Varian has reported revenues of $209.7 million in the third quarter of fiscal year 2006, representing an increase of 12.3 percent over revenues of $186.8 million in the third quarter of fiscal year 2005. The growth in sales was broad-based, with double-digit increases in life science and industrial applications for both the Scientific Instruments and Vacuum Technologies segments.
Non-GAAP (adjusted) net earnings were $17.7 million, or $0.57 adjusted diluted earnings per share, for the third quarter of fiscal year 2006, compared to $12.9 million, or $0.38 adjusted diluted earnings per share, in the third quarter of fiscal year 2005. On a GAAP basis, net earnings in the third quarter of fiscal year 2006 were $14.5 million, or $0.46 diluted earnings per share, compared to $10.5 million, or $0.31 diluted earnings per share, in the third quarter of fiscal year 2005. The company's GAAP net earnings and diluted earnings per share for the third quarter of fiscal year 2006 include $1.8 million, or $0.04 per diluted share, of share-based compensation expense recorded under the provisions of FAS 123. The company's results for periods prior to fiscal year 2006 (including the third quarter and first nine months of fiscal year 2005) do not include compensation expense relating to stock options or shares issued under the company's employee stock purchase plan.
Adjusted operating earnings increased 30.6 percent to $23.8 million in the third quarter of fiscal year 2006, compared to $18.3 million in the same quarter a year ago. Adjusted operating profit margin was 11.4 percent in the third quarter of fiscal year 2006, compared to 9.8 percent in the prior-year quarter. The improvements in adjusted operating earnings and adjusted operating profit margin were primarily the result of sales volume leverage, a mix shift toward higher-margin products and lower Sarbanes-Oxley Act Section 404 compliance costs. On a GAAP basis, operating earnings were $18.9 million and operating profit margin was 9.0 percent in the third quarter of fiscal year 2006 (including negative impacts of $1.8 million and 0.9 percent, respectively, from FAS 123), compared to $11.9 million and 6.4 percent, respectively, in the same quarter a year ago.
Adjusted income tax expense was $6.4 million (a 26.6 percent effective tax rate) in the third quarter of fiscal year 2006, compared to $6.7 million (a 34.0 percent effective tax rate) in the prior-year quarter. The lower effective tax rate for the third quarter of fiscal year 2006 reflects the positive outcome of tax uncertainties during the quarter. As a result, the effective tax rate for the full fiscal year 2006 on an adjusted basis is now anticipated to be approximately 33.0 percent. On a GAAP basis, income tax expense was $4.7 million (a 24.6 percent effective tax rate) in the third quarter of fiscal year 2006, compared to $2.7 million (a 20.4 percent effective tax rate) in the same quarter a year ago.
"Our balanced approach of focusing on a broad array of applications, product lines and geographies positioned us to deliver another solid financial performance," said Garry W Rogerson, president and CEO. "This approach continued to allow us to take advantage of shifting areas of demand strength in industrial and life science applications and in different geographies."
