SEGMENT INFORMATION

In fiscal year 2017, the Company's VPT business met the criteria of a reportable operating segment and the Company now has two reportable operating segments: Oncology Systems and VPT. The Company's former Imaging Components reportable segment was part of the Distribution of Varex and is included in discontinued operations. In the first quarter of fiscal year 2017, the Company's Ginzton Technology Center ("GTC") previously reflected in the “Other” category, was dissolved and absorbed primarily into the Oncology Systems and also the Company's former Imaging Components businesses and is no longer a separate business. This change did not result in any recast of prior period financial information because GTC operating results were not material. Prior to the first quarter of 2017, the GTC business was reflected in the “Other” category because the operating segment did not meet the criteria of a reportable operating segment. The operating segments were determined based on how the Company’s Chief Executive Officer, its Chief Operating Decision Maker (“CODM”), views and evaluates the Company’s operations. The CODM allocates resources to and evaluates the financial performance of each operating segment primarily based on operating earnings.

Description of Segments

The Oncology Systems segment designs, manufactures, sells and services hardware and software products for treating cancer with conventional radiation therapy, and advanced treatments such as fixed field intensity-modulated radiation therapy (“IMRT”), image-guided radiation therapy (“IGRT”), VMAT, stereotactic radiosurgery (“SRS”), stereotactic body radiotherapy (“SBRT”) and brachytherapy. Products include linear accelerators, brachytherapy afterloaders, treatment simulation and verification equipment and accessories; as well as information management, treatment planning and image processing, clinical knowledge exchange, patient care management, decision-making support and practice management software. Oncology Systems’ products enable radiation oncology departments in hospitals and clinics to perform conventional radiotherapy treatments and offer advanced treatments such as IMRT, IGRT, VMAT, SRS and SBRT, as well as to treat patients using brachytherapy techniques, which involve temporarily implanting radioactive sources. The Company’s Oncology Systems products are also used by neurosurgeons to perform stereotactic radiosurgery. Oncology Systems’ customers worldwide include university research and community hospitals, private and governmental institutions, healthcare agencies, physicians’ offices and cancer care clinics.

The VPT segment develops, designs, manufactures, sells and services products and systems for delivering proton therapy, a form of external beam radiotherapy using proton beams for the treatment of cancer.

Accordingly, the following information is provided for purposes of achieving an understanding of operations, but may not be indicative of the financial results of the reported segments were they independent organizations. In addition, comparisons of the Company’s operations to similar operations of other companies may not be meaningful.

Change in Segment Measure of Earnings and Loss

During the second quarter of 2017, the Company changed its methodology for how corporate costs are allocated to its operating segments. Based on the relative revenues of Oncology Systems and VPT, the Company allocates these costs excluding certain corporate related costs, transactions or adjustments that the Company's CODM considers to be non-operational, such as restructuring and impairment charges, significant litigation charges or benefits and legal costs, acquisition-related expenses and benefits. Although the Company excludes these amounts from segment operating earnings and loss, they are included in the consolidated operating earnings and included in the reconciliation below. Prior period segment information has been recast to conform to the 2017 presentation.

Segment Data



	Revenues
	Fiscal Years
(In millions)	2017		2016		2015
Oncology Systems:
Product	$	1,383.0	$	1,430.3	$	1,359.2
Service	1,102.7		1,027.7		987.6
Total Oncology Systems	2,485.7		2,458.0		2,346.8
Varian Particle Therapy:
Product	172.5		153.1		137.9
Service	10.0		9.5		5.6
Total Varian Particle Therapy	182.5		162.6		143.5
Total reportable segments	2,668.2		2,620.6		2,490.3
Other	—		0.5		0.4
Total Company	$	2,668.2	$	2,621.1	$	2,490.7



	Operating Earnings
	Fiscal Years
(In millions)	2017			2016			2015
Oncology Systems	$	520.7		$	518.6		$	447.4
Varian Particle Therapy	(95.7		)	(44.6		)	(26.5		)
Total reportable segments	425.0			474.0			420.9
Other	—			(5.6		)	(6.2		)
Corporate	(83.1		)	(33.4		)	(19.0		)
Total Company	$	341.9		$	435.0		$	395.7



	Depreciation & Amortization						Total Assets
	Fiscal Years						Fiscal Years
(In millions)	2017		2016		2015		2017		2016		2015
Oncology Systems	$	39.4	$	28.5	$	21.8	$	1,452.7	$	1,491.2	$	1,411.3
Varian Particle Therapy	6.1		6.8		4.8		354.4		367.8		294.0
Total reportable segments	45.5		35.3		26.6		1,807.1		1,859.0		1,705.3
Other	—		0.2		0.2		—		2.1		2.2
Corporate	24.8		28.3		28.5		1,361.2		1,325.2		1,275.9
Discontinued operations	6.6		16.0		13.2		11.1		628.5		595.3
Total Company	$	76.9	$	79.8	$	68.5	$	3,179.4	$	3,814.8	$	3,578.7

The reconciliation of segment operating earnings (losses) to the Company’s earnings from continuing operations before taxes was as follows:



	Fiscal Years
(In millions)	2017			2016			2015
Oncology Systems	$	520.7		$	518.6		$	447.4
Varian Particle Therapy	(95.7		)	(44.6		)	(26.5		)
Total reportable segments	425.0			474.0			420.9
Other	—			(5.6		)	(6.2		)
Corporate	(83.1		)	(33.4		)	(19.0		)
Interest income, net	2.9			5.6			5.6
Total earnings from continuing operations before taxes	$	344.8		$	440.6		$	401.3

Geographic Information



	Revenues						Property, plant and equipment, net
	Fiscal Years						Fiscal Years
(In millions)	2017		2016		2015		2017		2016		2015
United States	$	1,237.0	$	1,161.7	$	1,212.3	$	163.8	$	177.0	$	194.8
International	1,431.2		1,459.4		1,278.4		91.5		81.6		78.3
Total Company	$	2,668.2	$	2,621.1	$	2,490.7	$	255.3	$	258.6	$	273.1

The Company operates various manufacturing and marketing operations outside the United States. Allocation between domestic and foreign revenues is based on the final destination of products sold. No country outside the United States represented 10% or more of the Company’s total revenues and property, plant and equipment, net, in fiscal years 2017, 2016 and 2015, respectively. Intercompany and intracompany profits are eliminated in consolidation.