Related Party Transactions

9 Months Ended

Jun. 28, 2013

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 PortalVisionTM imaging products. In accordance with the dpiXHolding 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 dpiXHolding agreement also provided that net profits were initially 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 dpiXHolding of $3.0 million in the three months ended June28, 2013 and income of $1.7 million in the three months ended June29, 2012. VMS recorded income on the equity investment in dpiXHolding of $2.5 million in the nine months ended June28, 2013 and income of $1.2 million in the nine months ended June29, 2012. 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 $49.7 million at June28, 2013 and $45.5 million at September28, 2012.

VMS entered into a loan agreement with dpiX in February 2009, which was amended in December 2011. Under this loan agreement, VMS loaned $8.8 million to dpiX. The loan bore interest at prime plus 1%per annum. The principal amount, together with accrued interest, was repaid in two installments through July 2012.

During the three months ended June28, 2013 and June29, 2012, the Company purchased glass transistor arrays from dpiX totaling approximately $6.5 million and $2.9 million, respectively. Glass transistor arrays purchased from dpiX totaled approximately $22.6 million for the nine months ended June28, 2013 and $10.9 million for the nine months ended June29, 2012. These purchases of glass transistor arrays are included as a component of “Inventory” in the Condensed Consolidated Balance Sheets or “Cost of revenues—product” in the Condensed Consolidated Statements of Earnings for these periods.