 July 2, 2021 July 3, 2020

Net income (loss) attributable to Varex $ 12.0 $ ( 28.3 ) $ 8.7 $ ( 31.5 )

1 unchanged sentence

39.4 39.0 39.3 38.7

Dilutive effect of potential common shares

Dilutive effect of Convertible Senior Notes 1.5 — — —

Dilutive effect of share-based awards and other 0.4 — 0.2 —

Weighted average shares outstanding - diluted

6 unchanged sentences

2.8 3.2 2.9 3.0

Potentially dilutive shares, which are based on the weighted-average shares of common stock underlying stock options, unvested stock awards, purchase rights granted under the employee stock purchase plan, warrants and convertible notes using the treasury stock method or the if-converted method, as applicable, are included when calculating diluted net (loss) income per share attributable to Varex when their effect is dilutive.

Since we intend to settle in cash the principal outstanding under our 4.00 % Convertible Senior Notes due in 2025, we use the treasury stock method applied using our average share price during the period when calculating their potential dilutive effect, if any.

Potentially dilutive shares, which are based on the weighted-average shares of common stock underlying stock options, unvested stock awards, purchase rights granted under the employee stock purchase plan, warrants and convertible notes using the treasury stock method or the if-converted method, as applicable, are included when calculating diluted net income (loss) per share attributable to Varex when their effect is dilutive.

Since we intend to settle in cash the principal outstanding under our 4.00 % Convertible Senior Notes due in 2025, we apply the treasury stock method applied using our average share price during the period when calculating their potential dilutive effect, if any.

Furthermore, in connection with the offerings of our notes, we entered into convertible note hedges and warrants (see Note 10, Borrowings).

1 unchanged sentence

Warrants which have a strike price above our average share price during the period were out of the money and were not included in the tables above.

Because the Company incurred a net loss for the six months ended April 2, 2021 and the three and six months ended April 3, 2020, none of the potentially dilutive common shares were included in the diluted share calculations for those periods as they would have been anti-dilutive.

Because the Company incurred a net loss for the three and nine months ended July 3, 2020, none of the potentially dilutive common shares were included in the diluted share calculations for those periods as they would have been anti-dilutive.

EMPLOYEE STOCK PLANS

3 unchanged sentences

The table below summarizes the effect of recording share-based compensation expense and the option component of the employee stock purchase plan shares:

Three Months Ended Six Months Ended

(In millions) April 2, 2021 April 3, 2020 April 2, 2021 April 3, 2020

Three Months Ended Nine Months Ended

(In millions) July 2, 2021 July 3, 2020 July 2, 2021 July 3, 2020

Cost of revenues

18 unchanged sentences

— $ 0.00 - $ 0.00

Outstanding at April 2, 2021 2,858 $ 13.61 - $ 37.60

Outstanding at July 2, 2021 2,821 $ 13.61 - $ 37.60

$ 28.70 5.0 $ 4,243

Exercisable at April 2, 2021 1,809 $ 25.17 - $ 37.60

Exercisable at July 2, 2021 1,813 $ 25.17 - $ 37.60

$ 30.81 3.1 $ 545

(1) The aggregate intrinsic value represents the total pre-tax intrinsic value, which is computed based on the difference between the exercise price and the closing price of Varex common stock of $ 20.88 as of April 1, 2021, the last trading date of the Company's second quarter, and which represents the amount that would have been received by the option holders had all option holders exercised their options and sold the shares received upon exercise as of that date.

(1) The aggregate intrinsic value represents the total pre-tax intrinsic value, which is computed based on the difference between the exercise price and the closing price of Varex common stock of $ 27.66 as of July 2, 2021, the last trading date of the Company's third quarter, and which represents the amount that would have been received by the option holders had all option holders exercised their options and sold the shares received upon exercise as of that date.

