Varex Imaging Corp
For the period ended Jan 3, 2025. Filed Feb 6, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jan 3, 2025 · Filed Feb 6, 2025
VREX$18.440.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-28; filed 2024-08-01.
0001681622-24-000070
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-01-03; filed 2025-02-06.
0001681622-25-000015
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 106 previous paragraphs and 88 current paragraphs.
52 unchanged; 30 reworded; 6 added; 19 removed; 5 previous and 0 current paragraphs rearranged.
Tables are not compared: 11 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
As described in more detail under the heading “Competition and Trade Compliance Laws” of this Item 1, our business in China has been, is currently being, and may in the future be, impacted by trade wars between the United States and China. We are closely monitoring the tariff and trade policy announcements of the United States and China, as well as other countries such as Canada and Mexico. This situation continues to change rapidly. At the time of filing this report, based on our current knowledge, we do not expect any significant direct impact to our business. However, additional tariffs or retaliatory actions, or changes to currently announced tariffs, could change the anticipated impact to our business.
Current report
Medical revenues increased $4.7 million, primarily due to increased sales of CT and fluoroscopy, partially offset by decreased sales in radiographic, dental, oncology, and mammography.
Current report
Interest expense increased primarily due to interest costs in connection with the Revolving Credit Facility and the Equipment Credit Facility issued during fiscal year 2024 and the additional Senior Secured Notes issued during the first quarter of fiscal year 2025.
Current report
Taxes on Income (loss)
Current report
The Organization for Economic Cooperation and Development enacted model rules for a 15% global minimum tax framework ("Pillar Two") which became effective for us in fiscal year 2025. There remains uncertainty as to the final Pillar Two model rules. We are continuing to evaluate the Pillar Two rules and their potential impact on future periods but we do not expect the rules to have a material impact on our effective tax rate.
Current report
(1)This amount has been excluded from current liabilities as it is supported by the Revolving Credit Facility and restricted cash from the proceeds of the Senior Secured Notes Add On (as defined below) and is expected to remain outstanding for an uninterrupted period extending beyond one year from the balance sheet date.
Removed paragraphs (19)
Previous report
In recent years, our business in China has been impacted by the trade war with the United States in three principal ways: (1) importing raw materials from China to the United States has become more expensive, (2) importing raw materials and sub-assemblies from the United States to China has become more expensive, and (3) importing finished United States manufactured products into China has become more difficult and expensive. While the governments of both the United States and China have granted tariff exclusions that temporarily eliminate the additional duties payable for specific commodities, providing partial relief, these exclusions are temporary and/or must be solicited and approved on a shipment-by-shipment basis. There is no guarantee that such exclusions will be granted or extended by either government, and the U.S. tariff exclusions are set to expire on May 31, 2025, unless extended. In order to mitigate the impact of tariffs on materials imported from China, we have implemented changes to secure more non-China sources of materials used to manufacture our X-ray imaging products. To help mitigate the impact of tariffs on materials imported to China, and to be closer to our global customer base, we continue to expand manufacturing capabilities at our facilities in China, Germany, the Netherlands, and the Philippines. We have also implemented local sourcing strategies to offer local content. This local-for-local strategy has been well received by both our local customers as well as global OEMs, and acts as a natural hedge against trade wars and other potential supply chain disruptions. Our mitigation efforts could prove less effective than anticipated if tensions between China and Taiwan lead to worsening trade relations between China and the United States.
Previous report
Medical revenues decreased $26.8 million, primarily due to decreased sales of dental, mammography, oncology, and fluoroscopic, partially offset by increased sales in CT and radiographic.
Previous report
Interest expense was flat in the third quarter of fiscal year 2024 compared to the third quarter of 2023.
Previous report
Taxes on Income
Previous report
Revenues
Previous report
Medical revenues decreased $72.3 million, primarily due to decreased sales of dental, fluoroscopic, oncology, and CT, partially offset by increased sales in mammography.
