What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-01-31 compared with 2022-08-03 · 250 added, 334 removed, 507 unchanged (54% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended Nine Months Ended

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

Three Months Ended

(In millions, except per share amounts) December 30, 2022 December 31, 2021

Revenues, net $ 205.6 $ 198.8

8 unchanged sentences

Interest expense ( 7.5 ) ( 9.9 )

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

Other expense, net ( 0.6 ) ( 0.8 )

Interest and other expense, net ( 7.6 ) ( 10.7 )

10 unchanged sentences

Diluted 40.6 43.9

See accompanying notes to the unaudited condensed consolidated financial statements.

See accompanying Notes to the Condensed Consolidated Financial Statements.

VAREX IMAGING CORPORATION

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

Three Months Ended

(In millions) December 30, 2022 December 31, 2021

Net income $ 3.2 $ 1.6

Other comprehensive income

Other comprehensive loss

Foreign currency translation adjustments — ( 0.5 )

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

Total comprehensive income 3.2 1.1

1 unchanged sentence

Comprehensive income attributable to Varex $ 3.1 $ 0.9

See accompanying notes to the unaudited condensed consolidated financial statements.

See accompanying Notes to the Condensed Consolidated Financial Statements.

VAREX IMAGING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(In millions, except share and per share amounts) December 30, 2022 September 30, 2022

Current assets:

Cash and cash equivalents $ 81.5 $ 89.4

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

Accounts receivable, net of allowance for credit losses of $ 0.4 million and $ 0.6 million at December 30, 2022 and September 30, 2022, respectively

Inventories 320.3 303.2

Prepaid expenses and other current assets

26 unchanged sentences

Shares issued and outstanding:

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

40,087,100 and 40,085,126 at December 30, 2022 and September 30, 2022, respectively

Additional paid-in capital 437.9 469.1

Accumulated other comprehensive loss ( 1.5 ) —

Accumulated other comprehensive income 0.1 0.1

Retained earnings 73.3 63.8

3 unchanged sentences

Total liabilities and stockholders' equity $ 1,180.9 $ 1,184.4

See accompanying notes to the unaudited condensed consolidated financial statements.

See accompanying Notes to the Condensed Consolidated Financial Statements.

VAREX IMAGING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF 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

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

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

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

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

Three Months Ended December 30, 2022

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

(In millions) Shares Amount

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

September 30, 2022 40.1 $ 0.4 $ 469.1 $ 0.1 $ 63.8 $ 533.4 $ 13.3 $ 546.7

Cumulative effect of accounting change — — ( 34.6 ) — 6.5 ( 28.1 ) — ( 28.1 )

Net income — — — — 3.1 3.1 0.1 3.2

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

Share-based compensation — — 3.3 — — 3.3 — 3.3

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

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.

VAREX IMAGING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Nine Months Ended July 1, 2022

December 30, 2022 40.1 $ 0.4 $ 437.9 $ 0.1 $ 73.3 $ 511.7 $ 13.3 $ 525.0

Three Months Ended December 31, 2021

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

3 unchanged sentences

Exercise of stock options 0.1 — 3.5 — — 3.5 — 3.5

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 — 1.7 — — 1.7 — 1.7

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

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

Foreign currency translation adjustments — — — ( 0.5 ) — ( 0.5 ) — ( 0.5 )

Other — — — — — — ( 0.1 ) ( 0.1 )

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 income — — — — 8.7 8.7 0.4 9.1

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 0.2 — 2.8 — — 2.8 — 2.8

Share-based compensation — — 10.6 — — 10.6 — 10.6

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

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

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.

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

See accompanying Notes to the Condensed Consolidated Financial Statements.

VAREX IMAGING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

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

Three Months Ended

(In millions) December 30, 2022 December 31, 2021

Cash flows from operating activities:

5 unchanged sentences

Deferred taxes ( 0.2 ) 0.2

Loss from equity method investments 1.5 2.2

(Income) loss from equity method investments ( 1.3 ) 0.5

Amortization of deferred loan costs 0.6 2.6

12 unchanged sentences

Purchases of property, plant and equipment ( 5.5 ) ( 4.1 )

Purchases of marketable securities ( 10.4 ) —

Loss on settlement of cash flow hedge ( 0.3 ) —

Proceeds from maturities of marketable debt securities 4.0 —

Purchase of marketable debt securities ( 6.3 ) —

Purchase of marketable equity securities ( 2.7 ) —

Settlement of net investment hedge 7.0 —

Proceeds from sales of business and assets — 1.7

Investments in and loans to privately-held companies ( 0.3 ) ( 0.8 )

Other ( 0.4 ) 0.4

Other, net 0.1 ( 0.2 )

Net cash used in investing activities

1 unchanged sentence

Cash flows from financing activities:

Taxes related to net share settlement of equity awards

( 2.1 ) ( 1.5 )

Borrowings under credit agreements

Repayments of borrowing under credit agreements

2 unchanged sentences

Proceeds from shares issued under employee stock purchase plan

Other financing activities

( 0.3 ) ( 1.9 )

Net cash used in financing activities

( 24.0 ) ( 1.3 )

Other, net 0.1 0.1

Net cash (used in) provided by financing activities

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

( 45.2 ) 27.7

Cash and cash equivalents and restricted cash at beginning of period

6 unchanged sentences

Purchases of property, plant and equipment financed through accounts payable $ 2.0 $ 0.8

See accompanying notes to the unaudited condensed consolidated financial statements.

See accompanying Notes to the Condensed Consolidated Financial Statements.

