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Item 1. Financial Statements

2024-05-02 compared with 2024-02-06 · 240 added, 140 removed, 645 unchanged (37% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

(In millions, except per share amounts) December 29, 2023 December 30, 2022

Three Months Ended Six Months Ended

(In millions, except per share amounts) March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023

Revenues, net $ 206.2 $ 228.2 $ 396.2 $ 433.8

10 unchanged sentences

Interest and other expense, net ( 5.4 ) ( 7.8 ) ( 10.2 ) ( 15.4 )

(Loss) income before taxes ( 0.6 ) 5.4

Income tax (benefit) expense ( 0.2 ) 2.2

Net (loss) income ( 0.4 ) 3.2

Income before taxes 2.3 7.8 1.7 13.2

Income tax expense 0.7 3.5 0.5 5.7

Net income 1.6 4.3 1.2 7.5

Net income attributable to noncontrolling interests 0.2 0.2 0.3 0.3

Net (loss) income attributable to Varex $ ( 0.5 ) $ 3.1

Net (loss) income per common share attributable to Varex

Net income attributable to Varex $ 1.4 $ 4.1 $ 0.9 $ 7.2

Net income per common share attributable to Varex

Basic $ 0.03 $ 0.10 $ 0.02 $ 0.18

5 unchanged sentences

VAREX IMAGING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

Three Months Ended

(In millions) December 29, 2023 December 30, 2022

Net (loss) income $ ( 0.4 ) $ 3.2

Other comprehensive loss

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended Six Months Ended

(In millions) March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023

Net income $ 1.6 $ 4.3 $ 1.2 $ 7.5

Other comprehensive income (loss)

Unrealized gain on available-for-sale securities — 0.1 — 0.1

Foreign currency translation adjustments 0.5 — ( 0.5 ) —

Total comprehensive (loss) income ( 1.4 ) 3.2

Total comprehensive income 2.1 4.4 0.7 7.6

Comprehensive income attributable to noncontrolling interests 0.2 0.2 0.3 0.3

Comprehensive (loss) income attributable to Varex $ ( 1.5 ) $ 3.1

Comprehensive income attributable to Varex $ 1.9 $ 4.2 $ 0.4 $ 7.3

See accompanying Notes to the Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share amounts) December 29, 2023 September 29, 2023

(In millions, except share and per share amounts) March 29, 2024 September 29, 2023

Current assets:

Cash and cash equivalents $ 141.8 $ 152.6

Accounts receivable, net of allowance for credit losses of $ 0.6 million and $ 0.6 million at December 29, 2023 and September 29, 2023, respectively

Marketable securities 47.1 41.3

Accounts receivable, net of allowance for credit losses of $ 0.7 million and $ 0.6 million at March 29, 2024 and September 29, 2023, respectively

Inventories 286.1 277.5

26 unchanged sentences

Shares issued and outstanding:

40,618,590 and 40,529,573 at December 29, 2023 and September 29, 2023, respectively

40,855,981 and 40,529,573 at March 29, 2024 and September 29, 2023, respectively

Additional paid-in capital 458.4 450.4

8 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Three Months Ended December 29, 2023

Three Months Ended March 29, 2024

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 29, 2023 40.6 $ 0.4 $ 453.2 $ ( 2.2 ) $ 117.5 $ 568.9 $ 14.1 $ 583.0

Net income — — — — 1.4 1.4 0.2 1.6

Common stock issued upon vesting of restricted shares 0.1 — — — — — — —

Shares withheld on vesting of restricted stock — — ( 0.8 ) — — ( 0.8 ) — ( 0.8 )

Common stock issued under employee stock purchase plan 0.2 — 2.0 — — 2.0 — 2.0

Share-based compensation — — 4.1 — — 4.1 — 4.1

Foreign currency translation adjustments — — — 0.5 — 0.5 — 0.5

Other — — ( 0.1 ) — 0.1 — ( 0.2 ) ( 0.2 )

March 29, 2024 40.9 $ 0.4 $ 458.4 $ ( 1.7 ) $ 119.0 $ 576.1 $ 14.1 $ 590.2

Three Months Ended March 31, 2023

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

(In millions) Shares Amount

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

Net income — — — — 4.1 4.1 0.2 4.3

Common stock issued upon vesting of restricted shares

0.2 — — — — — — —

Shares withheld on vesting of restricted stock ( 0.1 ) — ( 1.4 ) — — ( 1.4 ) — ( 1.4 )

Common stock issued under employee stock purchase plan 0.1 — 2.0 — — 2.0 — 2.0

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

Unrealized gain on change in fair value of available-for-sale securities — — — 0.1 — 0.1 — 0.1

Other 0.1 — ( 0.2 ) — — ( 0.2 ) ( 0.2 ) ( 0.4 )

March 31, 2023 40.4 $ 0.4 $ 441.6 $ 0.2 $ 77.4 $ 519.6 $ 13.3 $ 532.9

See accompanying Notes to the Condensed Consolidated Financial Statements.