Previous report
Gross Profit
Previous report
The decrease in Medical segment gross profit was primarily due to decreased sales volume and an unfavorable shift in product sales mix.
Previous report
The Industrial gross profit increased primarily due to increased Industrial revenue, partially offset by an unfavorable shift in product sales mix.
Previous report
Operating Expenses
Previous report
Research and Development
Previous report
Research and development costs increased to 10.8% of total revenues primarily due to increased costs and decreased sales.
Previous report
Selling, General, and Administrative
Previous report
Selling, general, and administrative expenses for the nine months ended June 28, 2024 increased to 17.1% of total revenues primarily due to increased fixed cost commitments to a supplier, increased litigation costs, and increased severance costs.
Previous report
Interest and Other Expense, Net
Previous report
Interest expense increased during the nine months ended June 28, 2024 primarily due to the termination of the ABL facility which resulted in the recognition of $0.6 million of the remaining unamortized deferred issuance costs.
Previous report
During the nine months ended June 28, 2024, we realized Other expense, net of $1.6 million compared to Other expense, net of $2.5 million during the nine months ended June 30, 2023, primarily due to a gain on business acquisition and decreased losses in certain investments in privately-held companies and equity investments, partially offset by increased foreign exchange expense.
Previous report
Taxes on Income
Previous report
In fiscal year 2022, the Company entered into several agreements with a third-party company, whose stock is publicly traded on a foreign exchange. Under these agreements, the Company will make certain milestone payments of up to $5.0 million upon achievement of specified milestones. During fiscal year 2022, the first of these milestones was achieved, and the Company paid $1.0 million to the third-party company. During fiscal year 2023, two more milestones were achieved and the Company paid an additional $2.0 million to the third-party company. During the second quarter of fiscal year 2024, an additional milestone was achieved and the Company paid $1.0 million to the third-party company. Payments made under these agreements are recorded in research and development in the Condensed Consolidated Statements of Operations. As of June 28, 2024, there was one milestone remaining of $1.0 million under these agreements.
Reworded paragraphs (30)
Previous wording
•global, regional, and country-specific economic instability, shifting political environments, changing tax treatment, reactionary import/export regulatory regimes, and other risks associated with international manufacturing, operations, and sales;
Current wording
•global, regional, and country-specific economic instability, shifting political environments, changing tax treatment, reactionary import/export regulatory, tariff, and trade policy regimes, and other risks associated with international manufacturing, operations, and sales;
Previous wording
Statements concerning supply chain and logistics challenges; cost increases and expense management; changes in U.S. and worldwide economic conditions, such as the impact of inflation, and fluctuations in foreign currency exchange rates; geopolitical tensions; including concerns and uncertainty surrounding the outcome of the elections in the United States in 2024 and possible legislative, tariffs, and policy reforms resulting therefrom; industry or market segment outlook; market acceptance of or transition to new products or technologies such as advanced X-ray tube and digital flat panel detector products; growth drivers; future orders, revenues, market share, backlog, earnings or other financial results; and any statements using the terms “believe,” “expect,” “anticipate,” “can,” “should,” “would,” “could,” “estimate,” “may,” “intend,” “potential,” and “possible” or similar statements are forward-looking statements that involve risks and uncertainties that could cause our actual results and the outcome and timing of certain events to differ materially from those projected or management’s current expectations.