VAREX IMAGING CORPORATION

2 unchanged sentences

Description of Business

Varex Imaging Corporation (the “Company,” “Varex,” or “Varex Imaging”) designs, manufactures, sells and services a broad range of medical products, which include X-ray tubes, digital detectors and accessories, high voltage connectors, image processing software and workstations, computer-aided diagnostic software, collimators, automatic exposure control devices, generators, ionization chambers and buckys, for use in a range of applications, including radiographic or fluoroscopic imaging, mammography, computed tomography, oncology and computer-aided detection.

Varex Imaging Corporation (the “Company” or “Varex”) designs, manufactures, sells and services a broad range of medical products, which include X-ray imaging components including X-ray tubes, digital detectors and accessories, ionization chambers and buckys, high voltage connectors, image processing software and workstations, 3D reconstruction software, computer-aided diagnostic software, collimators, automatic exposure control devices, generators, and heat exchangers.

The Company sells its products to imaging system original equipment manufacturer (“OEM”) customers for incorporation into new medical diagnostic, radiation therapy, dental, and veterinary equipment, as well as to independent service companies and distributors, and directly to end-users for replacement purposes.

The Company also designs, manufactures, sells and services industrial products, which include Linatron® X-ray accelerators, high voltage connectors, imaging processing software and image detection products for security and inspection purposes, such as cargo screening at ports and borders and nondestructive examination in a variety of applications.

The Company generally sells security and inspection products to OEM customers who incorporate Varex’s products into their inspection systems.

The Company also designs, manufactures, sells and services industrial products, which include Linatron® X-ray linear accelerators, digital detectors, high voltage connectors, coolers, imaging processing software and image detection products for security and inspection purposes, such as cargo screening at ports and borders and nondestructive examination in a variety of applications.

The Company generally sells security and inspection products to OEM customers who incorporate Varex’s products into their inspection or irradiation systems and processes.

The Company conducts an active research and development program to focus on new technology and applications in both the medical and industrial X-ray imaging markets.

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 have been prepared in accordance with accounting principles generally accepted in the United States (“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 in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information.

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

In the opinion of management, these condensed consolidated financial statements include all adjustments necessary for a fair presentation of the results for the interim periods.

The Company has consolidated all of its majority owned subsidiaries and entities over which it has control.

All intercompany balances and transactions have been eliminated as part of the consolidation.

These condensed consolidated financial statements and the accompanying notes are unaudited and should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended 2022 included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on November 18, 2022.

The Company considers events or transactions that occur after the balance sheet date, but before the financial statements are issued, to provide additional evidence relative to certain estimates or to identify matters that require additional disclosures.

Except for the change in certain policies upon adoption of the accounting standards described below, there have been no material changes to the Company's significant accounting policies, compared to the accounting policies described in Note 1, Summary of Significant Accounting Policies , in the Company’s Annual Report on Form 10-K for fiscal year 2021.

Except for the change in certain policies upon adoption of the accounting standard described below, there have been no material changes to the Company's significant accounting policies, compared to the accounting policies described in Note 1, Summary of Significant Accounting Policies , in the Company’s Annual Report on Form 10-K for fiscal year 2022.

Reclassification of Prior Period Presentation

Certain prior period amounts in the notes to the condensed consolidated financial statements have had a change in presentation to conform to current period presentation.

This change does not affect previously reported results.

Segment Reporting

4 unchanged sentences

Fiscal year 2023 is the 52-week period ending September 29, 2023.

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

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.

T able of Contents

Fiscal year 2022 was the 52-week period that ended on September 30, 2022.

The fiscal quarters ended December 30, 2022 and December 31, 2021 were both 13-week periods.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.

Such estimates include the valuation of inventories, valuation of goodwill and intangible assets, warranties, contract liabilities, long-lived asset valuations, impairment on investments, valuation of financial instruments, and taxes on income.

Such estimates include the valuation of inventories, valuation of goodwill and intangible assets, warranties, contract liabilities, long-lived asset valuations, impairment of investments, valuation of financial instruments, and taxes on income.

Actual results could differ from these estimates.

Impact of COVID-19

The coronavirus (“COVID-19”) pandemic, the emerging variants, 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:

The coronavirus (“COVID-19”) pandemic, the COVID-19 variants, 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.

While the impacts of COVID-19 on the Company's business have lessened, 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 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.

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.

In addition, while the Company has 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 remotely when possible, the Company has experienced, and may in the future experience, COVID-19 related employee absences that adversely impact its production or business.

The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company, including the estimated future impacts of COVID-19, through the date of filing this report.

9 unchanged sentences

Cash and cash equivalents and restricted cash as reported within the Condensed Consolidated Statements of Cash Flows consisted of the following:

Nine Months Ended Nine Months Ended

July 1, 2022 July 2, 2021

Three Months Ended Three Months Ended

December 30, 2022 December 31, 2021

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

1 unchanged sentence

Restricted cash 1.2 1.3 1.5 1.4

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

T able of Contents

Total as presented in the Condensed Consolidated Statements of Cash Flows $ 90.6 $ 82.8 $ 146.1 $ 159.2

Concentration of Risk

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

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

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

To date, the Company has not experienced any losses on its deposits of cash and cash equivalents.

To date, the Company has not realized any losses on its deposits of cash and cash equivalents.

The Company performs ongoing credit evaluations of its customers and, except for government tenders, group purchases and orders with a letter of credit, its industrial customers often provide a down payment.