VAREX IMAGING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Six Months Ended March 29, 2024

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

(In millions) Shares Amount

September 29, 2023 40.5 $ 0.4 $ 450.4 $ ( 1.2 ) $ 118.1 $ 567.7 $ 13.3 $ 581.0

Net (loss) income — — — — ( 0.5 ) ( 0.5 ) 0.1 ( 0.4 )

Net income — — — — 0.9 0.9 0.3 1.2

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

Shares withheld on vesting of restricted stock ( 0.1 ) — ( 1.8 ) — — ( 1.8 ) — ( 1.8 )

Common stock issued under employee stock purchase plan 0.2 — 2.0 — — 2.0 — 2.0

Share-based compensation — — 7.8 — — 7.8 — 7.8

2 unchanged sentences

Other — — — — — — ( 0.2 ) ( 0.2 )

December 29, 2023 40.6 $ 0.4 $ 453.2 $ ( 2.2 ) $ 117.5 $ 568.9 $ 14.1 $ 583.0

Three Months Ended December 30, 2022

March 29, 2024 40.9 $ 0.4 $ 458.4 $ ( 1.7 ) $ 119.0 $ 576.1 $ 14.1 $ 590.2

Six Months Ended March 31, 2023

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

1 unchanged sentence

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

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

Net income — — — — 7.2 7.2 0.3 7.5

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

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

Shares withheld on vesting of restricted stock ( 0.1 ) — ( 1.4 ) — — ( 1.4 ) — ( 1.4 )

Common stock issued under employee stock purchase plan 0.1 — 2.0 — — 2.0 — 2.0

Share-based compensation — — 6.6 — — 6.6 — 6.6

Unrealized gain on change in fair value of available-for-sale securities — — — 0.1 — 0.1 — 0.1

Other 0.1 — ( 0.1 ) — ( 0.1 ) ( 0.2 ) ( 0.3 ) ( 0.5 )

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

March 31, 2023 40.4 $ 0.4 $ 441.6 $ 0.2 $ 77.4 $ 519.6 $ 13.3 $ 532.9

See accompanying Notes to the Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

(In millions) December 29, 2023 December 30, 2022

Six Months Ended

(In millions) March 29, 2024 March 31, 2023

Cash flows from operating activities:

Net (loss) income $ ( 0.4 ) $ 3.2

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

Net income $ 1.2 $ 7.5

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

Share-based compensation expense 7.9 6.5

14 unchanged sentences

Deferred revenues ( 0.2 ) 2.8

Net cash provided by (used in) operating activities 10.3 ( 3.7 )

Net cash provided by operating activities 13.4 23.6

Cash flows from investing activities:

10 unchanged sentences

Taxes related to net share settlement of equity awards

( 1.8 ) ( 1.4 )

Repayments of borrowing under credit agreements

( 0.8 ) ( 1.2 )

Payment of debt issuance costs

Proceeds from shares issued under employee stock purchase plan

Other, net ( 0.8 ) ( 0.3 )

Net cash used in financing activities ( 3.0 ) ( 0.9 )

Net decrease in cash and cash equivalents and restricted cash

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

( 10.8 ) 15.2

26 unchanged sentences

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 2023.

Reclassification of Prior Period Presentation

Certain prior period amounts in the Unaudited Financial Statements and 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

5 unchanged sentences

Fiscal year 2023 was the 52-week period that ended on September 29, 2023.

The fiscal quarters ended December 29, 2023 and December 30, 2022 were both 13-week periods.

The fiscal quarters ended March 29, 2024 and March 31, 2023 were both 13-week periods.

The two fiscal periods ended March 29, 2024 and March 31, 2023 were both 26-week periods.

Use of Estimates

8 unchanged sentences

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

Three Months Ended Three Months Ended

December 29, 2023 December 30, 2022

Six Months Ended Six Months Ended

March 29, 2024 March 31, 2023

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

13 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

December 29, 2023 December 30, 2022

Three Months Ended Six Months Ended

March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023

Canon Medical Systems Corporation 21.8 % 18.3 % 18.4 % 16.6 %

Canon Medical Systems Corporation accounted for 8.2 % and 13.8 % of the Company’s accounts receivable as of December 29, 2023 and September 29, 2023, respectively.

Canon Medical Systems Corporation accounted for 13.9 % and 13.8 % of the Company’s accounts receivable as of March 29, 2024 and September 29, 2023, respectively.

Equity Method Investments

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, but not control, these investments.

The Company accounts for its equity investments in other companies under the equity method of accounting if the Company has the ability to exercise significant influence in, but not control, these investments.

The Company records impairment losses on its equity method investments if an impairment exists and is deemed to be other-than-temporary, which is based on various factors, including but not limited to, the length of time the fair value of the investment is below the carrying value, the absence of an ability to recover the carrying amount of the investment, and the inability of the investee to sustain an earnings capacity that would justify the carrying amount of the investment.

There were no impairments recorded during the three months ended December 29, 2023 and December 30, 2022.

There were no impairments recorded during the three and six months ended March 29, 2024 and March 31, 2023.

Marketable Securities

3 unchanged sentences

Classification of marketable debt securities is determined at the time of purchase, and the Company reevaluates such classification as of each balance sheet date.

Marketable debt securities are recorded at estimated fair value and included in cash and cash equivalents, prepaid expenses and other current assets, and other assets within the Condensed Consolidated Balance Sheets.

Marketable debt securities are recorded at estimated fair value and included in cash and cash equivalents, marketable securities, and other assets within the Condensed Consolidated Balance Sheets.

Any unrealized gains or losses are included in accumulated other comprehensive loss within the Condensed Consolidated Balance Sheets.