Current wording
Statements concerning supply chain and logistics challenges; cost increases and expense management; changes in U.S. and worldwide economic conditions, such as the impact of inflation, and fluctuations in foreign currency exchange rates; geopolitical tensions; legislative, tariff, and trade policy reforms and responsive retaliatory actions by impacted countries, and uncertainty resulting therefrom, such as the tariffs against China, Canada, and Mexico announced by the United States on February 1, 2025, and the retaliatory tariffs against the United States announced by China, Canada, and Mexico (collectively referred to as the "February 2025 Tariffs"); industry or business segment outlook; customer acceptance of or transition to new products or technologies such as advanced X-ray tube and digital flat panel detector products; growth drivers; future orders, revenues, market share, backlog, earnings or other financial results; and any statements using the terms “believe,” “expect,” “anticipate,” “can,” “should,” “would,” “could,” “estimate,” “expand,” “drive”, “may,” “intend,” “potential,” and “possible” or similar statements are forward-looking statements that involve risks and uncertainties that could cause our actual results and the outcome and timing of certain events to differ materially from those projected or management’s current expectations.
Previous wording
Our success depends, among other things, on our ability to anticipate and respond to changes in our markets, the direction of technological innovation, and the demand from our customers. We continually invest in research and development and employ approximately 350 individuals in product development related activities. Our focus on innovation and product performance along with strong and long-term customer relationships allows us to collaborate with our customers to bring industry-leading products to the X-ray imaging market. We continue to work to improve the life and quality of our imaging components and leverage our scale as one of the largest independent X-ray imaging component suppliers to provide cost-effective solutions for our customers.
Current wording
Our success depends, among other things, on our ability to anticipate and respond to changes in our business, the direction of technological innovation, and the demand from our customers. We continually invest in research and development and employ approximately 400 individuals in product development related activities. Our focus on innovation and product performance along with strong and long-term customer relationships allows us to collaborate with our customers to deliver industry-leading X-ray imaging products. We continue to work to improve the life and quality of our imaging components and leverage our scale as one of the largest independent X-ray imaging component suppliers to provide cost-effective solutions for our customers.
Previous wording
We remain cautious about the general economic environment as many factors remain dynamic and unpredictable. The uncertain economic environment, supply chain and logistic challenges, and geopolitical tensions have contributed to, and may continue to contribute to, inflation, higher interest rates and capital costs, increased shipping costs, supply shortages, increased costs of labor and materials, exchange rate volatility, and other similar effects.
Current wording
We remain cautious about the general economic environment as many factors remain dynamic and unpredictable. The uncertain economic and geopolitical environment, supply chain and logistic challenges, the ultimate outcome and effect of the February 2025 Tariffs, and geopolitical tensions and local conflicts have contributed to, and may continue to contribute to, renewed inflation, higher interest rates and capital costs, increased shipping costs, supply shortages, increased costs of labor and materials, exchange rate volatility, increased tariff costs, and other similar effects.
Previous wording
We have experienced fewer supply chain, manufacturing, and logistics challenges in fiscal year 2024 than in fiscal year 2023. However, shortages of certain materials and delivery delays from some suppliers have caused, and may in the future cause, delays in manufacturing products, as well as operational and customer order fulfillment challenges. In addition, since late 2023 our Medical business has been negatively impacted by the China government initiated anti-corruption campaign related to the healthcare industry and more recently we have experienced cautious purchasing behaviors by our customers. We expect these trends to continue through the remainder of fiscal year 2024.
Current wording
In the past we have experienced supply chain, manufacturing, and logistics challenges but these challenges have largely subsided. However, shortages of certain materials and delivery delays from some suppliers have caused, and may in the future cause, delays in manufacturing products, as well as operational and customer order fulfillment challenges. In addition, since late 2023 our Medical business has been negatively impacted by the Chinese government's anti-corruption campaign related to the healthcare industry, which we expect to continue at some level through fiscal year 2025.
Previous wording
We have two reportable operating segments: Medical and Industrial. The segments align our products and services offerings with customer use in medical and industrial markets.
Current wording
We have two reportable operating segments: Medical and Industrial. The segments align our products and service offerings with customer use in medical and industrial imaging.
Previous wording
In our Medical segment, we design, manufacture, sell and service X-ray imaging components, including X-ray tubes, flat panel and photon counting detectors and accessories, high voltage connectors, image-processing software and workstations, 3D reconstruction software, computer-aided diagnostic software, collimators, automatic exposure control devices, generators, and coolers. These components are used in a range of medical imaging applications including CT, mammography, oncology, cardiac, surgery, dental, fluoroscopy, and other diagnostic radiography uses.
