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Item 1. Financial Statements

2022-08-03 compared with 2022-05-04 · 234 added, 168 removed, 607 unchanged (40% 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 1, 2022 April 2, 2021 April 1, 2022 April 2, 2021

Three Months Ended Nine Months Ended

(In millions, except per share amounts) July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Revenues, net $ 214.5 $ 211.2 $ 628.0 $ 591.8

8 unchanged sentences

Interest expense ( 9.4 ) ( 10.6 ) ( 30.4 ) ( 31.3 )

Other expense, net ( 2.0 ) ( 2.2 ) ( 2.8 ) ( 2.7 )

Other (expense) income, net ( 0.2 ) 0.2 ( 3.0 ) ( 2.5 )

Interest and other expense, net ( 9.5 ) ( 10.4 ) ( 33.2 ) ( 33.8 )

Income (loss) before taxes 13.6 3.2 16.9 ( 1.5 )

Income before taxes 13.5 15.3 30.4 13.8

Income tax expense 5.1 3.1 12.8 4.7

Net income (loss) 7.6 3.2 9.2 ( 3.1 )

Net income 8.4 12.2 17.6 9.1

Net income attributable to noncontrolling interests 0.2 0.2 0.4 0.4

Net income (loss) attributable to Varex $ 7.6 $ 3.1 $ 9.0 $ ( 3.3 )

Net income (loss) per common share attributable to Varex

Net income attributable to Varex $ 8.2 $ 12.0 $ 17.2 $ 8.7

Net income per common share attributable to Varex

Basic $ 0.21 $ 0.31 $ 0.43 $ 0.22

5 unchanged sentences

VAREX IMAGING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended Six Months Ended

(In millions) April 1, 2022 April 2, 2021 April 1, 2022 April 2, 2021

Net income (loss) $ 7.6 $ 3.2 $ 9.2 $ ( 3.1 )

Other comprehensive income (loss):

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended Nine Months Ended

(In millions) July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Net income $ 8.4 $ 12.2 $ 17.6 $ 9.1

Other comprehensive income

Foreign currency translation adjustments 0.8 — ( 0.9 ) ( 0.6 )

Total comprehensive income (loss) 6.4 2.5 7.5 ( 3.7 )

Change in fair value of derivative instruments ( 0.6 ) — ( 0.6 ) —

Total comprehensive income 8.6 12.2 16.1 8.5

Comprehensive income attributable to noncontrolling interests 0.2 0.2 0.4 0.4

Comprehensive income (loss) attributable to Varex $ 6.4 $ 2.4 $ 7.3 $ ( 3.9 )

Comprehensive income attributable to Varex $ 8.4 $ 12.0 $ 15.7 $ 8.1

See accompanying notes to the unaudited condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share amounts) April 1, 2022 October 1, 2021

(In millions, except share and per share amounts) July 1, 2022 October 1, 2021

Current assets:

Cash and cash equivalents $ 99.6 $ 144.6

Accounts receivable, net of allowance for credit losses of $ 0.7 million and $ 1.0 million at April 1, 2022 and October 1, 2021, respectively

Accounts receivable, net of allowance for credit losses of $ 0.7 million and $ 1.0 million at July 1, 2022 and October 1, 2021, respectively

Prepaid expenses and other current assets

25 unchanged sentences

150,000,000 shares authorized

Shares issued and outstanding - 39,823,331 and 39,435,830 at April 1, 2022 and October 1, 2021, respectively

Shares issued and outstanding:

39,940,055 and 39,435,830 at July 1, 2022 and October 1, 2021, respectively

Additional paid-in capital 465.2 449.4

Accumulated other comprehensive (loss) income ( 1.7 ) —

Accumulated other comprehensive loss ( 1.5 ) —

Retained earnings 50.7 33.5

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Three Months Ended April 1, 2022

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

Three Months Ended July 1, 2022

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

(In millions) Shares Amount

December 31, 2021 39.6 $ 0.4 $ 458.0 $ ( 0.5 ) $ 34.9 $ 492.8 $ 13.3 $ 506.1

April 1, 2022 39.8 $ 0.4 $ 459.9 $ ( 1.7 ) $ 42.5 $ 501.1 $ 13.3 $ 514.4

Net income — — — — 8.2 8.2 0.2 8.4

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

Common stock issued upon vesting of restricted shares 0.3 — — — — — — —

Shares withheld on vesting of restricted stock ( 0.1 ) — ( 2.1 ) — — ( 2.1 ) — ( 2.1 )

Common stock issued under employee stock purchase plan 0.1 — 1.9 — — 1.9 — 1.9

Share-based compensation — — 3.4 — — 3.4 — 3.4

— — 3.9 — — 3.9 — 3.9

Unrealized loss on change in fair value of cash flow hedge — — — ( 0.6 ) — ( 0.6 ) — ( 0.6 )

Foreign currency translation adjustments — — — 0.8 — 0.8 — 0.8

— — ( 0.2 ) — — ( 0.2 ) — ( 0.2 )