5 unchanged sentences

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

Three Months Ended Nine Months Ended

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

Three Months Ended

December 30, 2022 December 31, 2021

Canon Medical Systems Corporation 20.1 % 19.2 %

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.

Canon Medical Systems Corporation accounted for 9.2 % and 10.3 % of the Company’s accounts receivable as of December 30, 2022 and September 30, 2022, 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 nine months ended July 1, 2022 and July 2, 2021, respectively.

There were no impairments recorded during the three months ended December 30, 2022 and December 31, 2021, respectively.

Marketable Securities

1 unchanged sentence

treasury securities, U.S.

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

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

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.

All marketable debt securities are recorded at estimated fair value.

Any unrealized gains or losses for marketable debt securities are included in accumulated other comprehensive income within the Condensed Consolidated Balance Sheets.

Marketable equity securities are stated at fair value as determined by the most recently traded price of each security at the balance sheet date.

All unrealized gains and losses on equity securities are recorded as part of other expense, net in the Company's condensed consolidated financial statements.

See Note 7, Fair Value, for further details.

When the fair value of a marketable 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 the Condensed Consolidated Statements of Operations.

When the fair value of a marketable debt security declines below its amortized cost basis due to changes in interest rates, such amounts are recorded in other comprehensive loss, and are recognized in the Condensed Consolidated Statements of Operations only if the Company sells or intends to sell the security before recovery of its cost basis.

There were no credit losses related to marketable debt securities recorded during the three months ended December 30, 2022.

Loss Contingencies

From time to time, the Company is involved in legal proceedings, government inspections, investigations, customs and duties audits, and other claims and contingency matters, both inside and outside the United States, arising in the ordinary course of its business or otherwise.

From time to time, the Company is involved in legal proceedings, claims and government inspections or investigations, customs and duties audits, other contingency matters, both inside and outside the United States, arising in the ordinary course of its business or otherwise.

The Company accrues amounts for probable losses, to the extent they can be reasonably estimated, that it believes are adequate to address any liabilities related to legal proceedings and other loss contingencies that the Company believes will result in a probable loss (including, among other things, probable settlement value).

1 unchanged sentence

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.

T able of Contents

Product Warranty

1 unchanged sentence

The Company provides for the estimated future costs of warranty obligations in cost of revenues when the related revenues are recognized.

The accrued warranty costs represent the best estimate at the time of sale of the total costs that the Company will incur to repair or replace product parts that fail while under warranty.

The amount of the accrued estimated warranty costs obligation for established products is primarily based on historical experience as to product failures adjusted for current information on repair costs.

The accrued warranty costs represent the best estimate at the time of sale of the total costs that the Company will incur to repair or replace product parts that fail while still under warranty.

The amount of the accrued estimated warranty costs obligation for established products is primarily based on historical experience of product failures, adjusted for current information on repair costs.

For new products, estimates include the historical experience of similar products, as well as a reasonable allowance for warranty expenses associated with new products.

1 unchanged sentence

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

Nine Months Ended

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

Three Months Ended

(In millions) December 30, 2022 December 31, 2021

Accrued product warranty, at beginning of period $ 7.9 $ 8.5

13 unchanged sentences

The Company sells a high proportion of its X-ray products to a limited number of OEM customers.

X-ray tubes, digital detectors and image-processing tools and security and inspection products are generally sold on a stand-alone basis.

However, the Company occasionally sells its digital detectors, X-ray tubes and imaging processing tools as a package that is optimized for digital X-ray imaging and sells its Linatron® X-ray accelerators together with its image processing software and image detection products to OEM customers that incorporate them into their inspection systems.

X-ray imaging components including X-ray tubes, digital detectors and image-processing tools and security and inspection products are generally sold on a stand-alone basis.

However, the Company occasionally sells its digital detectors, X-ray tubes and imaging processing tools as a package that is optimized for digital X-ray imaging and sells its Linatron® X-ray linear accelerators together with its image processing software and image detection products to OEM customers that incorporate them into their inspection or irradiation systems and processes.

Service contracts are often sold with certain security and inspection products and computer-aided detection products.

5 unchanged sentences

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

T able of Contents

Transaction Price and Allocation to Performance Obligations

25 unchanged sentences

Contract assets are included within the prepaid expenses and other current assets, and other assets balances in the Condensed Consolidated Balance Sheets.

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.

T able of Contents

Contract liabilities, which includes refund liabilities and deferred revenue, are included within the accrued liabilities and other current liabilities, deferred revenues, and other long-term liabilities balances in the Condensed Consolidated Balance Sheets.

Deferred revenue represents the Company's obligation to transfer goods and/or services to its customers for which it has already received consideration (or the amount is due) from the customer.

The Company's deferred revenue balance primarily relates to contract advances and billings for warranty contracts.

Deferred revenue that is estimated to be recognized during the following twelve-month period is recorded as deferred revenues and the remaining portion is recorded as other long-term liabilities in the Condensed Consolidated Balance Sheets.

Costs to Obtain or Fulfill a Customer Contract

4 unchanged sentences

These costs are included as a component of cost of revenues.

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.

Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the current guidance, and improving the consistent application of and simplification of other areas of the guidance.

The Company adopted this ASU on October 2, 2021, using a prospective approach.

The adoption of ASU 2019-12 did not have a material impact on the Company's condensed consolidated financial statements and related disclosures.

Recent Accounting Standard Updates Not Yet Effective

In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.

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.

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.

Further, the ASU made amendments to the earnings per share (“EPS”) guidance in Topic 260 for convertible instruments, the most significant impact of which is requiring the use of the if-converted method for diluted EPS calculation, and no longer allowing the net share settlement method.

The ASU is effective for annual periods beginning after December 15, 2021, including interim periods within those years.

Adoption of the ASU can either be on a modified retrospective or full retrospective basis.

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, 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.

Adoption of the guidance is elective and is permitted from March 12, 2020 through December 31, 2022.

The Company will evaluate transactions or contract modifications occurring as a result of reference rate reform and determine whether to apply the optional guidance on an ongoing basis.

The Company does not currently expect this ASU will have a material impact on its financial position, results of operations or cash flows.

In August 2020, the Financial Accounting Standards Board issued Accounting Standard Update ("ASU") 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.

The standard removed 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.

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

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

Further, the ASU made amendments to the earnings per share (“EPS”) guidance in Topic 260 for convertible instruments, the most significant impact of which was requiring the use of the if-converted method for diluted EPS calculation, and no longer allowing the net share settlement method.

The Company adopted this ASU on October 1, 2022, using the modified retrospective method.

On the date of adoption, the Company recorded an entry to reduce additional paid-in capital by $ 34.6 million, increase long-term debt, net by $ 28.0 million, decrease deferred tax assets by $ 0.1 million, and increase retained earnings by $ 6.5 million for the after-tax impact of previously recognized amortization of the debt discount associated with the Company’s Convertible Notes (as defined herein).

The unamortized discount on the Company's Convertible Notes (see Note 10, Borrowings ) was derecognized in the first quarter of fiscal year 2023 and the interest expense from its Convertible Notes decreased and became closer to the coupon rate of 4.00 %.

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

Disaggregation of Revenue

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.

T able of Contents

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

Three Months Ended Nine Months Ended

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

Three Months Ended

(In millions) December 30, 2022 December 31, 2021

Americas $ 74.8 $ 60.5

2 unchanged sentences

$ 205.6 $ 198.8

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.

Revenue in the United States was $ 74.1 million and $ 58.8 million for the three months ended December 30, 2022 and December 31, 2021, respectively.

Our products are sold in three geographic regions:

the Americas, EMEA, and APAC.

The Americas includes North America (primarily the United States) and Latin America.

EMEA includes Europe, Russia, the Middle East, India and Africa.

APAC includes Asia (other than India) and Australia.

Revenues by region are based on the known final destination of products sold.

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

Contract Balances

The following table summarizes the changes in the contract assets and refund liabilities:

The following table summarizes the changes in the contract assets and refund liabilities for the three months ended December 30, 2022 and December 31, 2021:

Contract Assets

Nine Months Ended

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

Three Months Ended

(In millions) December 30, 2022 December 31, 2021

Balance at beginning of period $ 25.4 $ 24.3

1 unchanged sentence

Contract asset from shipments of products, subject to return during the period 1.5 1.8

Adjustment for actual vs reserved product returns ( 0.4 ) ( 0.6 )

Balance at end of period $ 25.4 $ 24.6

Contract Liabilities

Nine Months Ended

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

Refund Liabilities

Three Months Ended

(In millions) December 30, 2022 December 31, 2021

Balance at beginning of period $ 28.2 $ 27.0

1 unchanged sentence

Additions to refund liabilities 1.7 1.9

Adjustment for actual vs reserved product returns ( 0.5 ) ( 0.7 )

Balance at end of period $ 28.3 $ 27.3

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.

During the three months ended December 30, 2022, the Company recognized revenue of $ 4.2 million related to deferred revenues which existed at September 30, 2022.

During the three months ended December 31, 2021, the Company recognized revenue of $ 4.1 million related to deferred revenues that existed at October 1, 2021.

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

During the three months ended December 31, 2021, the Company determined that it no longer intends to sublease the Santa Clara facility, which ceased operations at the end of fiscal year 2020.

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 nine months ended July 1, 2022.

T able of Contents

During fiscal year 2022, 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.

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

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

(In millions) Balance Sheet Location December 30, 2022 September 30, 2022

Operating lease right-of-use assets Operating lease assets $ 22.1 $ 23.2

4 unchanged sentences

Finance lease liabilities (non-current) Other long-term liabilities $ 0.1 $ 0.1

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

July 1, 2022 July 2, 2021

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

Operating lease weighted average discount rate 5.6 % 5.2 %

Finance lease weighted average remaining lease term (in years) 2.2 2.8

Finance lease weighted average discount rate 3.7 % 3.7 %

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

Three Months Ended Nine Months Ended

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

Three Months Ended

(In millions) December 30, 2022 December 31, 2021

Total operating lease costs (1)

$ 1.5 $ 1.9 $ 4.9 $ 5.8

Total finance lease costs $ 0.1 $ 0.1

3 unchanged sentences

Noncash operating right-of-use assets obtained in exchange for new lease liabilities $ — $ 0.1

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

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 nine months ended July 1, 2022 and July 2, 2021.

T able of Contents

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)

Fiscal years:

Operating Leases Finance Leases

2022 remaining $ 1.8 $ 0.1

Thereafter 9.7 —

Total future lease payments $ 30.1 $ 0.3

imputed interest ( 5.2 ) —

Present value of lease liabilities $ 24.9 $ 0.3

(1) Includes variable and short-term lease expense, which were immaterial for the three months ended December 30, 2022 and December 31, 2021.

RELATED-PARTY TRANSACTIONS

Investment in Privately-Held Companies

The Company has a 40 % ownership interest in dpiX Holding LLC (“dpiX Holding”), a holding company that has a 100 % ownership interest in dpiX LLC (“dpiX”), a supplier of amorphous silicon-based thin film transistor arrays for digital flat panel image detectors.