Current wording
In our Medical segment, we design, manufacture, sell and service X-ray imaging components, including X-ray tubes, flat panel and photon counting detectors and accessories, high voltage connectors, image-processing software and workstations, 3D reconstruction software, computer-aided diagnostic software, collimators, automatic exposure control devices, generators, and coolers. These components are used in a range of medical imaging applications including computed tomography ("CT"), mammography, oncology, cardiac, surgery, dental, fluoroscopy, and other diagnostic radiography uses.
Previous wording
In China, the government is broadening the availability of healthcare services. As a result, the number of diagnostic X-ray imaging systems, including CT, has grown significantly. We are developing CT X-ray tubes and related subsystems for Chinese OEMs as they introduce new systems in China. Over the long-term, our objective is to become the partner of choice both for OEMs and in the replacement market as CT systems become more widely adopted throughout the Chinese market.
Current wording
In China, the government has continued its efforts to broaden the availability of healthcare services. In the past 20 years, the number of medical institutions and diagnostic radiology equipment per million population in China has increased substantially. We are developing CT X-ray tubes and related subsystems for Chinese OEMs as they introduce new systems in China. Over the long-term, our objective is to become the partner of choice both for new systems and for replacement components in existing systems as CT systems continue to be more widely adopted throughout China. In March 2024, China introduced a new stimulus program that includes the healthcare industry. We believe the stimulus program has led to customers delaying purchasing decisions in the short-term as they wait to understand the details of the program before making significant purchasing decisions, but are optimistic that it will result in increased opportunities for our business in the longer-term.
Previous wording
In our Industrial segment, we design, develop, manufacture, sell, and service X-ray imaging products for use in a number of markets, including security applications for cargo screening at ports and borders, baggage screening at airports, and nondestructive testing, irradiation, and inspection applications used in a number of other vertical markets. Our Industrial products include Linatron® X-ray linear accelerators, X-ray tubes, flat panel and photon counting detectors, computed radiography scanners, high voltage connectors, and coolers. In addition, we license proprietary image-processing and detection software designed to work with other Varex products to provide packaged sub-assembly solutions to our Industrial customers. Our Industrial business benefits from the research and development investment and manufacturing economies of scale on the Medical side of our business, as we continue to find new applications for our technology. Along with more favorable pricing dynamics, this allows us to generally achieve higher gross profit for Industrial products relative to our Medical business. In addition, our Industrial business benefits from our long-term service agreements for our Linatron® products.
Current wording
In our Industrial segment, we design, develop, manufacture, sell, and service X-ray imaging products for use in a number of applications, including security applications for cargo screening at ports and borders, baggage screening at airports, and nondestructive testing, irradiation, and inspection applications used in a number of other verticals. Our Industrial products include Linatron® X-ray linear accelerators, X-ray tubes, flat panel and photon counting detectors, computed radiography scanners, high voltage connectors, and coolers. In addition, we license proprietary image-processing and detection software designed to work with other Varex products to provide packaged sub-assembly solutions to our Industrial customers. Our Industrial business benefits from the research and development investment and manufacturing economies of scale on the Medical side of our business, as we continue to find new applications for our technology. Along with more favorable pricing dynamics, this allows us to generally achieve higher gross profit for Industrial products relative to our Medical business. In addition, our Industrial business benefits from our long-term service agreements for our Linatron® products.
Previous wording
The security market primarily consists of cargo security for the screening of trucks, trains, and cargo containers at ports and borders as well as airport security for checked baggage and palletized cargo. The end customers for border protection systems are typically government agencies, many of which are in oil-based economies and war zones where there can be significant variation in buying patterns.