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 impairments related to marketable debt securities recorded during the three months ended December 29, 2023 and December 30, 2022.

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 income (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 impairments related to marketable debt securities recorded during the three and six months ended March 29, 2024 and March 31, 2023.

Marketable Equity Securities

12 unchanged sentences

The Company does not receive fees, payments, extended payment terms, or other direct economic benefits from the intermediary.

The total amounts due to the financial intermediary to settle supplier invoices under supply chain finance programs as of December 29, 2023 and September 29, 2023 were $ 2.3 million and $ 4.2 million, respectively.

The total amounts due to the financial intermediary to settle supplier invoices under supply chain finance programs as of March 29, 2024 and September 29, 2023 were $ 4.3 million and $ 4.2 million, respectively.

These amounts are included within accounts payable in the Condensed Consolidated Balance Sheets.

5 unchanged sentences

The Company anticipates that it will be obligated to reimburse Varian for 20 % of the liabilities of Varian related to these sites (after adjusting for any insurance proceeds or tax benefits received by Varian).

As of December 29, 2023, our estimated environmental liability for these sites was $ 2.6 million, net of expected insurance proceeds.

As of September 29, 2023, our estimated liability for these sites was $ 2.8 million, net of expected insurance proceeds.

As of March 29, 2024 and September 29, 2023, our estimated environmental liability for these sites was $ 2.5 million and $ 2.8 million, net of expected insurance proceeds, respectively.

Product Warranty

6 unchanged sentences

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

Three Months Ended

(In millions) December 29, 2023 December 30, 2022

Six Months Ended

(In millions) March 29, 2024 March 31, 2023

Accrued product warranty, at beginning of period $ 7.7 $ 7.9

72 unchanged sentences

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

Three Months Ended

(In millions) December 29, 2023 December 30, 2022

Three Months Ended Six Months Ended

(In millions) March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023

Americas $ 68.2 $ 67.7 $ 130.6 $ 134.3

2 unchanged sentences

$ 206.2 $ 228.2 $ 396.2 $ 433.8

Revenue in the United States was $ 60.6 million and $ 65.4 million for the three months ended December 29, 2023 and December 30, 2022, respectively.

Revenue in the United States was $ 64.1 million and $ 66.3 million for the three months ended March 29, 2024 and March 31, 2023, respectively.

Revenue in the United States was $ 124.7 million and $ 131.7 million for the six months ended March 29, 2024 and March 31, 2023, respectively.

Our products are sold in three geographic regions:

8 unchanged sentences

Refund liabilities are included within the accrued liabilities and other current liabilities and other long-term liabilities balances in the Condensed Consolidated Balance Sheets.

The following table summarizes the changes in the right of return assets and refund liabilities for the three months ended December 29, 2023 and December 30, 2022:

The following table summarizes the changes in the right of return assets and refund liabilities for the six months ended March 29, 2024 and March 31, 2023:

Right of Return Assets

Three Months Ended

(In millions) December 29, 2023 December 30, 2022

Six Months Ended

(In millions) March 29, 2024 March 31, 2023

Balance at beginning of period $ 26.0 $ 25.4

1 unchanged sentence

Right of return assets from shipments of products subject to return during the period 2.9 3.4

Adjustment for actual vs.

reserved product returns — ( 0.2 )

Balance at end of period $ 25.6 $ 25.7

Refund Liabilities

Three Months Ended

(In millions) December 29, 2023 December 30, 2022

Six Months Ended

(In millions) March 29, 2024 March 31, 2023

Balance at beginning of period $ 28.9 $ 28.2

1 unchanged sentence

Additions to refund liabilities 3.2 3.7

Adjustment for actual vs.

reserved product returns — ( 0.2 )

Balance at end of period $ 28.4 $ 28.5

Contract Balances

During the three months ended December 29, 2023, the Company recognized revenue of $ 6.8 million related to deferred revenues which existed at September 29, 2023.

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

During the three and six months ended March 29, 2024, the Company recognized revenue of $ 1.3 million and $ 8.1 million, respectively, related to deferred revenues which existed at September 29, 2023.

During the three and six months ended March 31, 2023, the Company recognized revenue of $ 0.6 million and $ 4.8 million, respectively, related to deferred revenues that existed at September 30, 2022.

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

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

(In millions) Balance Sheet Location December 29, 2023 September 29, 2023

(In millions) Balance Sheet Location March 29, 2024 September 29, 2023

Operating lease right-of-use assets Operating lease assets $ 29.5 $ 29.0

5 unchanged sentences

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

Three Months Ended

(In millions) December 29, 2023 December 30, 2022

Three Months Ended Six Months Ended

(In millions) March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023

Total operating lease costs (1)

$ 1.7 $ 1.3 $ 3.2 $ 2.8

Total finance lease costs $ — $ — $ 0.1 $ 0.1

5 unchanged sentences

Total right-of-use assets obtained in exchange for new lease liabilities $ 2.4 $ 2.3 $ 4.6 $ 2.3

(1) Includes variable and short-term lease expense, which were immaterial for the three months ended December 29, 2023 and December 30, 2022.

(1) Includes variable and short-term lease expense which were immaterial for the three and six months ended March 29, 2024 and March 31, 2023.