In accordance with the dpiX Holding operating agreement, net profits or losses are allocated to the members in accordance with their ownership interests.

1 unchanged sentence

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 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.

During the three months ended December 30, 2022 and December 31, 2021, the Company recorded income (loss) on the equity investment in dpiX Holding of $ 2.0 million and $( 0.7 ) million, respectively.

The income and loss on the equity investment in dpiX Holding are included in other expense, net in the Condensed Consolidated Statements of Operations.

The carrying value of the equity investment in dpiX Holding was $ 44.4 million and $ 42.4 million at December 30, 2022 and September 30, 2022, respectively.

During the three months ended December 30, 2022 and December 31, 2021, the Company purchased glass transistor arrays from dpiX totaling $ 5.0 million and $ 5.2 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 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.

As of December 30, 2022, and September 30, 2022, the Company had accounts payable to dpiX totaling $ 3.3 million and $ 3.1 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 2023, the Company's fixed cost commitment was determined and approved by the dpiX board of directors to be $ 13.1 million for calendar year 2023.

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).

3 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 $ 44.4 million and fixed cost commitments.

T able of Contents

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 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.

The Company has determined that VEC is a variable interest entity.

During the three months ended December 30, 2022, and December 31, 2021, the Company recorded a loss on the equity investment in VEC of $ 0.3 million and $ 0.1 million, respectively.

The Company's investment in VEC was $ 2.2 million and $ 2.5 million at December 30, 2022 and September 30, 2022, respectively.

As of December 30, 2022 and September 30, 2022 the Company had loans outstanding to VEC totaling $ 0.6 million, and other receivables from VEC of $ 0.4 million and $ 0.3 million at December 30, 2022 and September 30, 2022, respectively, which are recorded in prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets.

RESTRUCTURING

3 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 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

Below is a detail of restructuring charges incurred during the three months ended December 30, 2022 and December 31, 2021, respectively, which predominantly relate to the Company's Medical segment:

Three Months Ended

(In millions) Location of Restructuring Charges in Condensed Consolidated Statements of Operations December 30, 2022 December 31, 2021

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

Accelerated depreciation Cost of revenues — — — 0.2

Severance costs Selling, general and administrative — 0.2 — 0.6

Total restructuring charges $ — $ 0.4 $ 1.8 $ 1.0

FINANCIAL DERIVATIVES AND HEDGING ACTIVITIES

8 unchanged sentences

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 .

T able of Contents

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 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:

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

During the three months ended December 30, 2022, the Company terminated all three of its previously outstanding cross currency swap contracts which resulted in cash received upon settlement of $ 7.3 million.

The gain on the swap was recorded in accumulated other comprehensive income where it will remain until such time that substantial liquidation of the international operations should occur.

Concurrent with the termination of the previous cross currency swaps, the Company entered into two new cross currency swaps which have been designated as net investment hedges.

As of December 30, 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

1 unchanged sentence

Amount of Gain (Loss) Recognized in OCI on Derivative

Amount of (Loss) Gain 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) 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

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

(In millions) December 30, 2022 December 31, 2021 December 30, 2022 December 31, 2021

Cross currency swap contracts $ ( 4.0 ) $ 0.8 Interest expense $ 0.2 $ 0.3

T able of Contents

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

2 unchanged sentences

(In millions) Derivative Assets and Liabilities

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

Derivatives Designated as Net Investment Hedges Balance Sheet Location December 30, 2022 September 30, 2022

Cross currency swap contracts Prepaid expenses and other current assets $ 1.1 $ 1.2

1 unchanged sentence

Cross currency swap contracts Other long-term liabilities $ 4.7 $ —

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 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) 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 July 1, 2022:

Notional Value of Derivatives not Designated as Hedging Instruments:

(In millions of equivalent USD) Buy contracts Sell contract

Chinese renminbi $ — $ 9.1

Total Notional Value $ — $ 16.2

Assets and Liabilities Measured at Fair Value on a Recurring Basis

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

As of December 30, 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 $ 229.0 million and $ 239.3 million, respectively.

As of September 30, 2022, the fair values of the Company's Convertible Notes and Senior Secured Notes, measured using Level 1 inputs, were $ 250.2 million and $ 241.3 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

T able of Contents

Fair Value at July 1, 2022

Fair Value at December 30, 2022

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

6 unchanged sentences

Government agencies — 0.3 — 0.3

Treasury bills — 10.3 — 10.3

Derivative assets

Deferred compensation plan (1)

Marketable equity securities 4.5 — — 4.5

Total assets measured at fair value $ 10.3 $ 41.7 $ — $ 52.0

2 unchanged sentences

Total liabilities measured at fair value $ — $ 4.7 $ — $ 4.7

Fair Value at October 1, 2021

Fair Value at September 30, 2022

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

3 unchanged sentences

Money market funds $ — $ 36.6 $ — $ 36.6

Commercial paper — 5.9 — 5.9

Corporate notes/bonds — 3.6 — 3.6

Government agencies — 0.3 — 0.3

Treasury bills — 10.2 — 10.2

Derivative assets — 7.5 — 7.5

Deferred compensation plan (1)

Marketable equity securities 2.5 — — 2.5

Total assets measured at fair value $ 7.9 $ 64.1 $ — $ 72.0

1 unchanged sentence

Total liabilities measured at fair value $ — $ 0.3 $ — $ 0.3

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

(1) The assets held under the Company's deferred compensation plan are classified in Level 1 as they relate primarily to publicly traded mutual funds for which there are observable market prices in active markets.

Marketable Debt Securities

The following tables summarize the Company's marketable debt securities:

December 30, 2022

(In millions) Amortized Costs Unrealized Losses Fair Value

Commercial paper $ 4.9 $ — $ 4.9

Corporate notes/bonds 3.7 ( 0.1 ) 3.6

Treasury bills 10.3 — 10.3

Government agencies 0.3 — 0.3

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.

Total marketable debt securities $ 19.2 $ ( 0.1 ) $ 19.1

September 30, 2022

(In millions) Amortized Costs Unrealized Losses Fair Value

Commercial paper $ 5.9 $ — $ 5.9

Corporate notes/bonds 3.7 ( 0.1 ) 3.6

Treasury bills 10.2 — 10.2

Government agencies 0.3 — 0.3

Total marketable debt securities $ 20.1 $ ( 0.1 ) $ 20.0

The contractual maturities of marketable debt securities as of December 30, 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.

T able of Contents

December 30, 2022

(In millions) Amortized Costs Fair Value

2 unchanged sentences

Due after one year through five years 2.4 2.4

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

Total marketable debt securities $ 19.2 $ 19.1

During the three months ended December 30, 2022, there were no gross realized gains or losses from the sale of certain marketable debt securities that were reclassified out of accumulated other comprehensive income.

The following tables summarize the balance sheet locations for marketable debt securities:

December 30, 2022

(In millions) Commercial paper Corporate notes/bonds Government agencies Treasury bills Total

Prepaid expenses and other current assets $ 4.9 $ 2.4 $ 0.3 $ 9.1 $ 16.7

Other assets — 1.2 — 1.2 2.4

Total marketable debt securities $ 4.9 $ 3.6 $ 0.3 $ 10.3 $ 19.1

September 30, 2022

(In millions) Commercial paper Corporate notes/bonds Government agencies Treasury bills Total

Cash and cash equivalents $ — $ — $ — $ 3.3 $ 3.3

1 unchanged sentence

Other assets — 1.7 — 0.5 2.2

Total marketable securities $ 29.3 $ 2.8 $ 0.2 $ 32.3

Total marketable debt securities $ 5.9 $ 3.6 $ 0.3 $ 10.2 $ 20.0

The following table summarizes the Company’s inventories:

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

(In millions) December 30, 2022 September 30, 2022

Raw materials and parts $ 247.5 $ 240.3

5 unchanged sentences

(In millions) Medical Industrial Total

Balance at October 1, 2021 $ 173.9 $ 118.3 $ 292.2

Balance at September 30, 2022 $ 169.4 $ 115.1 $ 284.5

Foreign currency translation adjustments 2.2 1.5 3.7

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:

July 1, 2022 October 1, 2021

Balance at December 30, 2022 $ 171.6 $ 116.6 $ 288.2

The following table reflects the gross carrying amount and accumulated amortization of the Company’s finite-lived intangible assets included in other assets in the Condensed Consolidated Balance Sheets:

December 30, 2022 September 30, 2022

(In millions)

10 unchanged sentences

$ 134.3 $ ( 102.6 ) $ 31.7 $ 131.9 $ ( 98.3 ) $ 33.6

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.

T able of Contents

Amortization expense for intangible assets was $ 3.4 million and $ 3.8 million for the three months ended December 30, 2022 and December 31, 2021, respectively.

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

July 1, 2022 October 1, 2021

December 30, 2022 September 30, 2022

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

1 unchanged sentence

Other debt $ 2.1 $ 2.1

Total current maturities of long-term debt $ 2.5 $ 2.8

Non-current maturities of long-term debt:

6 unchanged sentences

Unamortized discount - Convertible Notes (1)

$ — $ ( 28.7 )

Unamortized issuance costs - Convertible Notes (1)

( 3.5 ) ( 3.1 )

Unamortized issuance costs - Senior Secured Notes ( 3.3 ) ( 3.5 )

2 unchanged sentences

Equity component of Convertible Senior Unsecured Notes (2)

$ 49.7 $ 49.7

(1) In connection with the adoption of ASU 2020-06, the unamortized discount related to the Convertible Notes was derecognized and the carrying value of the issuance costs was adjusted in the first quarter of fiscal year 2023.

Refer to Note 1, Summary of Significant Accounting Policies for further details.

(2) Included in additional paid-in capital on the Condensed Consolidated Balance Sheets.

The following table summarizes the Company's interest expense:

Three Months Ended Nine Months Ended

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

Three Months Ended

December 30, 2022 December 31, 2021

Contractual interest coupon and other $ 6.9 $ 7.3

5 unchanged sentences

The net proceeds from the issuance of the Convertible Notes, after deducting transaction fees and offering expense payable by the Company, were approximately $ 193.1 million.

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.

The Convertible Notes are convertible into cash, shares of Varex common stock or a combination thereof, at Varex's election, at an initial conversion rate of 48.048 shares of common stock per $1,000 principal amount of Convertible Notes, which is equivalent to an initial conversion price of approximately $ 20.81 per share, subject to adjustment pursuant to the terms of the indenture governing the Convertible Notes.

The Convertible Notes may be converted at any time after, and including, December 15, 2024 until the close of business on the second scheduled trading day immediately before the maturity date.

The maximum number of shares issuable upon conversion of the Convertible Notes is 9.6 million.

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”).