Current wording
Security applications primarily consists of cargo security for the screening of trucks, trains, and cargo containers at ports and borders as well as airport security for checked baggage and palletized cargo. The end customers for border protection systems are typically government agencies, many of which are in oil-based economies and war zones where there can be significant variation in buying patterns. We have recently expanded our security offerings to include full systems that perform cargo and vehicle inspections. These systems are used for screening cargo at ports and borders.
Previous wording
Non-destructive testing and inspection verticals utilize X-ray imaging to scan items for inspection of manufacturing defects and product integrity in a wide range of industries including aerospace, automotive, electronics, oil and gas, food packaging, metal castings, and additive manufacturing. In addition, new applications for X-ray sources are being developed, such as sterilization of food and its packaging. We provide X-ray sources, digital detectors, high voltage connectors, and image processing software to OEM customers, system integrators, and manufacturers in a variety of these verticals. We believe that the non-destructive testing market represents a significant growth opportunity for our business, and we are actively pursuing new potential applications for our products.
Current wording
Non-destructive testing and inspection verticals utilize X-ray imaging to scan items for inspection of manufacturing defects and product integrity in a wide range of industries including aerospace, automotive, electronics, oil and gas, food packaging, metal castings, and additive manufacturing. In addition, new applications for X-ray sources are being developed, such as sterilization of food and its packaging. We provide X-ray sources, digital detectors, high voltage connectors, and image processing software to OEM customers, system integrators, and manufacturers in a variety of these verticals. We believe that non-destructive testing represents a significant growth opportunity for our business, and we are actively pursuing new potential applications for our products.
Previous wording
We periodically review our accounting policies, estimates, and assumptions and make adjustments when facts and circumstances dictate. Refer to our Annual Report on Form 10-K for the fiscal year ended September 29, 2023 filed with the SEC on November 16, 2023 and Note 1, Summary of Significant Accounting Policies, of the Notes to the Consolidated Financial Statements of this report for further details. Our critical accounting policies that are affected by accounting estimates include valuation of inventories, assessment of recoverability of goodwill and intangible assets, and income taxes. Except for the changes in certain policies upon adoption of the accounting standard described in Note 1, Summary of Significant Accounting Policiesof the Notes to the Condensed Consolidated Financial Statements of this report, 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.
Current wording
We periodically review our accounting policies, estimates, and assumptions and make adjustments when facts and circumstances dictate. Refer to our Annual Report on Form 10-K for the fiscal year ended September 27, 2024 filed with the SEC on November 19, 2024 and Note 1, Summary of Significant Accounting Policies, of the Notes to the Consolidated Financial Statements of this report for further details. Our critical accounting policies that are affected by accounting estimates include valuation of inventories, assessment of recoverability of goodwill and intangible assets, and income taxes. 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 2024.
Previous wording
The fiscal years of the Company as reported are the 52 or 53-week periods ending on the Friday nearest September 30. Fiscal year 2024 is the 52-week period ending September 27, 2024. Fiscal year 2023 was the 52-week period that ended on September 29, 2023. The fiscal quarters ended June 28, 2024 and June 30, 2023 were both 13-week periods. The nine-month fiscal periods ended June 28, 2024 and June 30, 2023 were both 39-week periods.
Current wording
The fiscal years of the Company as reported are the 52 or 53-week periods ending on the Friday nearest September 30. Fiscal year 2025 is the 53-week period ending October 3, 2025. Fiscal year 2024 was the 52-week period that ended on September 27, 2024. The fiscal quarters ended January 3, 2025 and December 29, 2023 were a 14-week period and 13-week period, respectively.
Previous wording
Industrial revenues increased $3.7 million, primarily due to increased sales of security inspection products, partially offset by decreased sales of digital detectors.
Current wording
Industrial revenues increased $5.1 million, primarily due to increased sales of security inspection products, partially offset by decreased sales of digital detectors.
Previous wording
The decrease in Medical segment gross profit was primarily due to decreased sales volume and an unfavorable shift in product sales mix.