Restricted Stock Units

2 unchanged sentences

Outstanding at October 2, 2020 955 $ 25.54

( 193 ) 33.67

Granted 386 22.79

Vested ( 196 ) 33.69

Canceled or expired ( 46 ) 23.49

Outstanding at April 2, 2021 1,105 $ 23.29

Outstanding at July 2, 2021 1,099 $ 23.26

TAXES ON INCOME

For the three months ended April 2, 2021, the Company recognized income tax expense of $ 0.0 million on $ 3.2 million of pre-tax income.

For the three months ended April 3, 2020, the Company recognized income tax expense of $ 0.7 million on $ 1.1 million of pre-tax loss.

For the six months ended April 2, 2021, the Company recognized income tax expense of $ 1.6 million on $ 1.5 million of pre-tax loss.

For the six months ended April 3, 2020, the Company recognized income tax expense of $ 0.7 million on $ 2.3 million of pre-tax loss.

For the three months ended July 2, 2021, the Company recognized income tax expense of $ 3.1 million on $ 15.3 million of pre-tax income.

For the three months ended July 3, 2020, the Company recognized income tax benefit of $ 11.6 million on $ 39.8 million of pre-tax loss.

For the nine months ended July 2, 2021, the Company recognized income tax expense of $ 4.7 million on $ 13.8 million of pre-tax income.

For the nine months ended July 3, 2020, the Company recognized income tax benefit of $ 10.9 million on $ 42.1 million of pre-tax loss.

The Company is unable to recognize a tax benefit for pre-tax book losses in the U.S.

and certain foreign jurisdictions but has recognized tax expense for profitable foreign jurisdictions.

The Company's tax expense for the three months ended April 2, 2021 decreased, primarily due to tax credits and benefits recorded in certain foreign jurisdiction.

The Company's tax expense for the six months ended April 2, 2021 increased, compared to the prior year periods, primarily due to valuation allowances in the U.S.

on disallowed interest expense deductions and losses in the U.S.

and certain foreign jurisdictions for which no benefit can be recorded.

The Company is maintaining its reinvestment assertion with respect to foreign earnings for the quarter ended April 2, 2021, which is that all earnings prior to fiscal year 2018 are permanently reinvested for all countries, and that all earnings for Direct Conversion, located primarily in Sweden and Finland, are also indefinitely reinvested in those countries, but post fiscal year 2017 earnings in all other countries are not permanently reinvested.

The Company's tax expense for the three months ended July 2, 2021 increased, primarily due to increased pre-tax income in certain jurisdictions.

The Company's tax expense for the nine months ended July 2, 2021 increased, compared to the prior year periods, primarily due to pre-tax income and valuation allowances in the U.S.

on credits and disallowed interest expense deductions and losses in certain foreign jurisdictions for which no benefit can be recorded.

The Company is maintaining its reinvestment assertion with respect to foreign earnings for the quarter ended July 2, 2021, which is that all earnings prior to fiscal year 2018 are permanently reinvested for all countries, and that all earnings for Direct Conversion, located primarily in Sweden and Finland, are also indefinitely reinvested in those countries, but post fiscal year 2017 earnings in all other countries are not permanently reinvested.

Due to the level of earnings available for repatriation, the treaty benefits applicable to jurisdictions in which those earnings are located, and the now favorable U.S.

1 unchanged sentence

This estimated liability is for U.S.

State income taxes and foreign withholding taxes that would apply if the foreign earnings were repatriated in the form of a dividend.

State income taxes and foreign withholding taxes expected to apply when the foreign earnings are repatriated.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), signed into law on March 27, 2020, has resulted in significant changes to the U.S.

19 unchanged sentences

Information related to the Company’s segments is as follows:

Three Months Ended Six Months Ended

(In millions) April 2, 2021 April 3, 2020 April 2, 2021 April 3, 2020

Three Months Ended Nine Months Ended

(In millions) July 2, 2021 July 3, 2020 July 2, 2021 July 3, 2020

$ 167.3 $ 137.6 $ 463.1 $ 448.6

15 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements