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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ____________________________________________________________
FORM 10-Q
 ____________________________________________________________
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2023
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number 001-37860
 ____________________________________________________________ 
logoa37.jpg
VAREX IMAGING CORPORATION
(Exact name of registrant as specified in its charter)
 ____________________________________________________________ 
Delaware
81-3434516
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
1678 S. Pioneer Road, Salt Lake City, Utah
84104
(Address of principal executive offices)
(Zip Code)
(801) 972-5000
(Registrant’s telephone number, including area code)
 ____________________________________________________________ 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock
VREX
The Nasdaq Global Select Market
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   ☒ No   ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes   ☒     No   ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated filer
☒
Accelerated filer
☐
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As of July 27, 2023, there were 40.4 million shares of the registrant’s common stock outstanding.


VAREX IMAGING CORPORATION
FORM 10-Q
For the Quarter Ended June 30, 2023
INDEX
 

1
PART I
FINANCIAL INFORMATION

Item 1. Financial Statements

VAREX IMAGING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS    
(Unaudited)
Three Months EndedNine Months Ended
(In millions, except per share amounts)June 30, 2023July 1, 2022June 30, 2023July 1, 2022
Revenues, net$232.2 $214.5 $666.0 $628.0 
Cost of revenues155.9 141.1 453.7 419.0 
Gross profit76.3 73.4 212.3 209.0 
Operating expenses:
Research and development20.0 20.2 63.0 56.8 
Selling, general and administrative32.1 30.2 96.5 88.6 
Total operating expenses52.1 50.4 159.5 145.4 
Operating income24.2 23.0 52.8 63.6 
Interest income0.9 0.1 2.1 0.2 
Interest expense(7.3)(9.4)(22.1)(30.4)
Other expense, net(0.7)(0.2)(2.5)(3.0)
Interest and other expense, net(7.1)(9.5)(22.5)(33.2)
Income before taxes17.1 13.5 30.3 30.4 
Income tax expense7.9 5.1 13.6 12.8 
Net income9.2 8.4 16.7 17.6 
Less: Net income attributable to noncontrolling interests0.1 0.2 0.4 0.4 
Net income attributable to Varex$9.1 $8.2 $16.3 $17.2 
Net income per common share attributable to Varex
Basic$0.23 $0.21 $0.41 $0.43 
Diluted$0.21 $0.20 $0.40 $0.41 
Weighted average common shares outstanding
Basic40.4 39.9 40.2 39.7 
Diluted50.4 40.5 40.6 41.9 
See accompanying Notes to the Condensed Consolidated Financial Statements.
2


VAREX IMAGING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three Months EndedNine Months Ended
(In millions)June 30, 2023July 1, 2022June 30, 2023July 1, 2022
Net income$9.2 $8.4 $16.7 $17.6 
Other comprehensive (loss) income
Unrealized loss on forward contracts— (0.6)— (0.6)
Unrealized loss on available-for-sale securities(0.1)— — — 
Foreign currency translation adjustments(0.4)0.8 (0.4)(0.9)
Total comprehensive income8.7 8.6 16.3 16.1 
Less: Comprehensive income attributable to noncontrolling interests0.1 0.2 0.4 0.4 
Comprehensive income attributable to Varex$8.6 $8.4 $15.9 $15.7 
 See accompanying Notes to the Condensed Consolidated Financial Statements.
3
VAREX IMAGING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions, except share and per share amounts)June 30, 2023September 30, 2022
Assets
Current assets:
Cash and cash equivalents$118.5 $89.4 
Accounts receivable, net of allowance for credit losses of $0.6 million and $0.6 million at June 30, 2023 and September 30, 2022, respectively
163.3 173.3 
Inventories297.7 303.2 
Prepaid expenses and other current assets
59.0 44.0 
Total current assets638.5 609.9 
Property, plant, and equipment, net142.0 141.3 
Goodwill
289.2 284.5 
Intangible assets, net
25.5 33.6 
Investments in privately-held companies
46.8 46.4 
Deferred tax assets
2.8 2.3 
Operating lease assets28.7 23.2 
Other assets
38.2 43.2 
Total assets
$1,211.7 $1,184.4 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable
$74.6 $78.2 
Accrued liabilities and other current liabilities
67.9 81.4 
Current operating lease liabilities
3.4 4.0 
Current maturities of long-term debt
1.8 2.1 
Deferred revenues
10.9 7.4 
Total current liabilities158.6 173.1 
Long-term debt, net
441.1 412.3 
Deferred tax liabilities
— 0.5 
Operating lease liabilities23.4 18.0 
Other long-term liabilities
43.7 33.8 
Total liabilities666.8 637.7 
Stockholders' equity:
Preferred stock, $.01 par value: 20,000,000 shares authorized, none issued
— — 
Common stock, $.01 par value: 150,000,000 shares authorized
Shares issued and outstanding: 40,387,511 and 40,085,126 at June 30, 2023 and September 30, 2022, respectively
0.4 0.4 
Additional paid-in capital444.9 469.1 
Accumulated other comprehensive (loss) income(0.3)0.1 
Retained earnings86.5 63.8 
Total Varex stockholders' equity531.5 533.4 
Noncontrolling interests13.4 13.3 
Total stockholders' equity544.9 546.7 
Total liabilities and stockholders' equity$1,211.7 $1,184.4 
See accompanying Notes to the Condensed Consolidated Financial Statements.

4


VAREX IMAGING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)

Three Months Ended June 30, 2023
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Varex EquityNoncontrolling InterestsTotal Stockholders' Equity
(In millions)SharesAmount
March 31, 202340.4 $0.4 $441.6 $0.2 $77.4 $519.6 $13.3 $532.9 
Net income— — — — 9.1 9.1 0.1 9.2 
Share-based compensation— — 3.5 — — 3.5 — 3.5 
Unrealized loss on change in fair value of available-for-sale securities— — — (0.1)— (0.1)— (0.1)
Foreign currency translation adjustments— — — (0.4)— (0.4)— (0.4)
Other— — (0.2)— — (0.2)— (0.2)
June 30, 202340.4 $0.4 $444.9 $(0.3)$86.5 $531.5 $13.4 $544.9 


Three Months Ended July 1, 2022
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Varex EquityNoncontrolling InterestsTotal Stockholders' Equity
(In millions)SharesAmount
April 1, 202239.8 $0.4 $459.9 $(1.7)$42.5 $501.1 $13.3 $514.4 
Net income— — — — 8.2 8.2 0.2 8.4 
Common stock issued under employee stock purchase plan0.1 — 1.9 — — 1.9 — 1.9 
Share-based compensation— — 3.4 — — 3.4 — 3.4 
Unrealized loss on change in fair value of cash flow hedge— — — (0.6)— (0.6)— (0.6)
Foreign currency translation adjustments— — — 0.8 — 0.8 — 0.8 
Other— — — — — — (0.2)(0.2)
July 1, 202239.9 $0.4 $465.2 $(1.5)$50.7 $514.8 $13.3 $528.1 
See accompanying Notes to the Condensed Consolidated Financial Statements.
5
VAREX IMAGING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)

Nine Months Ended June 30, 2023
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Varex EquityNoncontrolling InterestsTotal Stockholders' Equity
(In millions)SharesAmount
September 30, 202240.1 $0.4 $469.1 $0.1 $63.8 $533.4 $13.3 $546.7 
Cumulative effect of accounting change— — (34.6)— 6.5 (28.1)— (28.1)
Net income— — — — 16.3 16.3 0.4 16.7 
Common stock issued upon vesting of restricted shares0.2 — — — — — — — 
Shares withheld on vesting of restricted stock(0.1)— (1.4)— — (1.4)— (1.4)
Common stock issued under employee stock purchase plan0.1 — 2.0 — — 2.0 — 2.0 
Share-based compensation— — 10.1 — — 10.1 — 10.1 
Foreign currency translation adjustments— — — (0.4)— (0.4)— (0.4)
Other0.1 — (0.3)— (0.1)(0.4)(0.3)(0.7)
June 30, 202340.4 $0.4 $444.9 $(0.3)$86.5 $531.5 $13.4 $544.9 


Nine Months Ended July 1, 2022
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Varex EquityNoncontrolling InterestsTotal Stockholders' Equity
(In millions)SharesAmount
October 1, 202139.4 $0.4 $449.4 $— $33.5 $483.3 $13.2 $496.5 
Net income— — — — 17.2 17.2 0.4 17.6 
Exercise of stock options0.1 — 3.8 — — 3.8 — 3.8 
Common stock issued upon vesting of restricted shares0.3 — — — — — — — 
Shares withheld on vesting of restricted stock(0.1)— (2.1)— — (2.1)— (2.1)
Common stock issued under employee stock purchase plan0.2 — 3.6 — — 3.6 — 3.6 
Share-based compensation— — 10.7 — — 10.7 — 10.7 
Unrealized loss on change in fair value of cash flow hedge— — — (0.6)— (0.6)— (0.6)
Foreign currency translation adjustments— — — (0.9)— (0.9)— (0.9)
Other— — (0.2)— — (0.2)(0.3)(0.5)
July 1, 202239.9 $0.4 $465.2 $(1.5)$50.7 $514.8 $13.3 $528.1 
See accompanying Notes to the Condensed Consolidated Financial Statements.
6
VAREX IMAGING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
(In millions)June 30, 2023July 1, 2022
Cash flows from operating activities:
Net income$16.7 $17.6 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Share-based compensation expense10.1 10.7 
Depreciation14.2 14.3 
Amortization of intangible assets10.2 11.2 
Deferred taxes(1.1)1.5 
Loss from equity method investments0.1 1.5 
Amortization of deferred loan costs1.9 8.1 
Inventory write-down3.8 5.3 
Loss on operating lease abandonment— 1.9 
Other, net2.2 1.7 
Changes in assets and liabilities:
Accounts receivable10.2 (1.9)
Inventories1.7 (81.1)
Prepaid expenses and other assets4.0 4.6 
Accounts payable(3.7)24.8 
Accrued liabilities and other current and long-term liabilities(12.5)(22.8)
Deferred revenues3.5 2.4 
Net cash provided by (used in) operating activities61.3 (0.2)
Cash flows from investing activities:
Purchases of property, plant, and equipment(15.3)(11.5)
Loss on settlement of cash flow hedge(0.2)— 
Proceeds from maturities of marketable debt securities16.7 — 
Purchase of marketable debt securities(33.6)(10.4)
Purchase of marketable equity securities(2.7)— 
Settlement of net investment hedge7.0 — 
Proceeds from sales of business and assets— 1.7 
Investments in and loans to privately-held companies— (0.3)
Other, net(2.2)(0.4)
Net cash used in investing activities(30.3)(20.9)
Cash flows from financing activities:
Taxes related to net share settlement of equity awards
(1.4)(2.1)
Repayments of borrowing under credit agreements
(1.7)(29.0)
Proceeds from exercise of stock options
— 3.8 
Proceeds from shares issued under employee stock purchase plan
2.0 3.6 
Other, net(0.5)(0.3)
Net cash used in financing activities(1.6)(24.0)
Effects of exchange rate changes on cash and cash equivalents and restricted cash
(0.1)(0.1)
Net increase (decrease) in cash and cash equivalents and restricted cash
29.3 (45.2)
Cash and cash equivalents and restricted cash at beginning of period
90.6 146.1 
Cash and cash equivalents and restricted cash at end of period
$119.9 $100.9 
Supplemental cash flow information:
Cash paid for interest$27.4 $29.5 
Income taxes paid, net of (refunds)9.8 (0.6)
Supplemental non-cash activities:
Purchases of property, plant and equipment financed through accounts payable$1.3 $1.2 
See accompanying Notes to the Condensed Consolidated Financial Statements.