April 1, 2022 39.8 $ 0.4 $ 459.9 $ ( 1.7 ) $ 42.5 $ 501.1 $ 13.3 $ 514.4

Three Months Ended April 2, 2021

Other — — — — — — ( 0.2 ) ( 0.2 )

July 1, 2022 39.9 $ 0.4 $ 465.2 $ ( 1.5 ) $ 50.7 $ 514.8 $ 13.3 $ 528.1

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 ( 0.1 ) — ( 1.5 ) — — ( 1.5 ) — ( 1.5 )

Common stock issued under employee stock purchase plan 0.1 — 1.6 — — 1.6 — 1.6

Share-based compensation — — 3.4 — — 3.4 — 3.4

Foreign currency translation adjustments — — — ( 0.7 ) — ( 0.7 ) — ( 0.7 )

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

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

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

See accompanying notes to the unaudited condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Six Months Ended April 1, 2022

Nine Months Ended July 1, 2022

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

7 unchanged sentences

Share-based compensation — — 10.7 — — 10.7 — 10.7

Unrealized loss on change in fair value of cash flow hedge — — — ( 0.6 ) — ( 0.6 ) — ( 0.6 )

Foreign currency translation adjustments — — — ( 0.9 ) — ( 0.9 ) — ( 0.9 )

Other — — ( 0.2 ) — — ( 0.2 ) ( 0.3 ) ( 0.5 )

April 1, 2022 39.8 $ 0.4 $ 459.9 $ ( 1.7 ) $ 42.5 $ 501.1 $ 13.3 $ 514.4

Six Months Ended April 2, 2021

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

July 1, 2022 39.9 $ 0.4 $ 465.2 $ ( 1.5 ) $ 50.7 $ 514.8 $ 13.3 $ 528.1

Nine 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

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

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

See accompanying notes to the unaudited condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

(In millions) April 1, 2022 April 2, 2021

Nine Months Ended

(In millions) July 1, 2022 July 2, 2021

Cash flows from operating activities:

Net income (loss) $ 9.2 $ ( 3.1 )

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

Net income $ 17.6 $ 9.1

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

Share-based compensation expense 10.7 10.6

14 unchanged sentences

Deferred revenues 2.4 0.1

Net cash provided by operating activities 2.5 19.9

Net cash (used in) provided by operating activities ( 0.2 ) 42.0

Cash flows from investing activities:

Purchases of property, plant and equipment ( 11.5 ) ( 12.5 )

Purchases of marketable securities ( 10.4 ) —

Proceeds from sales of business and assets 1.7 —

16 unchanged sentences

Effects of exchange rate changes on cash and cash equivalents and restricted cash

( 0.1 ) ( 0.1 )

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

28 unchanged sentences

(i) Medical and (ii) Industrial, which aligns with how its Chief Executive Officer, who is the Company's Chief Operating Decision Maker (“CODM”), reviews the Company’s performance.

Segment Information , for further information on the Company’s segments.

See Note 15, Segment Information , for further information on the Company’s segments.

The fiscal years of the Company as reported are the 52 or 53-week period ending on the Friday nearest September 30.

1 unchanged sentence

Fiscal year 2021 was the 52-week period that ended on October 1, 2021.

The fiscal quarters ended April 1, 2022 and April 2, 2021 were both 13-week periods.

The two fiscal quarters ended April 1, 2022 and April 2, 2021 were both 26-week periods.

The fiscal quarters ended July 1, 2022 and July 2, 2021 were both 13-week periods.

The three fiscal quarters ended July 1, 2022 and July 2, 2021 were both 39-week periods.

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Use of Estimates

5 unchanged sentences

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

the magnitude and duration of COVID-19, the extent to which it will impact worldwide macroeconomic conditions, including supply chain disruptions, interest rates, unemployment rates, the speed of the economic recovery, and governmental and business reactions to the pandemic.

the magnitude and duration of COVID-19, the extent to which it will continue to impact worldwide macroeconomic conditions, including supply chain disruptions, interest rates, unemployment rates, the speed of the economic recovery, and governmental and business reactions to the pandemic.

The Company has experienced continuing supply chain disruptions and other issues that are at least partially related to the ongoing COVID-19 pandemic.

These supply chain related challenges have been increasing in recent months.

The supply chain challenges related to certain components have become more pronounced since the beginning of this calendar year.

In addition, while we have from time to time taken significant precautions to maintain employee safety, such as implementing mask requirements, encouraging vaccination, and periodically asking non-production related employees to work from home when possible, the Company has experienced, and may in the future experience, COVID-19 related employee absences that adversely impact our production or business.

5 unchanged sentences

Cash and Cash Equivalents

The Company considers currency on hand, demand deposits, time deposits and all highly-liquid investments with an original maturity of three months or less at the date of purchase to be cash and cash equivalents.

The Company considers unrestricted currency on hand, demand deposits, time deposits and all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash and cash equivalents.