RELATED-PARTY TRANSACTIONS

4 unchanged sentences

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

During the three months ended December 29, 2023 and December 30, 2022, the Company recorded income on the equity investment in dpiX Holding of $ 0.5 million and $ 2.0 million, respectively.

During the three months ended March 29, 2024 and March 31, 2023, the Company recorded income (loss) on the equity investment in dpiX Holding of $ 0.6 million and $( 0.4 ) million, respectively.

During the six months ended March 29, 2024 and March 31, 2023, the Company recorded income on the equity investment in dpiX Holding of $ 1.1 million and $ 1.6 million, respectively.

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

The carrying value of the equity investment in dpiX Holding was $ 26.3 million and $ 25.8 million at December 29, 2023 and September 29, 2023, respectively.

During the three months ended December 29, 2023 and December 30, 2022, the Company purchased glass transistor arrays from dpiX totaling $ 5.0 million and $ 5.0 million, respectively.

The carrying value of the equity investment in dpiX Holding was $ 26.9 million and $ 25.8 million at March 29, 2024 and September 29, 2023, respectively.

During the three months ended March 29, 2024 and March 31, 2023, the Company purchased glass transistor arrays from dpiX totaling $ 4.0 million and $ 4.5 million, respectively.

During the six months ended March 29, 2024 and March 31, 2023, the Company purchased glass transistor arrays from dpiX totaling $ 9.0 million and $ 9.5 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 December 29, 2023 and September 29, 2023, the Company had accounts payable to dpiX totaling $ 2.8 million and $ 2.7 million, respectively.

As of March 29, 2024 and September 29, 2023, the Company had accounts payable to dpiX totaling $ 2.7 million and $ 2.7 million, respectively.

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

1 unchanged sentence

In January 2024, the Company's fixed cost commitment was determined and approved by the dpiX board of directors to be $ 12.4 million for calendar year 2024.

As of March 29, 2024, the Company estimated it has fixed cost commitments of $ 9.4 million related to the amended agreement with dpiX through the remainder of calendar year 2024.

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

8 unchanged sentences

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

During the three months ended December 29, 2023 and December 30, 2022, the Company recorded a loss on the equity investment in VEC of $ 0.1 million and $ 0.3 million, respectively.

The Company's investment in VEC was $ 2.0 million and $ 2.1 million at December 29, 2023 and September 29, 2023, respectively.

As of December 29, 2023 and September 29, 2023, the Company had loans and other receivables outstanding from VEC of $ 0.7 million, and $ 0.7 million, respectively, which are recorded in prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets.

During the three months ended March 29, 2024 and March 31, 2023, the Company recorded a loss on the equity investment in VEC of $ 0.0 million and $ 0.1 million, respectively.

During the six months ended March 29, 2024, and March 31, 2023, the Company recorded a loss on the equity investment in VEC of $ 0.1 million and $ 0.4 million, respectively.

The Company's investment in VEC was $ 2.0 million and $ 2.1 million at March 29, 2024 and September 29, 2023, respectively.

As of March 29, 2024 and September 29, 2023, the Company had loans and other receivables outstanding from VEC of $ 0.7 million, and $ 0.7 million, respectively, which are recorded in prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets.

FINANCIAL DERIVATIVES AND HEDGING ACTIVITIES

11 unchanged sentences

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 December 29, 2023, the Company had the following outstanding derivatives designated as net investment hedging instruments:

As of March 29, 2024, the Company had the following outstanding derivatives designated as net investment hedging instruments:

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

1 unchanged sentence

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

Amount of Loss 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) December 29, 2023 December 30, 2022 December 29, 2023 December 30, 2022

(In millions) March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023

Cross currency swap contracts $ 1.3 $ ( 1.0 ) Interest expense $ 0.2 $ 0.2

Amount of Loss Recognized in OCI on Derivative

Six 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)

Six Months Ended

(In millions) March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023

Cross currency swap contracts $ ( 1.4 ) $ ( 5.0 ) Interest expense $ 0.5 $ 0.4

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 December 29, 2023 September 29, 2023

Derivatives Designated as Net Investment Hedges Balance Sheet Location March 29, 2024 September 29, 2023

Cross currency swap contracts Prepaid expenses and other current assets $ 0.8 $ 0.7

6 unchanged sentences

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 December 29, 2023:

The following table shows the notional amounts of outstanding foreign currency contracts as of March 29, 2024:

Notional Value of Derivatives not Designated as Hedging Instruments:

2 unchanged sentences

Chinese Renminbi 13.0

Indian Rupee 5.0

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, net and accounts payable, approximate their fair values due to their short maturities.

As of December 29, 2023, the fair values of the Company’s Convertible Notes and Senior Secured Notes, as defined in Note 9, Borrowings and measured using Level 1 inputs, were $ 234.0 million and $ 244.4 million, respectively.

As of March 29, 2024, the fair values of the Company’s Convertible Notes and Senior Secured Notes, as defined in Note 9, Borrowings and measured

using Level 1 inputs, were $ 218.3 million and $ 247.3 million, respectively.

As of September 29, 2023, the fair values of the Company’s Convertible Notes and Senior Secured Notes, measured using Level 1 inputs, were $ 228.4 million and $ 243.6 million, respectively.

1 unchanged sentence

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 December 29, 2023

Fair Value at March 29, 2024

(In millions) Quoted Prices in Active Markets

33 unchanged sentences

Marketable Debt Securities

The following is a summary of marketable debt 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.

