DISCONTINUED OPERATIONS

On January 28, 2017, the Company completed the Distribution of Varex. In connection with the Distribution, Varian and Varex have entered into a separation and distribution agreement as well as various other agreements that will govern the relationships between the parties going forward, including a transition services agreement, a tax matters agreement, an employee matters agreement, an intellectual property matters agreement, a trademark license agreement and supply/distribution agreements. The separation and distribution agreement and other agreements related to the separation were entered into on January 27, 2017. Services under the transition services agreement are expected to continue for 60 days to 24 months following the Distribution Date, depending on the service provided.

In conjunction with the Distribution, the Company received $200.0 million from Varex and used those proceeds to repay a portion of its outstanding 2013 Revolving Credit Facility. At the Distribution Date, the Company contributed $81.3 million in cash and cash equivalents to Varex as part of the distribution and transfer of certain legal entities. In May 2017, the Company received $27.1 million from Varex for excess cash and cash equivalents contributed at the Distribution Date. As of June 30, 2017, the change to the Company's stockholders' equity was primarily due to a $334.1 million reduction recorded in retained earnings as a result of the Distribution of Varex. In December 2016, the Company entered into a master purchase and sale agreement ("MPSA") to acquire the Medical Imaging business of PerkinElmer, Inc. for approximately $276 million. In connection with the Distribution, the Company assigned the MPSA and all rights and obligations to Varex.

Following the Distribution, Varex retained a specified amount of cash that would enable Varex to pay the Company consideration for certain net assets outside of the United States that were required to be transferred to Varex but which did not occur on the Distribution Date due to not having received regulatory approvals for such transfers. Once those regulatory approvals are received, Varian will receive a cash payment from Varex in consideration for such net asset transfers. At June 30, 2017, the Company had $17.0 million in assets (net of liabilities) on its Condensed Consolidated Balance Sheet related to Varex net assets to be transferred. The Company expects the remainder of Varex's net assets will be transferred in fiscal years 2017 and 2018. If the Company does not receive the necessary regulatory approvals during a specified time period, Varex will be required to transfer such cash amounts to Varian.

The financial results of Varex are presented as net (loss) earnings from discontinued operations on the Condensed Consolidated Statements of Earnings, and primarily include the financial results of the Company's former Imaging Components operating segment and costs relating to the Distribution. Corporate costs previously allocated to the Company's Imaging Components operating segment are not included in discontinued operations. See Note 16, "Segment Information" for more information related to corporate allocated costs.

The following table summarizes the key components of net earnings (loss) from discontinued operations:



	Three Months Ended ⁽¹⁾		Nine Months Ended
(In millions)	July 1, 2016		June 30, 2017			July 1, 2016
Revenues	$	146.5	$	194.0		$	431.4
Cost of revenues	83.6		117.3			252.2
Gross margin	62.9		76.7			179.2
Operating expenses⁽²⁾	34.5		76.1			91.5
Operating earnings	28.4		0.6			87.7
Taxes on earnings	11.4		7.4			33.8
Net earnings (loss) from discontinued operations	17.0		(6.8		)	53.9
Less: Net earnings from discontinued operations attributable to noncontrolling interests	0.2		0.1			0.2
Net earnings (loss) from discontinued operations attributable to Varian	$	16.8	$	(6.9	)	$	53.7


⁽¹⁾	There was no activity in net earnings (loss) from discontinued operations during the three months ended June 30, 2017.


⁽²⁾	Operating expenses included separation costs of $34.2 million during the nine months ended June 30, 2017 and $5.4 million during the three and nine months ended July 1, 2016. Separation costs include expenses for transaction advisory services, consulting services, restructuring and other expenses.

The following table summarizes the major classes of assets and liabilities of discontinued operations that were included in the Company's balance sheet:



(In millions)	June 30, 2017		September 30, 2016
Assets:
Cash and cash equivalents	$	1.8	$	32.1
Accounts receivable, net	8.2		122.2
Inventories	5.5		197.3
Prepaid expenses and other current assets	3.4		4.0
Current assets of discontinued operations	18.9		355.6
Property, plant and equipment, net	5.1		120.6
Goodwill	—		74.7
Intangible assets	—		20.6
Deferred tax assets	—		2.1
Other assets	—		54.9
Total assets of discontinued operations	$	24.0	$	628.5
Liabilities:
Accounts payable	$	5.8	$	41.9
Accrued liabilities	1.2		29.1
Deferred revenues	—		12.0
Current liabilities of discontinued operations	7.0		83.0
Other long-term liabilities	—		4.2
Total liabilities of discontinued operations	$	7.0	$	87.2
Redeemable noncontrolling interests of discontinued operations	$	—	$	10.3

The following table presents supplemental cash flow information of discontinued operations:



	Nine Months Ended
(In millions)	June 30, 2017			July 1, 2016
Operating activities:
Share-based compensation expense	$	2.0		$	4.4
Depreciation expense	4.8			7.6
Amortization expense	1.8			4.2
Investing activities:
Purchases of property, plant and equipment	(6.4		)	(24.2		)
Sale of available-for-sale securities	—			8.6
Acquisition of business, net of cash acquired	$	—		$	(1.2	)