Restricted Cash

2 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 Six Months Ended

April 1, 2022 April 2, 2021

Nine Months Ended Nine Months Ended

July 1, 2022 July 2, 2021

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

2 unchanged sentences

Cash and cash equivalents and restricted cash $ 146.1 $ 100.9 $ 102.1 $ 129.8

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Concentration of Risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash, cash equivalents and trade accounts receivable.

Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash, cash equivalents, marketable securities, and trade accounts receivable.

Cash held with financial institutions may exceed the Federal Deposit Insurance Corporation insurance limits or similar limits in foreign jurisdictions.

3 unchanged sentences

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

When these suppliers are unable to meet our supply needs, our production is negatively impacted.

When these suppliers are unable to meet the Company's supply needs, the Company's production is negatively impacted.

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

1 unchanged sentence

During the periods presented, one of the Company's customers accounted for a significant portion of revenues, as set forth below:

Three Months Ended Six Months Ended

April 1, 2022 April 2, 2021 April 1, 2022 April 2, 2021

Three Months Ended Nine Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Canon Medical Systems Corporation 16.6 % 17.1 % 18.0 % 17.2 %

Canon Medical Systems Corporation accounted for 12.8 % and 16.2 % of the Company’s condensed consolidated accounts receivable as of April 1, 2022 and October 1, 2021, respectively.

Canon Medical Systems Corporation accounted for 12.5 % and 16.2 % of the Company’s condensed consolidated accounts receivable as of July 1, 2022 and October 1, 2021, 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 1, 2022 and April 2, 2021, respectively.

There were no impairments recorded during the three and nine months ended July 1, 2022 and July 2, 2021, respectively.

Marketable Securities

The Company's marketable securities consist primarily of financial instruments such as U.S.

treasury securities, U.S.

agency obligations, corporate bonds, commercial paper, and money market funds.

The Company classifies marketable debt securities as available-for-sale at the time of purchase and reevaluates such classifications as of each balance sheet date.

All marketable securities are recorded at estimated fair value.

Any unrealized gains or losses for marketable securities are included in accumulated other comprehensive loss within the condensed consolidated balance sheets.

Refer to Note 7, Fair Value, for further details.

When the fair value of a debt security declines below its amortized cost basis, any portion of that decline attributable to credit losses, to the extent expected to be nonrecoverable before the sale of the security, is recognized in our condensed consolidated statements of operations.

When the fair value of a debt security declines below its amortized cost basis due to changes in interest rates, such amounts are recorded in other comprehensive income, and are recognized in our condensed consolidated statements of operations only if we sell or intend to sell the security before recovery of its cost basis.

There were no credit losses related to marketable securities recorded during the three and nine months ended July 1, 2022.

Loss Contingencies

3 unchanged sentences

When a loss contingency is probable but not reasonably estimable the nature of the contingency and the fact that an estimate cannot be made is disclosed.

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Product Warranty

6 unchanged sentences

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

Six Months Ended

(In millions) April 1, 2022 April 2, 2021

Nine Months Ended

(In millions) July 1, 2022 July 2, 2021

Accrued product warranty, at beginning of period $ 8.5 $ 8.1

22 unchanged sentences

• Recognition of revenue when, or as, a performance obligation is satisfied

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Transaction Price and Allocation to Performance Obligations

22 unchanged sentences

Revenue is disaggregated from contracts between geography and by reportable operating segment, which the Company believes best depicts how the nature, amount, timing, and uncertainty of revenues and cash flows are affected by economic factors.

Refer to Note 15.

Segment Information, included in this report, for the disaggregation of the Company’s revenue based on reportable operating segments and Note 2.

Revenue for the disaggregation of revenue by geographic region.

Refer to Note 15, Segment Information, included in this report, for the disaggregation of the Company’s revenue based on reportable operating segments and Note 2, Revenue for the disaggregation of revenue by geographic region.

Contract Balances

1 unchanged sentence

Contract liabilities, which also includes refund obligations, are included within the Accrued liabilities and other current liabilities, Deferred revenues, and Other long-term liabilities balances in the condensed consolidated balance sheets.

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Costs to Obtain or Fulfill a Customer Contract

13 unchanged sentences

The standard removes certain separation models in ASC 470-20 for convertible instruments, and, as a result, embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under ASC 815.

The convertible debt instruments will be accounted for as a single liability measured at amortized cost.

These convertible debt instruments will be accounted for as a single liability measured at amortized cost.

This will also result in the interest expense recognized for convertible debt instruments to be typically closer to the coupon interest rate.

3 unchanged sentences

We expect to adopt this ASU as of the first quarter of fiscal year 2023.

While we are still evaluating the impacts of this ASU on our consolidated financial statements, we expect that the unamortized discount on our Convertible Notes (see Note 10.

Borrowings ) will be reclassified from equity to liabilities and that the interest expense from our Convertible Notes will decrease and be closer to the coupon rate of 4.00 %.

The impact that adoption of ASU 2020-06 will have on our net income per diluted share will depend on the amount of earnings in each period and our share price, but could result in additional dilution.