December 29, 2023

The following is a summary of marketable debt securities, which are included within the cash and cash equivalents, marketable securities, and other assets balances on the Condensed Consolidated Balance Sheets.

March 29, 2024

(In millions) Amortized Costs Fair Value

11 unchanged sentences

Total marketable debt securities $ 49.5 $ 49.5

The contractual maturities of marketable debt securities as of December 29, 2023, are shown in the table below.

The contractual maturities of marketable debt securities as of March 29, 2024, are shown in the table below.

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

December 29, 2023

March 29, 2024

(In millions) Amortized Costs Fair Value

3 unchanged sentences

Total marketable debt securities $ 51.5 $ 51.5

During the three months ended December 29, 2023, there were no gross realized gains or losses from the sale of certain marketable debt securities that were reclassified out of accumulated other comprehensive loss.

During the three and six months ended March 29, 2024, there were no gross realized gains or losses from the sale of certain marketable debt securities that were reclassified out of accumulated other comprehensive loss.

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

December 29, 2023

March 29, 2024

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

Cash and cash equivalents $ 3.4 $ — $ — $ 1.0 $ 4.4

Prepaid expenses and other current assets — 10.3 20.1 21.8 52.2

Marketable securities — 10.0 22.0 15.1 47.1

Total marketable debt securities $ 3.4 $ 10.0 $ 22.0 $ 16.1 $ 51.5

2 unchanged sentences

Cash and cash equivalents $ 6.0 $ — $ — $ 2.2 $ 8.2

Prepaid expenses and other current assets — 8.3 6.6 26.4 41.3

Marketable securities — 8.3 6.6 26.4 41.3

Total marketable debt securities $ 6.0 $ 8.3 $ 6.6 $ 28.6 $ 49.5

The following table summarizes the Company’s inventories:

(In millions) December 29, 2023 September 29, 2023

(In millions) March 29, 2024 September 29, 2023

Raw materials and parts $ 226.1 $ 217.5

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Foreign currency translation adjustments 0.5 0.3 0.8

Balance at December 29, 2023 $ 172.6 $ 117.8 $ 290.4

Balance at March 29, 2024 $ 172.0 $ 117.3 $ 289.3

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 29, 2023 September 29, 2023

March 29, 2024 September 29, 2023

(In millions)

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$ 138.1 $ ( 119.9 ) $ 18.2 $ 135.1 $ ( 112.7 ) $ 22.4

Amortization expense for intangible assets was $ 3.6 million and $ 3.4 million for the three months ended December 29, 2023 and December 30, 2022, respectively.

Amortization expense for intangible assets was $ 3.6 million and $ 3.4 million for the three months ended March 29, 2024 and March 31, 2023, respectively.

Amortization expense for intangible assets was $ 7.2 million and $ 6.8 million for the six months ended March 29, 2024 and March 31, 2023, respectively.

In connection with the business combination discussed in Note 10.

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

December 29, 2023 September 29, 2023

March 29, 2024 September 29, 2023

(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

December 29, 2023 December 30, 2022

Three Months Ended Six Months Ended

March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023

Contractual interest coupon and other $ 6.7 $ 6.6 $ 13.3 $ 13.5

1 unchanged sentence

Total interest expense $ 7.9 $ 7.3 $ 15.2 $ 14.8

Senior Secured Revolving Credit Facility

On March 26, 2024, the Company entered into a senior secured revolving credit agreement (the "Credit Agreement") providing for a senior secured revolving credit facility of up to $ 155.0 million (the “Revolving Credit Facility”).

Simultaneous with its entry into the Revolving Credit Facility, the Company terminated its $ 100.0 million asset-based loan revolving credit facility (the “Asset-Based Loan” or "ABL Facility"), dated as of September 30, 2020.

As of March 26, 2024, there was no principal balance outstanding on the Revolving Credit Facility.

The maximum availability under the Revolving Credit Facility is $ 155.0 million, which is available to the Company for revolving loans in U.S.

dollars and for the issuance of letters of credit.

The Company may make and repay borrowings from time to time until the maturity of the Revolving Credit Facility.

Borrowings under the Revolving Credit Facility will mature, and lending commitments thereunder will terminate, on September 26, 2027.

The interest rate for Revolving Credit Facility borrowings is the Secured Overnight Financing Rate (“SOFR”) (subject to a floor of 0 %) plus a margin of 2.00 % to 2.75 %, depending on the consolidated total net leverage ratio of the Company (as defined in the Credit Agreement).

Alternatively, the Company has the option of selecting a base rate equal to the highest of (a) the prime rate, (b) the Federal Funds Rate plus 0.50 % and (c) the one-month SOFR (subject to a floor of 0 %) plus a margin of 1.00 %.

An unused commitment fee of 0.375 % per annum is payable from March 26, 2024 until June 28, 2024, and thereafter an used commitment fee of between 0.30 % to 0.40 % per annum is payable quarterly on the actual daily unused portion of the Revolving Credit Facility, depending on the consolidated total net leverage ratio of the Company.

Debt issuance costs, including unamortized deferred costs for continuing lenders under the previously existing ABL Facility, of $ 2.3 million were capitalized and are included within other assets on the Condensed Consolidated Balance Sheets.