7
VAREX IMAGING CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
    Varex Imaging Corporation (the “Company” or “Varex”) designs, manufactures, sells, and services a broad range of medical products, which include X-ray imaging components including X-ray tubes, digital detectors and accessories, ionization chambers, high voltage connectors, image processing software and workstations, 3D reconstruction software, computer-aided diagnostic software, collimators, automatic exposure control devices, generators, and heat exchangers. The Company sells its products to imaging system original equipment manufacturer (“OEM”) customers for incorporation into new medical diagnostic, radiation therapy, dental, and veterinary equipment, as well as to independent service companies and distributors, and directly to end-users for replacement purposes.
    The Company also designs, manufactures, sells and services industrial products, which include Linatron® X-ray linear accelerators, X-ray tubes, digital detectors, high voltage connectors, coolers, imaging processing software and image detection products for security and inspection purposes, such as cargo screening at ports and borders and nondestructive examination in a variety of applications. The Company generally sells security and inspection products to OEM customers who incorporate Varex’s products into their inspection or irradiation systems and processes. The Company conducts an active research and development program to focus on new technology and applications in both the medical and industrial X-ray imaging markets.
Basis of Presentation
    The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments necessary for a fair presentation of the results for the interim periods. The Company has consolidated all of its majority owned subsidiaries and entities over which it has control. All intercompany balances and transactions have been eliminated as part of the consolidation.
    These condensed consolidated financial statements and the accompanying notes are unaudited and should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended September 30, 2022 included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on November 18, 2022. The Company considers events or transactions that occur after the balance sheet date, but before the financial statements are issued, to provide additional evidence relative to certain estimates or to identify matters that require additional disclosures. Except for the change in certain policies upon adoption of the accounting standard described below, there have been no material changes to the Company's significant accounting policies, compared to the accounting policies described in Note 1, Summary of Significant Accounting Policies, in the Company’s Annual Report on Form 10-K for fiscal year 2022.
Reclassification of Prior Period Presentation
    Certain prior period amounts in the Notes to the Condensed Consolidated Financial Statements have had a change in presentation to conform to current period presentation. This change does not affect previously reported results.
Segment Reporting
    The Company has two reportable operating segments; (i) Medical and (ii) Industrial, which aligns with how its Chief Executive Officer, who is the Company's Chief Operating Decision Maker (“CODM”), reviews the Company’s performance. See Note 15, Segment Information, for further information on the Company’s segments.
Fiscal Year
    The fiscal years of the Company as reported are the 52 or 53-week period ending on the Friday nearest September 30. Fiscal year 2023 is the 52-week period ending September 29, 2023. Fiscal year 2022 was the 52-week period that ended on September 30, 2022. The fiscal quarters ended June 30, 2023 and July 1, 2022 were both 13-week periods. The three fiscal quarters ended June 30, 2023 and July 1, 2022 were both 39-week periods.
8
Use of Estimates
    The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Such estimates include the valuation of inventories, valuation of goodwill and intangible assets, warranties, refund liabilities, long-lived asset valuations, impairment of investments, valuation of financial instruments, and taxes on income. Actual results could differ from these estimates.
Cash and Cash Equivalents
    The Company considers unrestricted currency on hand, demand deposits, time deposits and all highly-liquid investments with an original maturity of three months or less at the date of purchase to be cash and cash equivalents.
Restricted Cash
    Restricted cash primarily consists of cash collateral related to certain leases and inventory arrangements. Restricted cash is included in other assets on the Company's Condensed Consolidated Balance Sheets. Cash and cash equivalents and restricted cash as reported within the Condensed Consolidated Statements of Cash Flows consisted of the following:
Nine Months EndedNine Months Ended
June 30, 2023July 1, 2022
(In millions)Beginning of PeriodEnd of PeriodBeginning of PeriodEnd of Period
Cash and cash equivalents$89.4 $118.5 $144.6 $99.6 
Restricted cash1.2 1.4 1.5 1.3 
Total as presented in the Condensed Consolidated Statements of Cash Flows$90.6 $119.9 $146.1 $100.9 
Concentration of Risk
    Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash, cash equivalents, marketable securities, certificates of deposit, and trade accounts receivable. Cash held with financial institutions may exceed the Federal Deposit Insurance Corporation insurance limits or similar limits in foreign jurisdictions. To date, the Company has not realized any losses on its deposits of cash and cash equivalents. The Company performs ongoing credit evaluations of its customers and, except for government tenders, group purchases, and orders with a letter of credit, its industrial customers often provide a down payment. The Company maintains an allowance for credit losses based upon the expected collectability of all accounts receivable. The Company obtains some of the components in its products from a limited group of suppliers or from a single-source supplier. When these suppliers are unable to meet the Company's supply needs, the Company's production is negatively impacted.
    Credit is extended to customers based on an evaluation of the customer’s financial condition, and collateral is not required. In certain circumstances, a customer may be required to prepay all or a portion of the contract price prior to transfer of control. During the periods presented, one of the Company's customers accounted for a significant portion of revenues, as set forth below:
Three Months EndedNine Months Ended
June 30, 2023July 1, 2022June 30, 2023July 1, 2022
Canon Medical Systems Corporation14.8 %16.6 %16.0%18.0%
    Canon Medical Systems Corporation accounted for 12.9% and 10.3% of the Company’s accounts receivable as of June 30, 2023 and September 30, 2022, respectively.
Equity Method Investments
    The Company accounts for its equity investments in privately-held companies under the equity method of accounting if the Company has the ability to exercise significant influence, but not control in these investments. The Company records impairment losses on its equity method investments if an impairment exists and is deemed to be other-than-temporary, which is based on various factors, including but not limited to, the length of time the fair value of the investment is below the carrying value, the absence of an ability to recover the carrying amount of the investment, and the inability of the investee to sustain an earnings capacity that would justify the carrying amount of the investment. There were no impairments recorded during the three and nine months ended June 30, 2023 and July 1, 2022, respectively.
9
Marketable Securities
    The Company's marketable securities consist primarily of financial instruments such as United States treasury securities, United States agency obligations, corporate bonds, commercial paper, money market funds, and equity securities.
Marketable Debt Securities
The Company's marketable debt securities are classified as available-for-sale. Classification of marketable debt securities is determined at the time of purchase, and the Company reevaluates such classification as of each balance sheet date. Marketable debt securities are recorded at estimated fair value and included in cash and cash equivalents, prepaid expenses and other current assets, and other assets within the Condensed Consolidated Balance Sheets. Any unrealized gains or losses are included in accumulated other comprehensive (loss) income within the Condensed Consolidated Balance Sheets. When the fair value of a marketable debt security declines below its amortized cost basis, any portion of that decline attributable to credit losses, to the extent expected to be nonrecoverable before the sale of the security, is recognized in the Condensed Consolidated Statements of Operations. When the fair value of a marketable debt security declines below its amortized cost basis due to changes in interest rates, such amounts are recorded in other comprehensive (loss) income, and are recognized in the Condensed Consolidated Statements of Operations only if the Company sells or intends to sell the security before recovery of its cost basis. There were no impairments related to marketable debt securities recorded during the three and nine months ended June 30, 2023 and July 1, 2022.
Marketable Equity Securities
Marketable equity securities are stated at fair value as determined by the most recently traded price of each security at the balance sheet date and included in other assets within the Condensed Consolidated Balance Sheets. All unrealized gains and losses on marketable equity securities are recorded as part of other expense, net in the Company's Condensed Consolidated Statements of Operations. See Note 7, Fair Value, for further details.
Loss Contingencies
    From time to time, the Company is involved in legal proceedings, claims and government inspections or investigations, customs and duties audits, and other contingency matters, both inside and outside the United States, arising in the ordinary course of its business or otherwise. The Company accrues amounts for probable losses, to the extent they can be reasonably estimated, that it believes are adequate to address any liabilities related to legal proceedings and other loss contingencies that the Company believes will result in a probable loss (including, among other things, probable settlement value). A loss or a range of loss is disclosed when it is reasonably possible that a material loss will be incurred and can be estimated or when it is reasonably possible that the amount of a loss, when material, will exceed the recorded provision. When a loss contingency is probable but not reasonably estimable the nature of the contingency and the fact that an estimate cannot be made is disclosed.
Environmental Obligations
Our operations and facilities, past and present, are subject to environmental laws, including laws that regulate the handling, storage, transport and disposal of hazardous substances. Certain of those laws impose cleanup liabilities under certain circumstances. In connection with those laws and certain of our past and present operations and facilities, we are obligated to indemnify Varian for the cleanup liabilities related to prior corporate restructuring activities. We anticipate that we will be obligated to reimburse Varian for 20% of the liabilities of Varian related to these sites (after adjusting for any insurance proceeds or tax benefits received by Varian). As of September 30, 2022, our estimated liability for these sites was $1.1 million, net of expected insurance proceeds. During the second quarter of fiscal year 2023, Varian informed us of an adjustment to their estimate of their liability, which resulted in an increase to our liability of approximately $2.9 million, net of expected insurance proceeds. As of June 30, 2023, our estimated environmental liability for these sites is $4.2 million, net of expected insurance proceeds.
10
Product Warranty
    The Company warrants most of its products for a specific period of time, usually 12 to 24 months from delivery or acceptance, against material defects. The Company provides for the estimated future costs of warranty obligations in cost of revenues when the related revenues are recognized. The accrued warranty costs represent the best estimate at the time of sale of the total costs that the Company will incur to repair or replace product parts that fail while still under warranty.
    The amount of the accrued estimated warranty costs obligation for established products is primarily based on historical experience of product failures, adjusted for current information on repair costs. For new products, estimates include the historical experience of similar products, as well as a reasonable allowance for warranty expenses associated with new products. On a quarterly basis, the Company reviews the accrued warranty costs and updates the historical warranty cost trends, if required.
    The following table reflects the changes in the Company’s accrued product warranty:
Nine Months Ended
(In millions)June 30, 2023July 1, 2022
Accrued product warranty, at beginning of period$7.9 $8.5 
New accruals charged to cost of revenues9.3 7.5 
Product warranty expenditures(9.3)(8.5)
Accrued product warranty, at end of period$7.9 $7.5 
Leases
    The Company determines if an arrangement is or contains a lease at the inception of an arrangement. The Company's operating lease right-of-use ("ROU") assets represent the right to use an underlying asset over the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. ROU assets may also include initial direct costs incurred and prepaid lease payments, less lease incentives. Lease liabilities and their corresponding ROU assets are recognized based on the present value of lease payments over the lease term, discounted using the Company's incremental borrowing rate. The Company recognizes operating leases with lease terms of more than twelve months in operating lease assets, current operating lease liabilities, and operating lease liabilities on its Condensed Consolidated Balance Sheets. The Company recognizes finance leases with lease terms of more than twelve months in property, plant, and equipment, net, accrued liabilities and other current liabilities, and other long-term liabilities on its Condensed Consolidated Balance Sheets. For purposes of calculating lease liabilities and the corresponding ROU assets, the Company's lease term may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option.
Revenue Recognition
    The Company’s revenues are derived primarily from the sale of hardware and services. The Company recognizes its revenues net of any value-added or sales tax and net of sales discounts.
    The Company sells a high proportion of its X-ray products to a limited number of OEM customers. X-ray imaging components including X-ray tubes, digital detectors and image-processing tools and security and inspection products are generally sold on a stand-alone basis. However, the Company occasionally sells its digital detectors, X-ray tubes and imaging processing tools as a package that is optimized for digital X-ray imaging and sells its Linatron® X-ray linear accelerators together with its image processing software and image detection products to OEM customers that incorporate them into their inspection or irradiation systems and processes. Service contracts are often sold with certain security and inspection products and computer-aided detection products.
    The Company determines revenue recognition through the following steps:
•Identification of the contract, or contracts, with a customer
•Identification of the performance obligations in the contract
•Determination of the transaction price
•Allocation of the transaction price to the performance obligations in the contract
•Recognition of revenue when, or as, a performance obligation is satisfied
11
Contracts and Performance Obligations
    The Company accounts for a contract with a customer when there is an approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of the consideration is probable. The Company's performance obligations consist mainly of transferring control of products and services identified in the contracts or purchase orders. For each contract, the Company considers the obligation to transfer products and services to the customer, which are distinct, to be performance obligations.
Transaction Price and Allocation to Performance Obligations
    Transaction prices of products or services are typically based on contracted rates. To the extent that the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing the expected value method when there is a large number of transactions with similar characteristics or the most likely amount method when there are two possible outcomes, depending on the circumstances of the transaction, to which the Company expects to be entitled. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information (historical, current, and forecasted) that is reasonably available.
    The Company allows customers to return specific parts of purchased X-ray tubes for a partial refund credit, which is identified as variable consideration. For sales with a right of return, revenue is reduced and a liability is recorded for expected returns, and an asset is recorded for the right to recover products from customers on settling the liability. The Company recognizes a reduction to revenue and cost of sales at the time of sale and a corresponding refund liability and right of return asset. The Company records this estimate based on the historical volume of product returns and adjusts the estimate on a quarterly basis based on the current quarter sales and current quarter returns.
    If a contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. The Company determines standalone selling prices based on the price at which the performance obligation could be sold separately.
Recognition of Revenue
    Revenue is recognized when, or as, obligations under the terms of a contract are satisfied, which occurs when control of the promised products or services is transferred to customers. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or services to a customer.
    Product revenue is generally recognized when the customer obtains control of the Company’s product, which occurs at a point in time, and may be upon shipment or upon delivery based on the contractual shipping terms of a contract.
    Service revenue is generally recognized over the term of the service contract. Services are expected to be transferred to the customer throughout the term of the contract, and the Company believes recognizing revenue ratably over the term of the contract best depicts the transfer of value to the customer.
Disaggregation of Revenue
    Revenue is disaggregated from contracts between geography and by reportable operating segment, which the Company believes best depicts how the nature, amount, timing, and uncertainty of revenues and cash flows are affected by economic factors. Refer to Note 15, Segment Information, included in this report, for the disaggregation of the Company’s revenue based on reportable operating segments and Note 2, Revenue Recognition, for the disaggregation of revenue by geographic region.
Contract Balances
    Contract liabilities are included within the deferred revenues, and other long-term liabilities balances in the Condensed Consolidated Balance Sheets. The Company does not have any material contract assets.
    Deferred revenue represents the Company's obligation to transfer goods and/or services to its customers for which it has already received consideration (or the amount is due) from the customer. The Company's deferred revenue balance primarily relates to contract advances and billings for warranty contracts.
    Deferred revenue that is estimated to be recognized during the following twelve-month period is recorded as deferred revenues and the remaining portion is recorded as other long-term liabilities in the Condensed Consolidated Balance Sheets.
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Costs to Obtain or Fulfill a Customer Contract
    The Company has certain costs to obtain and fulfill a customer contract, such as commissions and shipping costs. The Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. Incremental costs of obtaining contracts that would be recognized over more than one year are not material. The Company accounts for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products. These costs are included as a component of cost of revenues.
Recently Adopted Accounting Pronouncements
    In August 2020, the Financial Accounting Standards Board issued Accounting Standard Update ("ASU") 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The standard removed certain separation models in ASC 470-20 for convertible instruments, and, as a result, embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under ASC 815. These convertible debt instruments are accounted for as a single liability measured at amortized cost. This results in the interest expense recognized for convertible debt instruments to be typically closer to the coupon interest rate. Further, the ASU made amendments to the earnings per share (“EPS”) guidance in Topic 260 for convertible instruments, the most significant impact of which was requiring the use of the if-converted method for diluted EPS calculation, and no longer allowing the net share settlement method. The Company adopted this ASU on October 1, 2022, using the modified retrospective method. On the date of adoption, the Company recorded an entry to reduce additional paid-in capital by $34.6 million, increase long-term debt, net by $28.0 million, decrease deferred tax assets by $0.1 million, and increase retained earnings by $6.5 million for the after-tax impact of previously recognized amortization of the debt discount associated with the Company’s Convertible Notes (as defined herein). The unamortized discount on the Company's Convertible Notes (see Note 10, Borrowings) was derecognized in the first quarter of fiscal year 2023, which removed the amortization of the debt discount, and brought the effective interest rate closer to the coupon rate of 4.00%. The impact that the adoption of ASU 2020-06 has on the Company's net income per diluted share will depend on the amount of earnings in each period and the Company's share price and could result in additional dilution.