While we are still evaluating the impacts of this ASU on our consolidated financial statements, we expect that the unamortized discount on our Convertible Notes (see Note 10, Borrowings ) will be reclassified from equity to liabilities and that the interest expense from our Convertible Notes will decrease and be closer to the coupon rate of 4.00 %.

The impact that adoption of ASU 2020-06 will have on our net income per diluted share will depend on the amount of earnings in each period and our share price, and could result in additional dilution.

In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting, to provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate (e.g., LIBOR) reform on financial reporting.

4 unchanged sentences

Revenue is disaggregated from contracts by geographic region and by reportable operating segment, which the Company believes best depicts how the nature, amount, timing, and uncertainty of revenues and cash flows are affected by economic factors.

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

Three Months Ended Six Months Ended

(In millions) April 1, 2022 April 2, 2021 April 1, 2022 April 2, 2021

Three Months Ended Nine Months Ended

(In millions) July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Americas $ 63.9 $ 65.7 $ 192.8 $ 198.5

2 unchanged sentences

$ 214.5 $ 211.2 $ 628.0 $ 591.8

Revenue in the United States was $ 66.2 million and $ 69.2 million for the three months ended April 1, 2022 and April 2, 2021, respectively.

Revenue in the United States was $ 125.0 and $ 130.3 million for the six months ended April 1, 2022 and April 2, 2021, respectively.

Revenue in the United States was $ 61.7 million and $ 64.0 million for the three months ended July 1, 2022 and July 2, 2021, respectively.

Revenue in the United States was $ 186.7 million and $ 194.2 million for the nine months ended July 1, 2022 and July 2, 2021, 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 1, 2022 April 2, 2021

Nine Months Ended

(In millions) July 1, 2022 July 2, 2021

Balance at beginning of period $ 24.3 $ 24.6

4 unchanged sentences

Contract Liabilities

Six Months Ended

(In millions) April 1, 2022 April 2, 2021

Nine Months Ended

(In millions) July 1, 2022 July 2, 2021

Balance at beginning of period $ 27.0 $ 27.4

3 unchanged sentences

Balance at end of period $ 28.0 $ 27.8

During the three and six months ended April 1, 2022, the Company recognized revenue of $ 1.8 million and $ 5.9 million related to deferred revenues that existed at October 1, 2021.

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 that existed at October 2, 2020.

During the three and nine months ended July 1, 2022, the Company recognized revenue of $ 0.4 million and $ 6.3 million related to deferred revenues that existed at October 1, 2021.

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 that existed at October 2, 2020.

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

1 unchanged sentence

See Note 5, Restructuring, for further details.

Accordingly during the three months ended December 31, 2021, the Company recorded a loss due to abandonment of $ 1.9 million, which is included in Selling, general and administrative on the Condensed Consolidated Statements of Operations for the six months ended April 1, 2022.

Accordingly, during the three months ended December 31, 2021, the Company recorded a loss due to abandonment of $ 1.9 million, which is included in Selling, general and administrative on the Condensed Consolidated Statements of Operations for the nine months ended July 1, 2022.

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

(In millions) Balance Sheet Location April 1, 2022 October 1, 2021

(In millions) Balance Sheet Location July 1, 2022 October 1, 2021

Operating lease right-of-use assets Operating lease assets $ 24.3 $ 24.3

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 1, 2022 April 2, 2021

July 1, 2022 July 2, 2021

Operating lease weighted average remaining lease term (in years) 6.4 6.1

3 unchanged sentences

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

Three Months Ended Six Months Ended

(In millions) April 1, 2022 April 2, 2021 April 1, 2022 April 2, 2021

Three Months Ended Nine Months Ended

(In millions) July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Total operating lease costs (1)

7 unchanged sentences

Total right-of-use assets obtained in exchange for new lease liabilities $ 2.4 $ 2.5 $ 5.4 $ 4.8

(1) Includes variable and short-term lease expense, which were immaterial for the three and six months ended April 1, 2022 and April 2, 2021.

As of April 1, 2022, the present value of operating lease and finance lease liabilities for each of the following five years and a total thereafter were as follows:

(1) Includes variable and short-term lease expense, which were immaterial for the three and nine months ended July 1, 2022 and July 2, 2021.

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As of July 1, 2022, 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)

12 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 1, 2022 and April 2, 2021, the Company recorded a loss on the equity investment in dpiX Holding of $ 0.4 million and $ 0.4 million, respectively.

During the six months ended April 1, 2022 and April 2, 2021, the Company recorded a loss on the equity investment in dpiX Holding of $ 1.1 million and $ 1.9 million, respectively.

The 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 $ 43.9 million and $ 45.0 million at April 1, 2022 and October 1, 2021, respectively.

During the three months ended April 1, 2022 and April 2, 2021, the Company purchased glass transistor arrays from dpiX totaling $ 5.5 million and $ 4.1 million, respectively.

During the six months ended April 1, 2022 and April 2, 2021, the Company purchased glass transistor arrays from dpiX totaling $ 10.7 million and $ 9.0 million, respectively.