The Hedge Transactions cover, subject to customary anti-dilution adjustments, the number of shares of Varex common stock that was initially covered by the Convertible Notes.

The Hedge Transactions cover, subject to customary anti-dilution adjustments, the number of shares of Varex common stock that were initially covered by the Convertible Notes.

The Hedge Transactions are expected generally to reduce the potential dilution and/or offset any cash payments Varex is required to make in excess of the principal amount due upon conversion of the Convertible Notes in the event that the market price of Varex common stock is greater than the strike price of the Hedge Transactions, which was initially $ 20.81 per share (subject to adjustment under the terms of the Hedge Transactions).

1 unchanged sentence

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

T able of Contents

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.

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 were initially covered by the Convertible Notes, subject to customary anti-dilution adjustments.

The initial strike price of the warrants is $ 24.975 per share (subject to adjustment under the terms of the Warrant Transactions), which was 50 % above the last reported sale price of Varex common stock on June 4, 2020.

1 unchanged sentence

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

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

The number of warrants outstanding as of December 30, 2022 was 9.6 million.

Senior Secured Notes

9 unchanged sentences

and enter into certain transactions with their affiliates.

On March 18, 2022, the Company redeemed $ 27 million of Senior Secured Notes, in accordance with the terms and conditions of the governing indenture, by paying cash of $ 28.7 million, inclusive of the redemption premium and accrued interest, and recognized a $ 1.2 million loss related to the redemption premium and the write-off of previously recorded debt issuance costs.

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

Asset-Based Loan

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").

From September 30, 2020 through March 9, 2022, borrowings under the Asset-Based Loan bore 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 was required to pay a quarterly commitment fee of 0.375 % to 0.5 %, based on the aggregate unused commitments under the Asset-Based Loan.

On March 9, 2022, the ABL Facility was amended to transition the reference rate for certain dollar denominated advances to the Secured Overnight Financing Rate ("SOFR") from the London Interbank Offered Rate ("LIBOR") and the quarterly commitment fee was amended to 0.25 %, based on the aggregate unused commitments under the Asset-Based Loan.

Additionally, the applicable margin rates were reduced by 75 basis points and the interest rate floor was reduced from 50 basis points to 0 basis points.

Borrowings under the Asset-Based Loan bear interest at floating rates based on the Secured Overnight Financing Rate ("SOFR"), 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 0.25 %, 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 maximum availability under our ABL Facility is $ 100.0 million;

The maximum availability under the 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 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.

T able of Contents

As of December 30, 2022, the amount available under the ABL Facility was $ 92.0 million and the ABL Facility remains undrawn.

The ABL Facility includes various restrictive covenants that limit the Company's 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.

NONCONTROLLING INTERESTS

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

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.

1 unchanged sentence

Accordingly, the Company has consolidated the operations of the Saudi Arabia partnership in its condensed consolidated financial statements and recorded the noncontrolling interests.

The noncontrolling interest related to the partner’s 25 % interest in the joint venture is included in Noncontrolling interests in the equity section of the Company’s condensed consolidated balance sheet.

The noncontrolling interest related to the partner’s 25 % interest in the joint venture is included in noncontrolling interests in the equity section of the Company’s Condensed Consolidated Balance Sheets.

Income representing the noncontrolling partner's share of income from operations is included in the Company's Condensed Consolidated Statements of Operations.

1 unchanged sentence

In August 2015, the Company, through one of its German subsidiaries, entered into a Domination and Profit and Loss Transfer Agreement (the “DPLTA”) with MeVis.

In fiscal years 2017 and 2018, the Company purchased an additional 0.2 % of outstanding shares such that the Company now owns 73.7 % of the outstanding shares of common stock of MeVis.

Under the DPLTA, MeVis subordinates its management to the Company and undertakes to transfer all its annual profits and losses to the Company.

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

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

At December 30, 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:

Nine Months Ended

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

Three Months Ended

(In millions) December 30, 2022 December 31, 2021

Noncontrolling interests, at beginning of period $ 13.3 $ 13.2

5 unchanged sentences

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

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

Three Months Ended

(In millions, except per share amounts)

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

December 30, 2022 December 31, 2021

Net income per share - basic

Net income attributable to Varex $ 3.1 $ 1.4

Weighted average shares outstanding - basic

39.9 39.4 39.7 39.3

Basic weighted average shares outstanding

Basic net income per share attributable to Varex $ 0.08 $ 0.04

Net income per share - diluted

Net income attributable to Varex $ 3.1 $ 1.4

Basic weighted average shares outstanding 40.1 39.5

Dilutive effect of Convertible Notes — 2.6

Dilutive effect of share-based awards and other 0.5 0.7

Weighted average shares outstanding - diluted

40.5 41.3 41.9 39.5

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

T able of Contents

Dilutive effect of warrants — 1.1

Diluted weighted average shares outstanding

Diluted net income per share attributable to Varex $ 0.08 $ 0.03

Anti-dilutive share summary

Restricted stock and options

Convertible notes 9.6 —

Warrants 1.9 —

Total anti-dilutive shares 14.5 2.5

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.

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

However, our convertible note hedges are not included when calculating potentially dilutive shares since their effect is always anti-dilutive.

As of October 1, 2022, the Company adopted ASU 2020-06 using the modified retrospective method.

The standard requires the Company to apply the if-converted method in relation to the Convertible Notes, which requires the Company to assume that the Convertible Notes were converted using only share settlement at the beginning of the period, resulting in an additional 9.6 million shares outstanding.