2. REVENUE RECOGNITION
Disaggregation of Revenue
    Revenue is disaggregated from contracts by geographic region and by reportable operating segment, which the Company believes best depicts how the nature, amount, timing, and uncertainty of revenues and cash flows are affected by economic factors.
    The following table disaggregates the Company’s revenue by geographic region:
Three Months EndedNine Months Ended
(In millions)June 30, 2023July 1, 2022June 30, 2023July 1, 2022
Americas$73.4 $63.9 $207.7 $192.8 
EMEA77.2 70.2 212.5 207.2 
APAC81.6 80.4 245.8 228.0 
$232.2 $214.5 $666.0 $628.0 
    Revenue in the United States was $72.1 million and $61.7 million for the three months ended June 30, 2023 and July 1, 2022, respectively. Revenue in the United States was $203.8 million and $186.7 million for the nine months ended June 30, 2023 and July 1, 2022, respectively.
    Our products are sold in three geographic regions: the Americas, EMEA, and APAC. The Americas includes North America (primarily the United States) and Latin America. EMEA includes Europe, the Middle East, India and Africa. APAC includes Asia (other than India) and Australia. Revenues by region are based on the known final destination of products sold.
    Refer to Note 15, Segment Information, for the disaggregation of the Company’s revenue based on reportable operating segments.
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Right of Return Assets and Refund Liabilities
    Right of return assets are included within the prepaid expenses and other current assets, and other assets balances in the Condensed Consolidated Balance Sheets. Refund liabilities are included within the accrued liabilities and other current liabilities and other long-term liabilities balances in the Condensed Consolidated Balance Sheets. The following table summarizes the changes in the right of return assets and refund liabilities for the nine months ended June 30, 2023 and July 1, 2022:
Right of Return Assets
Nine Months Ended
(In millions)June 30, 2023July 1, 2022
Balance at beginning of period$25.4 $24.3 
Costs recovered from product returns during the period(3.9)(4.2)
Right of return assets from shipments of products, subject to return during the period5.0 5.5 
Adjustment for actual vs. reserved product returns(0.7)(0.4)
Balance at end of period$25.8 $25.2 
Refund Liabilities
Nine Months Ended
(In millions)June 30, 2023July 1, 2022
Balance at beginning of period$28.2 $27.0 
Release of refund liability included in beginning of year refund liability(4.4)(4.6)
Additions to refund liabilities5.6 6.1 
Adjustment for actual vs. reserved product returns(0.7)(0.5)
Balance at end of period$28.7 $28.0 
Contract Balances
    During the three and nine months ended June 30, 2023, the Company recognized revenue of $0.9 million and $5.7 million, respectively, related to deferred revenues which existed at September 30, 2022. During the three and nine months ended July 1, 2022, the Company recognized revenue of $0.4 million and $6.3 million, respectively, related to deferred revenues that existed at October 1, 2021.
3. LEASES
    The Company has operating and finance leases for office space, warehouse and manufacturing space, vehicles, and equipment. During the nine months ended July 1, 2022, the Company recorded a loss due to abandonment of $1.9 million, which is included in selling, general and administrative in the Condensed Consolidated Statements of Operations. The following table presents supplemental balance sheet information related to the Company's operating and finance leases:
(In millions)Balance Sheet LocationJune 30, 2023September 30, 2022
Assets
Operating lease right-of-use assetsOperating lease assets$28.7 $23.2 
Finance lease right-of-use assetsProperty, plant, and equipment, net0.2 0.3 
Liabilities
Operating lease liabilities (current) Current operating lease liabilities3.4 4.0 
Finance lease liabilities (current) Accrued liabilities and other current liabilities0.1 0.2 
Operating lease liabilities (non-current)Operating lease liabilities23.4 18.0 
Finance lease liabilities (non-current)Other long-term liabilities$0.1 $0.1 
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    The following table provides information related to the Company’s operating and finance leases:
Three Months EndedNine Months Ended
(In millions)June 30, 2023July 1, 2022June 30, 2023July 1, 2022
Total operating lease costs(1)
$1.4 $1.5 $4.2 $4.9 
Total finance lease costs$0.1 $0.1 $0.2 $0.2 
Operating cash flows from operating leases$2.6 $1.9 $7.7 $5.5 
Financing cash flows from finance leases0.1 0.1 0.2 0.2 
Total cash paid for amounts included in the measurement of lease liabilities$2.7 $2.0 $7.9 $5.7 
Noncash operating right-of-use assets obtained in exchange for new lease liabilities$6.9 $2.3 $9.2 $5.3 
Noncash finance right-of-use assets obtained in exchange for new lease liabilities— 0.1 — 0.1 
Total right-of-use assets obtained in exchange for new lease liabilities$6.9 $2.4 $9.2 $5.4 
(1) Includes variable and short-term lease expense, which were immaterial for the three and nine months ended June 30, 2023 and July 1, 2022.
4. RELATED-PARTY TRANSACTIONS
Investments in Privately-Held Companies
    The Company has a 40% ownership interest in dpiX Holding LLC (“dpiX Holding”), a holding company that has a 100% ownership interest in dpiX LLC (“dpiX”), a supplier of amorphous silicon-based thin film transistor arrays for flat panels used in the Company's digital image detectors. In accordance with the dpiX Holding operating agreement, net profits or losses are allocated to the members in accordance with their ownership interests.