During the three months ended July 1, 2022 and July 2, 2021, the Company recorded income on the equity investment in dpiX Holding of $ 0.3 million and $ 0.8 million, respectively.

During the nine months ended July 1, 2022 and July 2, 2021, the Company recorded a loss on the equity investment in dpiX Holding of $ 0.8 million and $ 1.1 million, respectively.

The income and losses on the equity investment in dpiX Holding are included in Other (expense) income, net in the condensed consolidated statements of operations.

The carrying value of the equity investment in dpiX Holding was $ 44.2 million and $ 45.0 million at July 1, 2022 and October 1, 2021, respectively.

During the three months ended July 1, 2022 and July 2, 2021, the Company purchased glass transistor arrays from dpiX totaling $ 5.3 million and $ 4.8 million, respectively.

During the nine months ended July 1, 2022 and July 2, 2021, the Company purchased glass transistor arrays from dpiX totaling $ 16.0 million and $ 13.8 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 1, 2022, and October 1, 2021, the Company had accounts payable to dpiX totaling $ 2.4 million and $ 2.8 million, respectively.

As of July 1, 2022, and October 1, 2021, the Company had accounts payable to dpiX totaling $ 3.4 million and $ 2.8 million, respectively.

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

1 unchanged sentence

In January 2022, the Company's fixed cost commitment was determined and approved by the dpiX board of directors to be $ 13.2 million for calendar year 2022.

As of April 1, 2022, the Company estimated it has fixed cost commitments of $ 9.9 million related to this amended agreement through the remainder of calendar year 2022.

As of July 1, 2022, the Company estimated it has fixed cost commitments of $ 6.6 million related to this amended agreement through the remainder of calendar year 2022.

The amended agreement will continue unless the ownership structure of dpiX changes (as defined in the amended agreement).

2 unchanged sentences

The Company does not have majority voting rights and no power to unilaterally direct the activities of dpiX Holding and therefore is not the primary beneficiary of dpiX Holding.

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 $ 43.9 million and fixed cost commitments.

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 $ 44.2 million and fixed cost commitments.

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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.

2 unchanged sentences

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

During the three months ended April 1, 2022, and April 2, 2021, the Company recorded a loss on the equity investment in VEC of $ 0.5 million and $ 0.2 million, respectively.

During the six months ended April 1, 2022, and April 2, 2021, the Company recorded a loss on the equity investment in VEC of $ 0.6 million and $ 0.5 million, respectively.

The Company's investment in VEC was $ 2.6 million and $ 3.0 million at April 1, 2022 and October 1, 2021, respectively.

At April 1, 2022, the Company had loans outstanding to VEC totaling $ 0.6 million and other receivables of $ 0.3 million, which are recorded in Prepaid expenses and other current assets in the condensed consolidated balance sheet.

During the three months ended July 1, 2022, and July 2, 2021, the Company recorded a loss on the equity investment in VEC of $ 0.4 million and $ 0.4 million, respectively.

During the nine months ended July 1, 2022, and July 2, 2021, the Company recorded a loss on the equity investment in VEC of $ 1.0 million and $ 0.9 million, respectively.

The Company's investment in VEC was $ 2.3 million and $ 3.0 million at July 1, 2022 and October 1, 2021, respectively.

At July 1, 2022, the Company had loans outstanding to VEC totaling $ 0.6 million and other receivables of $ 0.3 million, which are recorded in Prepaid expenses and other current assets in the condensed consolidated balance sheet.

RESTRUCTURING

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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 1, 2022 and April 2, 2021, 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 1, 2022 April 2, 2021 April 1, 2022 April 2, 2021

Below is a detail of restructuring charges incurred during the three and nine months ended July 1, 2022 and July 2, 2021, 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 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Other assets impairment charges Selling, general and administrative $ — $ 0.2 $ 1.8 $ 0.2

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The Company’s policy is to enter into contracts only with financial institutions that meet certain minimum credit ratings to help mitigate counterparty credit risk.

Derivatives Designated as Hedging Instruments - Cash Flow Hedges

During the third quarter of fiscal year 2022 the Company entered into forward contracts which have been designated as cash flow hedges and are intended to manage its risk of variability in foreign currency-denominated contracts.

All changes in fair value of the derivatives designated as cash flow hedges are reported in Accumulated other comprehensive loss in the condensed consolidated balance sheet .

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As of July 1, 2022, the Company had the following outstanding derivatives designated as cash flow hedging instruments:

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

Forward Contracts 4 $ 7.9

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 cash flow hedges:

Amount of Loss Recognized in OCI on Derivative

Three Months Ended

(In millions) July 1, 2022

Forward Contracts $ ( 0.6 )

Amount of Loss Recognized in OCI on Derivative

Nine Months Ended

(In millions) July 1, 2022

Forward Contracts $ ( 0.6 )

These derivative instruments are subject to master netting agreements giving effect to rights of offset with each counterparty.

None of the balances were eligible for netting.