These costs will be amortized over the term of the new agreement and will be recorded within interest expense in the Condensed Consolidated Statements of Operations.

The Credit Agreement contains customary covenants restricting the Company’s activities, as well as those of its subsidiaries, including limitations on the ability to sell assets, engage in mergers, or other fundamental changes, enter into capital leases or certain leases not in the ordinary course of business, enter into transactions involving related parties or derivatives, incur or prepay indebtedness, grant liens or negative pledges on its assets, make loans or other investments, pay dividends or repurchase stock or other securities, guarantee third-party obligations, engage in sale leasebacks, and make changes in its corporate structure, though there are certain exceptions and carveouts related to these restrictions.

In addition, the Credit Agreement includes financial covenants related to the Company’s consolidated total net leverage ratio and its consolidated fixed charge coverage ratio.

The Company’s obligations under the Revolving Credit Facility are guaranteed by the Company and a number of Company subsidiaries.

These guarantees are secured on a first lien basis by specified assets, including inventory, accounts receivable, cash, intercompany accounts and loans, and certain real property.

In addition, the Revolving Credit Facility is secured by second liens on certain assets securing the Company’s 7.875 % Senior Secured Notes due 2027.

An intercreditor agreement governs how the collateral securing the respective debt obligations will be treated among the secured parties.

Convertible Senior Unsecured Notes

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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 Varex.

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

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.

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

The number of warrants outstanding as of December 29, 2023 was 9.6 million.

The number of warrants outstanding as of March 29, 2024 was 9.6 million.

Senior Secured Notes

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On July 15, 2021, we redeemed $ 30.0 million, and on March 18, 2022, we redeemed $ 27.0 million of the Senior Secured Notes.

As of December 29, 2023, the aggregate principal amount of the outstanding Senior Secured Notes was $ 243.0 million.

The Senior Secured Notes are secured by a first priority lien on substantially all of the assets of Varex and the assets and capital stock of its subsidiary guarantors (subject to exceptions), except for assets for which a first priority security interest is pledged for the ABL Facility (defined below), in which the Senior Secured Notes have a second lien security interest.

As of March 29, 2024, the aggregate principal amount of the outstanding Senior Secured Notes was $ 243.0 million.

The Senior Secured Notes are secured by a first priority lien on substantially all of the assets of Varex and the assets and capital stock of its subsidiary guarantors (subject to exceptions), except for assets for which a first priority security interest is pledged for the Revolving Credit Facility, in which the Senior Secured Notes have a second lien security interest.

The Senior Secured Notes include negative covenants, subject to certain exceptions, restricting or limiting Varex's ability and the ability of its restricted subsidiaries to, among other things, incur liens on collateral;

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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").

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 % annualized, 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 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 December 29, 2023, the amount available under the ABL Facility was $ 71.9 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.

On September 30, 2020, the Company entered into a revolving credit agreement consisting of a $ 100.0 million ABL Facility.

On March 26, 2024, the Company terminated the ABL Facility and recognized $ 0.6 million of the remaining unamortized issuance costs in interest expense in the Condensed Consolidated Statements of Operations, which excludes costs related to lenders that continued under the Revolving Credit Facility.

There was no principal balance outstanding under the ABL Facility when it was terminated.

BUSINESS COMBINATIONS

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Because the Company had the ability to exercise significant influence in, but not control, over MeVis Breastcare, it was historically accounted for as an equity method investment.

In October 2023, the Company increased its ownership in MeVis Breastcare to 87.1 % for a purchase price of $ 0.9 million, resulting in the Company now holding a controlling interest in MeVis Breastcare.

During the first quarter of fiscal year 2024, the Company increased its ownership in MeVis Breastcare to 87.1 % for a purchase price of $ 0.9 million, resulting in the Company now holding a controlling interest in MeVis Breastcare.

The purchase of this additional ownership interest was accounted for as a business combination achieved in stages, or step acquisition.

As a result, the previously held equity interest was remeasured to its acquisition-date fair value, with a gain of $ 0.9 million recognized in other income (expense), net in the Condensed Consolidated Statements of Operations.

The assets and liabilities of MeVis Breastcare were then recorded on the Company's balance sheet at their fair values in accordance with ASC 805, and a gain on bargain purchase of $ 1.2 million was recorded in other income (expense), net in the Condensed Consolidated Statements of Operations.

The assets and liabilities of MeVis Breastcare were then recorded on the Company's balance sheet at their fair values in accordance with ASC 805, and a gain on bargain purchase of $ 1.2 million was recorded during the first quarter of fiscal year 2024 in other income (expense), net in the Condensed Consolidated Statements of Operations.

Because the purchase price did not give consideration to the other assets of the business, the fair value of the ownership interest acquired exceeded the price paid to the third party partial owner and this resulted in a gain on bargain purchase.

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

At December 29, 2023, noncontrolling shareholders together held approximately 0.5 million shares of MeVis Medical, representing 26.3 % of the outstanding shares.

At March 29, 2024, noncontrolling shareholders together held approximately 0.5 million shares of MeVis Medical, representing 26.3 % of the outstanding shares.

During the first quarter of fiscal year 2024, the Company acquired a controlling interest in MeVis Breastcare, in which the Company now holds an 87.1 % ownership interest.