Using this method, the numerator is affected by adding back interest expense and the denominator is affected by including the effect of potential share settlement, if the effect is dilutive.

Prior to the adoption of ASU 2020-06, the Convertible Notes were accounted for using the treasury stock method for the purposes of net income per share.

See Note 1, Summary of Significant Accounting Policies, "Recently Adopted Accounting Pronouncements" for further details concerning the adoption of ASU 2020-06).

Furthermore, in connection with the offering of the Convertible Notes, the Company entered into convertible note hedges and warrants (see Note 10, Borrowings).

However, the Company's convertible note hedges are not included when calculating potentially dilutive shares since their effect is always 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 Nine Months Ended

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

Three Months Ended

(In millions) December 30, 2022 December 31, 2021

Cost of revenues $ 0.4 $ 0.4

1 unchanged sentence

Selling, general and administrative

2.2 2.2 7.1 7.4

Total share-based compensation expense $ 3.3 $ 3.4

Stock Option Activity

The following table summarizes the activity for stock options under Varex’s 2020 Omnibus Stock Plan, 2017 Omnibus Stock Plan, and 2017 Employee Stock Purchase Plan:

Options Outstanding

The following table summarizes the activity for stock options under Varex’s employee incentive plans for the Company's employees:

(In thousands, except per share amounts and the remaining term) Options Price Range Weighted Average Exercise Price

1 unchanged sentence

Aggregate Intrinsic Value (1)

Outstanding at October 1, 2021 2,811 $ 13.61 - $ 37.60

Outstanding at September 30, 2022 2,902 $ 13.61 - $ 37.60

$ 28.97 4.5 $ 1,361.4

1 unchanged sentence

Canceled, expired or forfeited ( 196 ) $ 25.06 - $ 37.10

Exercised ( 138 ) $ 13.61 - $ 30.74

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

Outstanding at December 30, 2022 3,091 $ 13.61 - $ 37.60

$ 27.96 5.2 $ 1,209.5

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

Exercisable at December 30, 2022 2,070 $ 13.61 - $ 37.60

$ 29.52 3.4 $ 672.3

(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.

T able of Contents

Restricted Stock Units

The following table summarizes the activity for restricted stock units under Varex’s 2020 Omnibus Stock Plan and 2017 Omnibus Stock Plan:

(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 $ 20.30 as of December 30, 2022, the last trading date of the Company's first 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, Restricted Stock Awards and Deferred Stock Units

The following table summarizes the activity for restricted stock units, restricted stock awards and deferred stock units under Varex’s 2020 Omnibus Stock Plan and 2017 Omnibus Stock Plan:

(In thousands, except per share amounts) Number of Shares Weighted Average Grant-Date Fair Value

Outstanding at October 1, 2021 1,080 $ 23.25

Outstanding at September 30, 2022 1,045 $ 24.35

Granted 492 20.12

1 unchanged sentence

Canceled or expired ( 28 ) 25.50

Outstanding at July 1, 2022 1,157 $ 23.39

Outstanding at December 30, 2022 1,506 $ 22.95

TAXES ON INCOME

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.

For the three months ended December 30, 2022, the Company recognized income tax expense of $ 2.2 million on $ 5.4 million of pre-tax income.

For the three months ended December 31, 2021, the Company recognized income tax expense of $ 1.7 million on $ 3.3 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 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.

The Company's tax expense for the three months ended December 30, 2022 increased, primarily due to increased pre-tax income in certain jurisdictions, valuation allowance positions in the U.S.

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 three months ended December 30, 2022, 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 are expected to apply when the foreign earnings are repatriated.

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

SEGMENT INFORMATION

3 unchanged sentences

The CODM allocates resources to and evaluates the financial performance of each operating segment primarily based on revenues and gross profit.

The operating and reportable segment structure provides alignment between business strategies and operating results.

The reportable operating segment structure provides alignment between business strategies and operating results.

Description of Segments

The Medical segment designs, manufactures, sells and services X-ray imaging components, including X-ray tubes, digital detectors, high voltage connectors, image-processing software and workstations, 3D reconstruction software, computer-aided diagnostic software, collimators, automatic exposure control devices, generators, heat exchangers, ionization chambers and buckys (a component of an X-ray system that holds an X-ray detector).

The Medical segment designs, manufactures, sells and services X-ray imaging components, including X-ray tubes, digital detectors, ionization chambers and buckys, high voltage connectors, image-processing software and workstations, 3D reconstruction software, computer-aided diagnostic software, collimators, automatic exposure control devices, generators, and heat exchangers.

These components are used in a range of medical imaging applications including CT, mammography, oncology, cardiac, surgery, dental, and other diagnostic radiography uses.

The Industrial segment designs, develops, manufactures, sells and services X-ray imaging products for use in a number of markets, including security applications for cargo screening at ports and borders and baggage screening at airports, and nondestructive testing and inspection applications used in a number of other markets.

The Company's industrial products include Linatron ® X-ray linear accelerators, X-ray tubes, digital detectors and high voltage connectors.

The Industrial segment designs, develops, manufactures, sells and services X-ray imaging products for use in a number of markets, including security applications for cargo screening at ports and borders and baggage screening at airports, and nondestructive testing, irradiation and inspection applications used in a number of other vertical markets.

The Company's industrial products include Linatron® X-ray linear accelerators, X-ray tubes, digital detectors, high voltage connectors and coolers.

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.

T able of Contents

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 Nine Months Ended

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

Three Months Ended

(In millions) December 30, 2022 December 31, 2021

Revenues, net

14 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