The following table summarizes the gross fair values of derivative instruments as of the periods indicated and the line items in the accompanying condensed consolidated balance sheets where the instruments are recorded:

(In millions) Derivative Liabilities

Derivatives designated as cash flow hedges Balance sheet location July 1, 2022

Forward Contracts Accrued liabilities and other current liabilities $ 0.6

Derivatives Designated as Hedging Instruments - Net Investment Hedges

The Company uses cross currency swap contracts as net investment hedges to manage its risk of variability in foreign currency-denominated net investments in wholly-owned international operations.

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 1, 2022, the Company had the following outstanding derivatives designated as net investment hedging instruments:

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

As of July 1, 2022, the Company had the following outstanding derivatives designated as net investment hedging instruments:

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

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Amount of Gain Recognized in OCI on Derivative

Amount of Gain (Loss) Recognized in OCI on Derivative

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

Three Months Ended

(In millions) April 1, 2022 April 2, 2021 April 1, 2022 April 2, 2021

(In millions) July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Cross Currency Swap Contracts $ 3.9 $ ( 0.1 ) Interest expense $ 0.3 $ 0.3

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 Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)

Six Months Ended

(In millions) April 1, 2022 April 2, 2021 April 1, 2022 April 2, 2021

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

Nine Months Ended

(In millions) July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Cross Currency Swap Contracts $ 5.0 $ ( 1.3 ) Interest expense $ 0.9 $ 1.0

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These derivative instruments are subject to master netting agreements giving effect to rights of offset with each counterparty.

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(In millions) Derivative Assets and Liabilities

Derivatives Designated as Net Investment Hedges Balance Sheet Location April 1, 2022 October 1, 2021

Cross Currency Swap Contracts Other current assets $ 1.2 $ 1.2

Derivatives Designated as Net Investment Hedges Balance Sheet Location July 1, 2022 October 1, 2021

Cross Currency Swap Contracts Prepaid expenses and other current assets $ 1.3 $ 1.2

Cross Currency Swap Contracts Other assets 2.5 —

Cross Currency Swap Contracts Other long-term liabilities — 2.4

$ ( 0.1 ) $ ( 1.2 )

Balance Sheet Hedges

The Company also enters into foreign currency forward contracts to hedge fluctuations associated with foreign currency-denominated monetary assets and liabilities, primarily cash, lease contracts, third-party accounts receivable and payable, and intercompany accounts receivable and payables.

These forward contracts expire within 30 to 90 days.

These forward contracts expire within 30 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 expense, net and offsets the change in fair value of the foreign currency denominated assets and liabilities, which are also recorded in Other expense, net.

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

The Company has 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 1, 2022:

The following table shows the notional amounts of outstanding foreign currency contracts as of July 1, 2022:

Notional Value of Derivatives not Designated as Hedging Instruments:

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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 1, 2022, the fair values of the Company's Convertible Notes and Senior Secured Notes, as defined in Note 10.

Borrowings and measured using Level 1 inputs , were $ 269.6 million and $ 260.6 million, respectively.

As of July 1, 2022, the fair values of the Company's Convertible Notes and Senior Secured Notes, as defined in Note 10, Borrowings and measured using Level 1 inputs , were $ 240.7 million and $ 231.8 million, respectively.

As of October 1, 2021, the fair values of the Company's Convertible Notes and Senior Secured Notes, measured using Level 1 inputs, were $ 296.3 million and $ 304.8 million, respectively.

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.

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 at April 1, 2022

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Fair Value at July 1, 2022

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

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Significant Unobservable Inputs

Cash equivalents - Money market funds

$ — $ 75.1 $ — $ 75.1

Money market funds $ — $ 23.5 $ — $ 23.5

Commercial Paper — 29.3 — 29.3

Corporate Notes/Bonds — 2.8 — 2.8

Government Agencies — 0.2 — 0.2

Derivative assets

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Significant Unobservable Inputs

Cash equivalents - Money market funds

$ — $ 88.2 $ — $ 88.2

Money market funds $ — $ 88.2 $ — $ 88.2

Derivative assets

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Total liabilities measured at fair value $ — $ 2.4 $ — $ 2.4

Marketable Securities

The following is a summary of marketable securities, which are included within the Cash and cash equivalents, Prepaid expenses and other current assets, and Other assets balances on the condensed consolidated balance sheets.

(In millions) Amortized Costs Unrealized Gains Unrealized Losses Fair Value

Commercial Paper $ 29.3 $ — $ — $ 29.3

Corporate Notes/Bonds 2.8 — — 2.8

Government Agencies 0.2 — — 0.2

Total marketable securities $ 32.3 $ — $ — $ 32.3

On October 1, 2021, the Company did not hold any marketable securities.

The contractual maturities of marketable securities as of July 1, 2022, are shown in the table below.

Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations.

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(In millions) Amortized Costs Fair Value

Contractual maturities:

Due within one year $ 30.5 $ 30.5

Due after one year through five years 1.8 1.8

Total marketable securities $ 32.3 $ 32.3

During the three and nine months ended July 1, 2022, there were no gross realized gains or losses from the sale of certain marketable securities that were reclassified out of Accumulated other comprehensive loss.

