Oncology Systems
(Dollars in Millions) 2000 1999 1998 Net Orders $ 597 $ 504 $ 414 Sales $ 534 $ 459 $ 405 Pretax Earnings-as Reported $ 93 $ 70 $ 60 Pretax Earnings-Pro Forma n/a $ 71 $ 60 Pretax Earnings as % of Sales-as Reported 17.5% 15.2% 14.8% Pretax Earnings as % of Sales-Pro Forma n/a 15.5% 14.8% Backlog $ 424 $ 361 $ 316 Capital Expenditures $ 8 $ 10 $ 7 Depreciation & Amortization $ 9 $ 9 $ 8 FY99 pro forma pretax earnings exclude reorganization and non-recurring expenses related to the spin-off of the Company's instruments and semiconductor equipment businesses, on April 2, 1999.
Varian Oncology Systems is the world's leading supplier of radiotherapy systems for treating cancer. Its integrated medical systems include linear accelerators and accessories, and a broad range of interconnected software tools for planning and delivering the most sophisticated radiation treatments available to cancer patients. Thousands of patients all over the world are treated daily on Varian systems. Oncology Systems works closely with health care professionals in community clinics, hospitals, and universities to improve cancer outcomes. The business unit also supplies linear accelerators for industrial inspection applications.

X-Ray Products
(Dollars in Millions) 2000 1999 1998 Net Orders $ 147 $ 123 $ 128 Sales $ 136 $ 123 $ 131 Pretax Earnings-as Reported $ 18 $ 11 $ 20 Pretax Earnings-Pro Forma n/a $ 17 $ 20 Pretax Earnings as % of Sales-as Reported 13.1% 8.6% 15.2% Pretax Earnings as % of Sales-Pro Forma n/a 13.9% 15.2% Backlog $ 40 $ 29 $ 30 Capital Expenditures $ 6 $ 8 $ 6 Depreciation & Amortization $ 7 $ 9 $ 7 FY99 pro forma pretax earnings exclude reorganization and non-recurring expenses related to the spin-off of the Company's instruments and semiconductor equipment businesses, on April 2, 1999, and restructuring expense related to the closure of the Arlington Heights X-ray tube facility.
Varian X-Ray Products is the world's premier independent supplier of X-ray tubes, serving manufacturers of radiology equipment and industrial inspection equipment as well as distributors of replacement tubes. This business provides the industry's broadest selection of X-ray tubes expressly designed for the most advanced diagnostic applications, including CT scanning, radiography, and mammography. These products meet evolving requirements for improved resolution, faster patient throughput, longer tube life, smaller dimensions, and greater cost efficiency. X-Ray Products also supplies a new line of amorphous silicon flat-panel X-ray detectors for medical and industrial applications.

Ginzton Technology Center
(Dollars in Millions) 2000 1999 1998 Net Orders $ 18 $ 12 $ 5 Sales $ 20 $ 8 $ 5 Pretax Losses-as Reported $ (5) $ (8) $ (9) Backlog $ 8 $ 10 $ 6 Capital Expenditures $ 1 $ 3 $ 1 Depreciation & Amortization $ 2 $ 1 $ 1
The Ginzton Technology Center acts as Varian Medical Systems' research and development facility for breakthrough technologies and operates a growing brachytherapy business for the delivery of internal radiation to treat cancer and cardiovascular disease. In addition to brachytherapy, current efforts are focused on next-generation imaging systems and advanced targeting technologies for radiotherapy. The center is also investigating the combination of radiotherapy with other treatment modalities, such as bioengineered gene delivery systems.

2000 Highlights
Oncology Systems again set records for annual net orders, sales, and operating earnings. It launched the Silhouette™ Edition Clinac featuring a new compact, patient friendly design for previously inaccessible small treatment rooms. It developed the Helios 6.2 inverse treatment planning software for IMRT and began volume shipments of new solid-state PortalVision imagers for treatment verification. The first installations of the fully integrated systems using Varian's Generation™ 6 architecture were completed and leading clinics began working with Varian's new Respiratory Gating System for improving treatment precision. Varian formed an alliance with GE Medical Systems, offering interfaced imaging equipment and See and Treat Cancer Care™ to North American radiation oncologists. Oncology Systems also shipped the first new Linatron M for industrial inspection.

X-Ray Products achieved double-digit growth in annual sales and orders. It tripled the operating life and manufacturing volume for its innovative 0.5 second CT scanner tube - the world's most powerful tube for high-speed, high-resolution CT scanning. Product development teams completed a unique integral housing design for compact, lightweight, oil-free tubes, putting a mammography unit into pre-production and prototyping a second unit for CT scanning. The business expanded its flat panel imaging line with larger, more sensitive receptors for medical applications. Consolidation of Arlington Heights manufacturing in Salt Lake City led to an improved cost structure in our glass tube products business.

The Ginzton Technology Center increased sales of brachytherapy products by more than 200 percent over fiscal year 1999 totals. Two new products - the VariSource 200 Afterloader for high-dose rate brachytherapy and the BrachyVision 6.0 software - contributed to the higher sales. Production capacity for the VariSource product line tripled. Production commenced on a new longer-lasting and more flexible source wire for high-dose rate brachytherapy. The business formed an alliance with Cordis, a Johnson and Johnson Company, to supply and service radiation sources for cardiovascular brachytherapy.

Outlook
A record backlog and continuing growth in net orders point to the potential of another year of strong growth for Oncology Systems. Growth should be driven by demand for IMRT-ready systems, particularly in North America, Western Europe, and Japan. Initiatives to upgrade and modernize cancer care for underserved populations should lead to growth in international markets. Product initiatives will focus on integrating systems to simplify complex treatments.

Growth for the X-Ray Products business will be focused in the market for high-end CT scanning tubes, as manufacturers continue to demand higher X-ray tube capability for their next generation of fast CT scanners. Additional growth should come from an emerging business in filmless, flat panel imaging systems for industrial and medical applications. X-Ray Products will continue to expand its product line with new tube designs.

The global market for brachytherapy products should continue to grow, partly with the help of new cardiovascular applications and the desire for less invasive therapeutic options. Ginzton Technology Center will compete in this market with a broad line of devices and software, including some new products that should be introduced during the year. Research will remain focused on advancing targeting technology for radiotherapy as well as the use of biotechnology to enhance outcomes with radiotherapy.

Facilities

Baden, Switzerland Buc, France Chicago, Illinois Crawley, England Espoo, Finland Milpitas, California (headguarters) Tokyo, Japan Zug, Switzerland

Charleston, South Carolina Salt Lake City, Utah (headquarters)

Charlottesville, Virginia Crawley, England Mountain View, California (headquarters)