    The investment in dpiX Holding is accounted for under the equity method of accounting. When the Company recognizes its share of net profits or losses of dpiX Holding, profits or losses in inventory purchased from dpiX are eliminated. During the three months ended June 30, 2023 and July 1, 2022, the Company recorded income on the equity investment in dpiX Holding of $0.0 million and $0.3 million, respectively. During the nine months ended June 30, 2023 and July 1, 2022, the Company recorded income (loss) on the equity investment in dpiX Holding of $1.6 million and $(0.8) million, respectively. The income and loss on the equity investment in dpiX Holding are included in other expense, net in the Condensed Consolidated Statements of Operations. The carrying value of the equity investment in dpiX Holding was $44.0 million and $42.4 million at June 30, 2023 and September 30, 2022, respectively.
    During the three months ended June 30, 2023 and July 1, 2022, the Company purchased glass transistor arrays from dpiX totaling $5.1 million and $5.3 million, respectively. During the nine months ended June 30, 2023 and July 1, 2022, the Company purchased glass transistor arrays from dpiX totaling $14.6 million and $16.0 million, respectively. These purchases of glass transistor arrays are included as a component of inventories on the Condensed Consolidated Balance Sheets or cost of revenues in the Condensed Consolidated Statements of Operations.
    As of June 30, 2023 and September 30, 2022, the Company had accounts payable to dpiX totaling $3.2 million and $3.1 million, respectively.
     In October 2013, the Company entered into an amended agreement with dpiX and other parties that, among other things, provides it with the right to 50% of dpiX’s total manufacturing capacity. In addition, the Company is required to pay for 50% of dpiX's fixed costs, as determined at the beginning of each calendar year. In January 2023, the Company's fixed cost commitment was determined and approved by the dpiX board of directors to be $13.1 million for calendar year 2023. As of June 30, 2023, the Company estimated it has fixed cost commitments of $6.5 million related to the amended agreement with dpiX through the remainder of calendar year 2023. The amended agreement will continue unless the ownership structure of dpiX changes (as defined in the amended agreement).
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    The Company has determined that dpiX Holding is a variable interest entity because the at-risk equity holders, as a group, lack the characteristics of a controlling financial interest. Majority votes are required to direct the manufacturing activities, legal operations and other activities that most significantly affect dpiX’s economic performance. The Company does not have majority voting rights and no power to unilaterally direct the activities of dpiX Holding, and therefore, is not the primary beneficiary of dpiX Holding. The Company’s exposure to loss as a result of its involvement with dpiX Holding is limited to the carrying value of the Company’s investment of $44.0 million and fixed cost commitments.
    In November 2018, the Company (through one of its wholly-owned subsidiaries) and CETTEEN GmbH (“CETTEEN”), formed a German limited liability company that governs the affairs and conduct of the business of VEC Imaging GmbH & Co. KG (“VEC”), a joint venture formed to develop technology for use in X-ray imaging components. In accordance with the VEC agreement, net profits or losses are allocated to the members in accordance with their ownership interest. The Company's investment in VEC is accounted for under the equity method of accounting. The Company has determined that VEC is a variable interest entity.
    During the three months ended June 30, 2023 and July 1, 2022, the Company recorded a loss on the equity investment in VEC of $0.3 million and $0.4 million, respectively. During the nine months ended June 30, 2023, and July 1, 2022, the Company recorded a loss on the equity investment in VEC of $0.7 million and $1.0 million, respectively. The Company's investment in VEC was $1.8 million and $2.5 million at June 30, 2023 and September 30, 2022, respectively. As of June 30, 2023 and September 30, 2022, the Company had loans and other receivables outstanding from VEC of $1.0 million, and $0.9 million, respectively, which are recorded in prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets.
5. RESTRUCTURING
    In July 2018, the Company committed to relocate the production of amorphous silicon glass for digital detectors from its Santa Clara facility to the dpiX fabrication facility in Colorado. In July 2019, the Company committed to close its Santa Clara facility and to relocate the remaining production to its other existing facilities. The Company ceased all operations at the Santa Clara facility as of October 2, 2020, and all activities related to the closure of the facility were completed by the end of December 2020.
    Cash outflows associated with these restructuring charges are limited to employee termination expenses, facility closure and equipment sales and disposals. Below is a detail of restructuring charges incurred during the three and nine months ended June 30, 2023 and July 1, 2022, respectively, which predominantly relate to the Company's Medical segment:
Three Months EndedNine Months Ended
(In millions)Location in Statements of OperationsJune 30, 2023July 1, 2022June 30, 2023July 1, 2022
Other assets impairment chargesSelling, general and administrative$— $— $— $1.8 
6. FINANCIAL DERIVATIVES AND HEDGING ACTIVITIES
    As part of the Company’s overall risk management practices, the Company enters into financial derivatives to manage its financial exposures to foreign currency exchange rates and interest rates.
    The Company records all derivatives on the Condensed Consolidated Balance Sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. A qualitative assessment of hedge effectiveness is performed on a quarterly basis, unless facts and circumstances indicate the hedge may no longer be highly effective, in which case the Company would test for effectiveness on a more frequent basis. The changes in fair value for all trades that are not designated for hedge accounting are recognized in current period income. The Company does not offset fair value amounts recognized for derivative instruments in its Condensed Consolidated Balance Sheets for presentation purposes.
    Credit risk related to derivative transactions reflects the risk that a party to the transaction could fail to meet its obligation under the derivative contracts. Therefore, the Company’s exposure to the counterparty’s credit risk is generally limited to the amounts, if any, by which the counterparty’s obligations to the Company exceed the Company’s obligations to the counterparty. The Company’s policy is to enter into contracts only with financial institutions that meet certain minimum credit ratings to help mitigate counterparty credit risk.
