RELATED PARTY TRANSACTIONS

9 Months Ended

Jun. 29, 2012

RELATED PARTY TRANSACTIONS

6. RELATED PARTY TRANSACTIONS

VMS has a 40% ownership interest in dpiX Holding LLC (“dpiX Holding”), a two-member consortium which has a 100% ownership interest in dpiX LLC (“dpiX”), a supplier of amorphous silicon based thin-film transistor arrays (“flat panels”) for the Company’s X-ray Products’ digital image detectors and for its Oncology Systems’ On-Board Imager^® (“OBI”), and PortalVision^TM imaging products. In accordance with the dpiX Holding agreement, net losses were to be allocated to the members, in succession, until their capital accounts equaled zero, then to the members in accordance with their ownership interests. The dpiX Holding agreement also provided that net profits were to be allocated to the members, in succession, until their capital accounts equaled the net losses previously allocated, then to the members in accordance with their ownership interests.

The equity investment in dpiX Holding is accounted for under the equity method of accounting. When VMS recognizes its share of net profits or losses of dpiX Holding, profits or losses in inventory purchased from dpiX are eliminated until realized by VMS. VMS recorded income on the equity investment in dpiX Holding of $1.7 million in the three months ended June 29, 2012 and income of $0.3 million in the three months ended July 1, 2011. VMS recorded income on the equity investment in dpiX Holding of $1.2 million in the nine months ended June 29, 2012 and income of $4.5 million in the nine months ended July 1, 2011. Income and loss on the equity investment in dpiX Holding are included in “Selling, general and administrative” expenses in the Condensed Consolidated Statements of Earnings. The carrying value of the equity investment in dpiX Holding, which was included in “Other assets” in the Condensed Consolidated Balance Sheets, was $46.2 million at June 29, 2012 and $46.7 million at September 30, 2011.

VMS entered into a loan agreement with dpiX in February 2009, which was amended in December 2011, under which VMS loaned $8.8 million to dpiX. The loan bears interest at prime plus 1% per annum. Interest was payable in full according to a quarterly schedule that began in April 2009. The principal balance was due and payable to VMS in installments, of which $3.4 million was due and paid in December 2011 and the balance, together with accrued and unpaid interest and all other related amounts payable, was due and payable on or before December 31, 2013. As of June 29, 2012, the amount outstanding under this loan agreement was $5.4 million, which was included in “Other assets” in the Condensed Consolidated Balance Sheet. As of September 30, 2011, the amount outstanding under this loan agreement was $8.8 million, which was included in “Prepaid expenses and other current assets” in the Condensed Consolidated Balance Sheets. The Company evaluated the collectability of its note receivable with dpiX at least on a quarterly basis, considering the timeliness of recurring payments, as well as its financial position and cash flows, and would recognize an impairment loss for any amount the Company deemed uncollectible. In July 2012, dpiX paid the outstanding amount of the loan prior to the due date of December 31, 2013.

During the three months ended June 29, 2012 and July 1, 2011, the Company purchased glass transistor arrays from dpiX totaling approximately $2.9 million and $6.4 million, respectively. Glass transistor arrays purchased from dpiX totaled approximately $10.9 million for the nine months ended June 29, 2012 and $18.7 million for the nine months ended July 1, 2011. These purchases of glass transistor arrays are included as a component of “Inventory” in the Condensed Consolidated Balance Sheets and “Cost of revenues—product” in the Condensed Consolidated Statements of Earnings for these periods.