The following table summarizes the balance sheet locations for marketable securities:

(In millions) Commercial Paper Corporate Notes/Bonds Government Agencies Total

Cash and cash equivalents $ 21.9 $ — $ — $ 21.9

Prepaid expenses and other current assets 7.4 1.0 0.2 8.6

Other assets — 1.8 — 1.8

Total marketable securities $ 29.3 $ 2.8 $ 0.2 $ 32.3

The following table summarizes the Company’s inventories:

(In millions) April 1, 2022 October 1, 2021

(In millions) July 1, 2022 October 1, 2021

Raw materials and parts $ 238.0 $ 168.0

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Foreign currency translation adjustments ( 2.9 ) ( 2.1 ) ( 5.0 )

Balance at April 1, 2022 $ 172.6 $ 117.3 $ 289.9

Balance at July 1, 2022 $ 171.0 $ 116.2 $ 287.2

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

April 1, 2022 October 1, 2021

July 1, 2022 October 1, 2021

(In millions)

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$ 134.8 $ ( 97.4 ) $ 37.4 $ 138.1 $ ( 87.4 ) $ 50.7

Amortization expense for intangible assets was $ 3.7 million and $ 4.3 million for the three months ended April 1, 2022 and April 2, 2021, respectively, and $ 7.5 million and $ 8.5 million for the six months ended April 1, 2022 and April 2, 2021, respectively.

Amortization expense for intangible assets was $ 3.7 million and $ 4.2 million for the three months ended July 1, 2022 and July 2, 2021, respectively, and $ 11.2 million and $ 12.7 million for the nine months ended July 1, 2022 and July 2, 2021, respectively.

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

April 1, 2022 October 1, 2021

July 1, 2022 October 1, 2021

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

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The following table summarizes the Company's interest expense:

Three Months Ended Six Months Ended

April 1, 2022 April 2, 2021 April 1, 2022 April 2, 2021

Three Months Ended Nine Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Contractual interest coupon and other $ 6.7 $ 8.0 $ 21.1 $ 23.9

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

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On June 4, 2020 and June 5, 2020, Varex also entered into privately negotiated warrant transactions (collectively, the “Warrant Transactions” and, together with the Hedge Transactions, the “Call Spread Transactions”), whereby the Company sold warrants at a higher strike price relating to the same number of shares of Varex common stock that was initially covered by the Convertible Notes, subject to customary anti-dilution adjustments.

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

The number of warrants outstanding as of April 1, 2022 was 9.6 million.

The number of warrants outstanding as of July 1, 2022 was 9.6 million.

Senior Secured Notes

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The redemption price of the redeemed notes was 103 % of the principal amount, plus accrued and unpaid interest from, and including, October 15, 2021 to, but excluding, the redemption date of March 18, 2022.

As of April 1, 2022, the aggregate principal amount of the outstanding Senior Secured Notes was $ 243.0 million.

As of July 1, 2022, the aggregate principal amount of the outstanding Senior Secured Notes was $ 243.0 million.

Asset-Based Loan

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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 1, 2022, the amount available under our ABL Facility was $ 96 million and the ABL Facility remains undrawn.

As of July 1, 2022, the amount available under our ABL Facility was $ 97 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.

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NONCONTROLLING INTERESTS

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

At April 1, 2022, noncontrolling shareholders together held approximately 0.5 million shares of MeVis, representing 26.3 % of the outstanding shares.

At July 1, 2022, 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:

Six Months Ended

(In millions) April 1, 2022 April 2, 2021

Nine Months Ended

(In millions) July 1, 2022 July 2, 2021

Noncontrolling interests, at beginning of period $ 13.2 $ 14.1

2 unchanged sentences

Noncontrolling interests, at end of period $ 13.3 $ 13.2

NET INCOME (LOSS) PER SHARE

Basic net income (loss) per common share is computed by dividing the net income (loss) for the period by the weighted average number of shares of common stock outstanding during the reporting period.

Diluted net income (loss) per common share reflects the effects of potentially dilutive securities, which is computed by dividing net income (loss) by the sum of the weighted average number of common shares outstanding and dilutive common shares.

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

NET INCOME PER SHARE

Basic net income per common share is computed by dividing the net income for the period by the weighted average number of shares of common stock outstanding during the reporting period.

Diluted net income per common share reflects the effects of potentially dilutive securities, which is computed by dividing net income by the sum of the weighted average number of common shares outstanding and dilutive common shares.

