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Strategic Arrangement
9 Months Ended
Jun. 28, 2013
Strategic Arrangement

16. strategic Arrangement

In April 2012, VMS entered into a strategic global partnership with Siemens through which, among other things, the Company and Siemens are working on developing interfaces to enable the Company’s ARIA® oncology information system software to connect with Siemens linear accelerators and imaging systems. Under the agreement establishing this collaboration, the Company committed to make certain payments, including up to $10 million in fixed fees and $20 million in license fees, in the event certain product development milestones are achieved. The Company will also pay for additional licenses beyond the minimum quantities set forth in the agreement. During the three and nine months ended June 28, 2013, the Company accrued $0.5 million and $1.5 million, respectively, of the fixed fees under the terms of the agreement, of which the first payment of $2 million will be due on September 30, 2013. As of June 28, 2013, no amount related to the achievement of the product development milestones was payable under this agreement.

In addition, pursuant to this agreement, the Company represents Siemens diagnostic imaging products to radiation oncology clinics in most international markets and, since November 2012, in North America. Siemens in turn represents the Company’s equipment and software products for radiotherapy and radiosurgery within its offerings to its healthcare customers in agreed upon regions. The Company will receive commissions from Siemens for sales agency activities provided to Siemens and will make commission payments to Siemens for sales agency activities provided to the Company as part of this agreement.  The Company incurred commissions expense of approximately $0.2 million during the three and nine months ended June 28, 2013.  Insignificant amounts of commissions income have been recognized during the three and nine months ended June 28, 2013.  This agreement also provides a framework for both companies to explore opportunities to co-develop new imaging and treatment solutions in the future.