1 unchanged sentence

Changes in noncontrolling interests were as follows:

Three Months Ended

(In millions) December 29, 2023 December 30, 2022

Six Months Ended

(In millions) March 29, 2024 March 31, 2023

Noncontrolling interests, at beginning of period $ 13.3 $ 13.3

3 unchanged sentences

Noncontrolling interests, at end of period $ 14.1 $ 13.3

NET (LOSS) INCOME PER SHARE

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

Diluted net (loss) income per common share reflects the effects of potentially dilutive securities, which is computed by dividing the sum of net (loss) income and any adjustments to 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 (loss) income per common share is as follows:

Three 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 the sum of net income and any adjustments to 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 Six Months Ended

(In millions, except per share amounts)

December 29, 2023 December 30, 2022

Net (loss) income per share - basic

Net (loss) income attributable to Varex $ ( 0.5 ) $ 3.1

March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023

Net income per share - basic

Net income attributable to Varex $ 1.4 $ 4.1 $ 0.9 $ 7.2

Basic weighted average shares outstanding

Basic net (loss) income per share attributable to Varex $ ( 0.01 ) $ 0.08

Net (loss) income per share - diluted

Net (loss) income attributable to Varex $ ( 0.5 ) $ 3.1

40.7 40.2 40.6 40.2

Basic net income per share attributable to Varex $ 0.03 $ 0.10 $ 0.02 $ 0.18

Net income per share - diluted

Net income attributable to Varex $ 1.4 $ 4.1 $ 0.9 $ 7.2

Basic weighted average shares outstanding 40.7 40.2 40.6 40.2

1 unchanged sentence

Diluted weighted average shares outstanding

Diluted net (loss) income per share attributable to Varex $ ( 0.01 ) $ 0.08

41.2 40.5 41.1 40.5

Diluted net income per share attributable to Varex $ 0.03 $ 0.10 $ 0.02 $ 0.18

Anti-dilutive share summary

Share-based awards and other

3.2 3.7 3.1 3.2

Convertible notes 9.6 9.6 9.6 9.6

1 unchanged sentence

Total anti-dilutive shares 22.4 22.9 22.3 22.4

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

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.

In connection with the offering of the Convertible Notes, the Company entered into convertible note hedges and warrants (see Note 9, Borrowings ).

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

Three Months Ended

(In millions) December 29, 2023 December 30, 2022

Three Months Ended Six Months Ended

(In millions) March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023

Cost of revenues $ 0.5 $ 0.4 $ 1.0 $ 0.8

1 unchanged sentence

Selling, general, and administrative

2.8 1.9 5.1 4.0

Total share-based compensation expense $ 4.2 $ 3.2 $ 7.9 $ 6.5

6 unchanged sentences

$ 28.08 4.8 $ 871.4

Granted — $ 0.00 - $ 0.00

Canceled, expired or forfeited ( 744 ) $ 31.08 - $ 31.08

Outstanding at December 29, 2023 2,862 $ 13.61 - $ 37.60

Outstanding at March 29, 2024 2,118 $ 13.61 - $ 37.60

$ 27.02 5.9 $ 755.3

Exercisable at December 29, 2023 2,249 $ 13.61 - $ 37.60

Exercisable at March 29, 2024 1,597 $ 13.61 - $ 37.60

$ 27.79 5.1 $ 665.2

(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 $ 20.50 as of December 29, 2023, 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 in-the-money 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 $ 18.10 as of March 28, 2024, 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 in-the-money options and sold the shares received upon exercise as of that date.

Restricted Stock Units, Performance Stock Units, Restricted Stock Awards, and Deferred Stock Units

In the first quarter of fiscal year 2024, the Company issued performance stock units ("PSUs").

PSUs are awarded to certain officers and key employees in connection with our long-term incentive program.

In the first quarter of fiscal year 2024, the Company issued performance stock units ("PSUs") to certain officers and key employees in connection with our long-term incentive program.

Each PSU represents the right to receive one share of our common stock, provided that the applicable performance and vesting conditions are satisfied.

9 unchanged sentences

Canceled or expired ( 32 ) 21.36

Outstanding at December 29, 2023 1,904 $ 21.00

TAXES ON (LOSS) INCOME

For the three months ended December 29, 2023, the Company recognized income tax benefit of $ 0.2 million on $ 0.6 million of pre-tax loss.

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.

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 months ended December 29, 2023 decreased, primarily due to decreased pre-tax income in certain jurisdictions 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 29, 2023, which is that all earnings prior to fiscal year 2018 are permanently reinvested for all countries, and that all earnings for Varex Imaging Sweden and Oy Varex Imaging Finland are also indefinitely reinvested in those countries, but post fiscal year 2017 earnings in all other countries are not permanently reinvested.

Outstanding at March 29, 2024 1,810 $ 20.48

TAXES ON INCOME

For the three months ended March 29, 2024, the Company recognized income tax expense of $ 0.7 million on $ 2.3 million of pre-tax income.

For the three months ended March 31, 2023, the Company recognized income tax expense of $ 3.5 million on $ 7.8 million of pre-tax income.

For the six months ended March 29, 2024, the Company recognized income tax expense of $ 0.5 million on $ 1.7 million of pre-tax income.

For the six months ended March 31, 2023, the Company recognized income tax expense of $ 5.7 million on $ 13.2 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 jurisdictions.