Current wording
The increase in Medical segment gross profit was primarily due to increased sales volume, favorable product mix, and refunds of foreign customs duties and taxes previously paid.
Previous wording
The Industrial segment gross profit decreased, even though Industrial revenues increased by 6.5%, primarily due to an unfavorable shift in product sales mix.
Current wording
The Industrial segment gross profit increased primarily due to a favorable product sales mix.
Previous wording
We are committed to investing in the business to support long-term growth and believe long-term research and development expenses of approximately 8% to 10% of annual revenues is the appropriate range that will allow us to innovate and bring new products to market for our global OEM customers. Research and development costs increased to 10.5% of revenues for the third quarter of fiscal year 2024, due to increased costs and decreased sales.
Current wording
We are committed to investing in the business to support long-term growth and believe long-term research and development expenses of approximately 8% to 10% of annual revenues is the appropriate range that will allow us to innovate and bring new products to market for our global OEM customers. Research and development costs increased to 11.8% of revenues for the first quarter of fiscal year 2025, due to increased costs and the fifth and final milestone payment for the Micro-X technology transfer.
Previous wording
Selling, general, and administrative expenses for the third quarter of fiscal year 2024 increased $3.5 million, primarily due to increased fixed cost commitments to a supplier, increased litigation costs, and increased environmental remediation costs.
Current wording
Selling, general, and administrative expenses for the first quarter of fiscal year 2025 increased $1.4 million, primarily due to increased fixed cost commitments to a supplier.
Previous wording
Interest income increased primarily due to an increase in investments made into marketable debt securities.
Current wording
Interest income increased primarily due to an increase in cash and cash equivalents being held in interest bearing deposit accounts.
Previous wording
Other expense, net increased due to increased losses in certain investments in privately-held companies and equity investments, partially offset by decreased foreign exchange expense.
Current wording
Other (expense) income, net decreased due to increased losses in certain investments in privately-held companies and equity investments and increased foreign exchange expense.
Previous wording
For the three months ended June 28, 2024, we recognized income tax benefit of $0.7 million on $0.8 million of pre-tax income. For the three months ended June 30, 2023, we recognized income tax expense of $7.9 million on $17.1 million of pre-tax income. Our tax expense decreased for the three months ended June 28, 2024, primarily due to decreased pre-tax income in certain jurisdictions and favorable impacts of international tax provisions and tax credits in the U.S., partially offset by losses in certain foreign jurisdictions for which no benefit can be recorded.
Current wording
For the three months ended January 3, 2025, we recognized income tax expense of $2.6 million on $2.5 million of pre-tax income. For the three months ended December 29, 2023, we recognized income tax benefit of $0.2 million on $0.6 million of pre-tax loss. Our tax expense increased for the three months ended January 3, 2025, primarily due to increased pre-tax income in certain jurisdictions, valuation allowance positions in the U.S. on deferred tax assets, and losses in certain foreign jurisdictions for which no benefit can be recorded.
Previous wording
We assess our liquidity in terms of our ability to generate cash to fund our operations, including working capital and investing activities. We believe that our operating cash flow, cash on our balance sheet, availability under our Revolving Credit Facility and Equipment Credit Facility, and our ability to access the credit and capital markets are sufficient to meet our anticipated operating activities and cash commitments for at least the next 12 months and will be sufficient to allow us to continue to invest in our existing businesses, consummate strategic acquisitions, and manage our capital structure on a short-term and long-term basis. We are currently not aware of any trends or demands, commitments, events, or uncertainties that will result in or that are reasonably likely to result in a material change to our liquidity needs during or beyond the next 12 months, except our Convertible Notes that become due in June 2025 that we currently anticipate refinancing using some combination of future borrowings under our Revolving Credit Facility and cash. The availability under our Revolving Credit Facility and Equipment Credit Facility is $155.0 million and $20.0 million, respectively. As of June 28, 2024, our Revolving Credit Facility and Equipment Credit Facility remain undrawn. At June 28, 2024, we had total debt of $443.1 million, net of deferred issuance costs of $3.7 million.