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

Three Months Ended Nine Months Ended

(In millions, except per share amounts)

April 1, 2022 April 2, 2021 April 1, 2022 April 2, 2021

Net income (loss) attributable to Varex $ 7.6 $ 3.1 $ 9.0 $ ( 3.3 )

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Net income attributable to Varex $ 8.2 $ 12.0 $ 17.2 $ 8.7

Weighted average shares outstanding - basic

2 unchanged sentences

Dilutive effect of share-based awards and other 0.4 0.4 0.6 0.2

Dilutive effect of warrants 0.2 — 0.7 —

Weighted average shares outstanding - diluted

40.5 41.3 41.9 39.5

Net income (loss) per share attributable to Varex - basic

$ 0.19 $ 0.08 $ 0.23 $ ( 0.09 )

Net income (loss) per share attributable to Varex - diluted

$ 0.18 $ 0.08 $ 0.21 $ ( 0.09 )

Net income per share attributable to Varex - basic $ 0.21 $ 0.31 $ 0.43 $ 0.22

Net income per share attributable to Varex - diluted $ 0.20 $ 0.29 $ 0.41 $ 0.22

Anti-dilutive share-based awards, excluded

3.2 2.8 3.0 2.9

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.

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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 per share attributable to Varex when their effect is dilutive.

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

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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 1, 2022 April 2, 2021 April 1, 2022 April 2, 2021

Three Months Ended Nine Months Ended

(In millions) July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Cost of revenues $ 0.4 $ 0.4 $ 1.2 $ 1.0

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Exercised ( 138 ) $ 13.61 - $ 30.74

Outstanding at April 1, 2022 2,914 $ 13.61 - $ 37.60

Outstanding at July 1, 2022 2,906 $ 13.61 - $ 37.60

$ 28.97 4.9 $ 1,396

Exercisable at April 1, 2022 1,931 $ 13.61 - $ 37.60

Exercisable at July 1, 2022 2,007 $ 13.61 - $ 37.60

$ 29.97 3.3 $ 590

(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 $ 21.33 as of April 1, 2022, 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 $ 21.33 as of July 1, 2022, 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.

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Restricted Stock Units

5 unchanged sentences

Canceled or expired ( 46 ) 21.30

Outstanding at April 1, 2022 1,181 $ 23.29

Outstanding at July 1, 2022 1,157 $ 23.39

TAXES ON INCOME

For the three months ended April 1, 2022, the Company recognized income tax expense of $ 6.0 million on $ 13.6 million of pre-tax 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 six months ended April 1, 2022, the Company recognized income tax expense of $ 7.7 million on $ 16.9 million of pre-tax income.

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 three months ended July 1, 2022, the Company recognized income tax expense of $ 5.1 million on $ 13.5 million of pre-tax income.

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 nine months ended July 1, 2022, the Company recognized income tax expense of $ 12.8 million on $ 30.4 million of pre-tax income.

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.

The Company is unable to recognize a tax benefit for pre-tax book losses in certain foreign jurisdictions but has recognized tax expense for profitable foreign jurisdictions.

The Company's tax expense for the three and six months ended April 1, 2022 increased, primarily due to increased pre-tax income in certain jurisdictions, valuation allowance positions in the United States on deferred tax attributes, 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 April 1, 2022, which is that earnings prior to fiscal year 2018 are permanently reinvested, but post fiscal year 2017 earnings are not permanently reinvested.

The Company's tax expense for the three and nine months ended July 1, 2022 increased, primarily due to increased pre-tax income in certain jurisdictions, valuation allowance positions in the United States on deferred tax attributes, 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 1, 2022, which is that earnings prior to fiscal year 2018 are permanently reinvested, but post fiscal year 2017 earnings are not permanently reinvested.

Furthermore, all earnings with respect to certain foreign subsidiaries, located primarily in Sweden and Finland, are indefinitely reinvested in those countries.

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In addition, the Company licenses proprietary image-processing and detection software designed to work with other Varex products to provide packaged sub-assembly solutions to industrial customers.

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Accordingly, the following information is provided for purposes of achieving an understanding of operations, but it may not be indicative of the financial results of the reported segments were they independent organizations.

1 unchanged sentence

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

Three Months Ended Six Months Ended

(In millions) April 1, 2022 April 2, 2021 April 1, 2022 April 2, 2021

Three Months Ended Nine Months Ended

(In millions) July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

Revenues, net

Medical $ 167.1 $ 167.3 $ 493.2 $ 463.1

5 unchanged sentences

Total operating expenses 50.4 48.4 145.4 148.3

44.2 48.8 95.0 99.9

Interest and other expenses, net

( 13.0 ) ( 12.6 ) ( 23.7 ) ( 23.4 )

Income (loss) before taxes 13.6 3.2 16.9 ( 1.5 )

Interest and other expense, net ( 9.5 ) ( 10.4 ) ( 33.2 ) ( 33.8 )

Income before taxes 13.5 15.3 30.4 13.8

Income tax expense 5.1 3.1 12.8 4.7

Net income (loss) 7.6 3.2 9.2 ( 3.1 )

Net income 8.4 12.2 17.6 9.1

Net income attributable to noncontrolling interests 0.2 0.2 0.4 0.4

Net income (loss) attributable to Varex $ 7.6 $ 3.1 $ 9.0 $ ( 3.3 )

Net income attributable to Varex $ 8.2 $ 12.0 $ 17.2 $ 8.7

The Company does not disclose total assets by segment as this information is not provided to the CODM.

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