The Company's tax expense for the three and six months ended March 29, 2024 decreased, primarily due to decreased pre-tax income in certain jurisdictions and is partially offset by 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 March 29, 2024, which is that all earnings prior to fiscal year 2018 are permanently reinvested for all countries, and that all earnings for Varex Imaging Sweden and Oy Varex Imaging 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 United States tax treatment of repatriated foreign earnings, the amount of deferred tax liability recorded related to the potential repatriation is approximately $ 0.1 million.

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

Three Months Ended

(In millions) December 29, 2023 December 30, 2022

Three Months Ended Six Months Ended

(In millions) March 29, 2024 March 31, 2023 March 29, 2024 March 31, 2023

Revenues, net

7 unchanged sentences

Interest and other expense, net ( 5.4 ) ( 7.8 ) ( 10.2 ) ( 15.4 )

(Loss) income before taxes ( 0.6 ) 5.4

Income tax (benefit) expense ( 0.2 ) 2.2

Net (loss) income ( 0.4 ) 3.2

Income before taxes 2.3 7.8 1.7 13.2

Income tax expense 0.7 3.5 0.5 5.7

Net income 1.6 4.3 1.2 7.5

Net income attributable to noncontrolling interests 0.2 0.2 0.3 0.3

Net (loss) income attributable to Varex $ ( 0.5 ) $ 3.1

Net income attributable to Varex $ 1.4 $ 4.1 $ 0.9 $ 7.2

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

SUBSEQUENT EVENTS

Equipment Credit Agreement

On April 26, 2024, the Company and Varex Imaging West, LLC (together with the Company, the “Equipment Borrowers”) and certain guarantors party thereto (the “Equipment Guarantors”) entered into a secured delayed draw term loan credit agreement, dated as of April 26, 2024 (the “Equipment Credit Agreement”) with Zions Bancorporation, N.A.

DBA Zions Credit Corporation, as the lender (the “Equipment Lender”), providing for a secured equipment credit facility of up to $ 20.0 million (the “Equipment Credit Facility”).

The Equipment Credit Facility is in addition to the Revolving Credit Facility.

As of May 2, 2024, there was no principal balance outstanding on the Equipment Credit Facility.

Availability, interest, and maturity .

The maximum availability under the Equipment Credit Facility is $ 20.0 million, available to Equipment Borrowers for delayed draw term loans drawn on or before June 30, 2025, in U.S.

Equipment Borrowers may make and repay borrowings from time to time until the maturity of the Equipment Credit Facility, but once repaid, loans may not be reborrowed.

Equipment Borrowers may make voluntary prepayments of borrowings at any time.

Borrowings under the Equipment Credit Facility will mature on September 26, 2027.

The interest rate for borrowings by Equipment Borrowers under the Equipment Credit Facility is the Secured Overnight Financing Rate (“SOFR”) (subject to a floor of 0.0 %) plus a margin of 2.00 % to 2.75 %, depending on the consolidated total net leverage ratio of the Company.

Alternatively, Equipment Borrowers have the option of selecting a base rate equal to the highest of (a) the prime rate, (b) the Federal Funds Rate plus 0.50 % and (c) SOFR (subject to a floor of 0.0 %) plus a margin of 1.00 %, in each case plus a margin of 1.00 % to 1.75 %, depending on the consolidated total net leverage ratio of the Company.

A commitment fee of 0.375 % per annum is payable from April 26, 2024 until June 28, 2024, and thereafter a commitment fee of between 0.30 % to 0.40 % per annum is payable quarterly on the actual daily unused portion of the Equipment Credit Facility, depending on the consolidated total net leverage ratio of the Company.

The proceeds of the Equipment Credit Facility will be used for purchases of eligible equipment and associated software costs for the Company and its subsidiaries.

Security and Unsecured Guarantees .

Equipment Borrowers’ obligations under the Equipment Credit Agreement are secured by the equipment and associated software financed by the Equipment Credit Facility.

Equipment Borrower’s obligations are guaranteed by the Equipment Guarantors on an unsecured basis.

The Equipment Credit Agreement contains customary covenants restricting the Company’s activities, as well as those of its subsidiaries, including limitations on the ability to sell financed equipment or all or substantially all assets, engage in mergers or other fundamental changes, grant liens or negative pledges on financed equipment, make changes in its corporate structure,

though there are certain exceptions and carveouts related to these restrictions.

In addition, the Equipment Credit Agreement includes financial covenants related to the Company’s consolidated total net leverage ratio and its consolidated fixed charge coverage ratio.

Events of default .

The Equipment Credit Agreement contains customary events of default, including payment failures, breaches of representations and warranties, failure to comply with covenants, failure to satisfy other obligations under the Equipment Credit Agreement or related documents, defaults in respect of the Revolving Credit Facility, bankruptcy, insolvency and inability to pay debts when due, material judgments, pension plan terminations or specified underfunding, change of control and failure of certain provisions of any guarantee or security document supporting the Company’s Equipment Credit Facility to be in full force and effect.

If an event of default occurs under the Equipment Credit Agreement, subject to any applicable grace period, the Equipment Lender may terminate its commitments, declare immediately payable all borrowings under the Equipment Credit Facility and foreclose on the collateral.

The above summary of the material terms of the Equipment Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the Equipment Credit Agreement, a copy of which is filed as Exhibit 10.2 hereto and incorporated by reference herein.

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