Current wording
We assess our liquidity in terms of our ability to generate cash to fund our operations, including working capital and investing activities. We believe that our operating cash flow, cash on our balance sheet, availability under our Revolving Credit Facility, and our ability to access the credit and capital markets are sufficient to meet our anticipated operating activities and cash commitments for at least the next 12 months and will be sufficient to allow us to continue to invest in our existing businesses, consummate strategic acquisitions, and manage our capital structure on a short-term and long-term basis. We are currently not aware of any trends or demands, commitments, events, or uncertainties that will result in or that are reasonably likely to result in a material change to our liquidity needs during or beyond the next 12 months, except for $200.0 million of our Convertible Notes that become due in June 2025 that we currently anticipate repaying using some combination of future borrowings under our Revolving Credit Facility, net proceeds from the Senior Secured Notes Add On, and cash. As of January 3, 2025, available restricted cash from the Senior Secured Notes Add On for repurchase prior to maturity or repayment at maturity of our Convertible Notes was $124.1 million, and the availability under our Revolving Credit Facility was $155.0 million. As of January 3, 2025, our Revolving Credit Facility remains undrawn. At January 3, 2025, we had total debt of $567.0 million, net of deferred issuance costs of $3.7 million.
Previous wording
Cash and Cash Equivalents, Certificates of Deposit, and Marketable Securities
Current wording
Cash and Cash Equivalents, Certificates of Deposit, and Marketable Debt Securities
Previous wording
Net cash provided by operating activities. Net cash provided by operating activities was $21.4 million and $61.3 million for the nine months ended June 28, 2024 and June 30, 2023, respectively. The decrease in cash provided by operating activities was primarily due to decreased non-cash adjustments, and increased cash outflows related to inventories and accrued liabilities and other current and long-term liabilities when compared to the nine months ended June 30, 2023, partially offset by reduced cash outflows related to accounts payable.
Current wording
Net cash provided by operating activities. Net cash provided by operating activities was $9.5 million and $10.3 million for the three months ended January 3, 2025 and December 29, 2023, respectively. The decrease in cash provided by operating activities was primarily due to decreased cash inflows related to accounts receivable and increased cash outflows related to accrued liabilities and other current and long-term liabilities and prepaid expenses, partially offset by increased non-cash adjustments.
Previous wording
Net cash used in investing activities. Net cash used in investing activities was $13.5 million and $30.3 million for the nine months ended June 28, 2024 and June 30, 2023, respectively. The decrease in cash used in investing activities was primarily due to increased proceeds from maturities of marketable securities, during the nine months ended June 28, 2024, partially offset by decreased purchases of property, plant, and equipment and the settlement of net investment hedges in the prior year.
Current wording
Net cash used in investing activities. Net cash used in investing activities was $3.0 million and $19.9 million for the three months ended January 3, 2025 and December 29, 2023, respectively. The decrease in cash used in investing activities was primarily due to increased proceeds from maturing and sold marketable securities and certificates of deposit and reduced cash outflows related to the purchase of property, plant and equipment.
Previous wording
Net cash used in financing activities. Net cash used in financing activities was $4.1 million and $1.6 million for the nine months ended June 28, 2024 and June 30, 2023, respectively. The increase in cash used in financing activities was primarily due to increased cash payments related to debt issuance costs and taxes for net share settlement of equity awards for the nine months ended June 30, 2023.
Current wording
Net cash provided by (used in) financing activities. Net cash provided by (used in) financing activities was $124.9 million and $(1.7) million for the three months ended January 3, 2025 and December 29, 2023, respectively. The increase in cash provided by in financing activities was primarily due to the issuance of the Senior Secured Notes Add On during the fiscal quarter of fiscal year 2025.
Previous wording
In October 2013, we entered into an amended agreement with dpiX and other parties that, among other things, provides us with the right to 50% of dpiX’s total manufacturing capacity produced after January 1, 2014. The amended agreement requires us to pay for 50% of the fixed costs (as defined in the amended agreement), as determined at the beginning of each calendar year. In January 2024, the Company's fixed cost commitment was determined to be $12.4 million for calendar year 2024. As of June 28, 2024, the Company estimated it has $6.2 million related to this fixed cost commitment remaining for calendar year 2024. The amended agreement will continue unless the ownership structure of dpiX changes (as defined in the amended agreement).
Current wording
In October 2013, we entered into an amended agreement with dpiX and other parties that, among other things, provides us with the right to 50% of dpiX’s total manufacturing capacity produced after January 1, 2014. The amended agreement requires us to pay for 50% of the fixed costs (as defined in the amended agreement), as determined at the beginning of each calendar year. In January 2025, the Company's fixed cost commitment was determined to be $13.7 million for calendar year 2025. The amended agreement will continue unless the ownership structure of dpiX changes (as defined in the amended agreement).
Previous wording
The Company enters into purchase agreements with its suppliers in the ordinary course of its business for the purchase of goods and services. Some of these purchase agreements are non-cancellable and thus contractually obligate the Company to future cash payments. As of June 28, 2024, our non-cancellable supplier purchase obligations totaled $7.0 million.
Current wording
The Company enters into purchase agreements with its suppliers in the ordinary course of its business for the purchase of goods and services. Some of these purchase agreements are non-cancellable and thus contractually obligate the Company to future cash payments. As of January 3, 2025, our non-cancellable supplier purchase obligations totaled $5.6 million.
Previous wording
Trade accounts receivable days sales outstanding (“DSO”) was 66 days at June 28, 2024 and 65 days at September 29, 2023. Our accounts receivable and DSO are impacted by a number of factors, including the timing of product shipments, collections performance, payment terms, the mix of revenues from different regions and the effects of economic instability.
Current wording
Trade accounts receivable days sales outstanding (“DSO”) was 68 days at January 3, 2025 and 70 days at September 27, 2024. Our accounts receivable and DSO are impacted by a number of factors, including the timing of product shipments, collections performance, payment terms, the mix of revenues from different regions and the effects of economic instability.
Previous wording
Backlog is the accumulation of all orders for which revenues have not been recognized and are still considered valid. Backlog also includes a small portion of billed service contracts that are included in deferred revenue. Our estimated total backlog at June 28, 2024 was approximately $310 million.
Current wording
Backlog is the accumulation of all orders for which revenues have not been recognized and are still considered valid. Backlog also includes a small portion of billed service contracts that are included in deferred revenue. Our estimated total backlog at January 3, 2025 was approximately $307 million.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
Discussion of Results of Operations for the Nine Months Ended June 28, 2024 Compared to the Nine Months Ended June 30, 2023
Previous report — wording carried elsewhere
Industrial revenues increased $11.6 million, primarily due to increased sales of security inspection products and x-ray tubes, partially offset by decreased sales of digital detectors.
Previous report — wording carried elsewhere
The following table summarizes the Company’s interest and other expense, net:
Previous report — wording carried elsewhere
Interest income increased primarily due to an increase in investments made into marketable debt securities.
Previous report — wording carried elsewhere
For the nine months ended June 28, 2024, we recognized an income tax benefit of $0.2 million on $2.5 million of pre-tax income. For the nine months ended June 30, 2023, the Company recognized income tax expense of $13.6 million on $30.3 million of pre-tax income. Our tax expense decreased for the nine months ended June 28, 2024, primarily due to decreased pre-tax income in certain jurisdictions and favorable impacts of international tax provisions and tax credits in the U.S., partially offset by losses in certain foreign jurisdictions for which no benefit can be recorded.