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Derivatives Designated as Hedging Instruments - Net Investment Hedges
    The Company uses cross currency swap contracts as net investment hedges to manage its risk of variability in foreign currency-denominated net investments in wholly-owned international operations. All changes in fair value of the derivatives designated as net investment hedges are reported in accumulated other comprehensive (loss) income along with the foreign currency translation adjustments on those investments. During the first quarter of fiscal year 2023, the Company terminated all three of its previously outstanding cross currency swap contracts which resulted in cash received upon settlement of $7.3 million. The gain on the cross currency swap contracts was recorded in accumulated other comprehensive (loss) income where it will remain until such time that substantial liquidation of the international operations should occur. Concurrent with the termination of the previous cross currency swap contracts, the Company entered into two new cross currency swap contracts which have been designated as net investment hedges.
    As of June 30, 2023, the Company had the following outstanding derivatives designated as net investment hedging instruments:
(In millions, except number of instruments)Number of InstrumentsNotional Value
Cross currency swap contracts2$58.7 
    The following table summarizes the amount of pre-tax income recognized from derivative instruments for the periods indicated and the line items in the accompanying statements of operations where the results are recorded for net investment hedges:
Amount of (Loss) Gain Recognized in OCI on Derivative
Three Months Ended		Location of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)Amount of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
Three Months Ended
(In millions)June 30, 2023July 1, 2022June 30, 2023July 1, 2022
Cross currency swap contracts$(0.6)$3.9 Interest expense$0.3 $0.3 
Amount of (Loss) Gain Recognized in OCI on Derivative
Nine Months Ended		Location of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)Amount of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
Nine Months Ended
(In millions)June 30, 2023July 1, 2022June 30, 2023July 1, 2022
Cross currency swap contracts$(5.6)$5.0 Interest expense$0.7 $0.9 
    These derivative instruments are subject to master netting agreements giving effect to rights of offset with each counterparty. None of the balances were eligible for netting. The following table summarizes the gross fair values of derivative instruments as of the periods indicated and the line items in the accompanying Condensed Consolidated Balance Sheets where the instruments are recorded:
(In millions)Derivative Assets and Liabilities
Derivatives Designated as Net Investment HedgesBalance Sheet LocationJune 30, 2023September 30, 2022
Cross currency swap contractsPrepaid expenses and other current assets$1.1 $1.2 
Cross currency swap contractsOther assets— 6.3 
Cross currency swap contractsOther long-term liabilities$6.4 $— 
Balance Sheet Hedges
    The Company also enters into foreign currency forward contracts to hedge fluctuations associated with foreign currency-denominated monetary assets and liabilities, primarily cash, lease contracts, third-party accounts receivable and payable, and intercompany accounts receivable and payables. These forward contracts are generally entered into at the end of one fiscal period and expire by the end of the next fiscal period. These forward contracts are not designated for hedge accounting treatment; therefore, the change in fair value of these derivatives is recorded as a component of other expense, net in the Condensed Consolidated Statements of Operations and offsets the change in fair value of the foreign currency-denominated assets and liabilities, which are also recorded as a component of other expense, net. The Company has not and does not intend to use derivative financial instruments for speculative or trading purposes.
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    The following table shows the notional amounts of outstanding foreign currency contracts as of June 30, 2023:
Notional Value of Derivatives not Designated as Hedging Instruments:
(In millions of equivalent USD)Sell contracts
Australian Dollar$4.0 
Chinese Renminbi9.8 
Euro7.0 
India Rupee6.5 
$27.3 
7. FAIR VALUE
Assets and Liabilities Measured at Fair Value on a Recurring Basis
    The fair values of certain of the Company’s financial instruments, including bank deposits included in cash and cash equivalents, accounts receivable, net and accounts payable, approximate their fair values due to their short maturities. As of June 30, 2023, the fair values of the Company’s Convertible Notes and Senior Secured Notes, as defined in Note 10, Borrowings and measured using Level 1 inputs, were $253.6 million and $242.7 million, respectively. As of September 30, 2022, the fair values of the Company’s Convertible Notes and Senior Secured Notes, measured using Level 1 inputs, were $250.2 million and $241.3 million, respectively. The Company has elected to use the income approach to value its derivative instruments using standard valuation techniques and Level 2 inputs, such as currency spot rates, forward points and credit default swap spreads.
    In the tables below, the Company has segregated all assets and liabilities that are measured at fair value on a recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date.
Fair Value at June 30, 2023
(In millions)
Quoted Prices in Active Markets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Total
Assets:
Money market funds$— $30.4 $— $30.4 
Commercial paper— 2.5 — 2.5 
Corporate notes/bonds— 3.7 — 3.7 
Government agencies— 11.3 — 11.3 
U.S. Treasury bills— 21.4 — 21.4 
Derivative assets
— 1.1 — 1.1 
Deferred compensation plan(1)
6.6 — — 6.6 
Marketable equity securities4.0 — — 4.0 
Total assets measured at fair value$10.6 $70.4 $— $81.0 
Liabilities:
Derivative liabilities
$— $6.4 $— $6.4 
Total liabilities measured at fair value$— $6.4 $— $6.4 
(1) The assets held under the Company’s deferred compensation plan are classified in Level 1, as they relate primarily to publicly traded mutual funds for which there are observable market prices in active markets.
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Fair Value at September 30, 2022
(In millions)
Quoted Prices in Active Markets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Total
Assets:
Money market funds$— $36.6 $— $36.6 
Commercial paper— 5.9 — 5.9 
Corporate notes/bonds— 3.6 — 3.6 
Government agencies— 0.3 — 0.3 
U.S. Treasury bills— 10.2 — 10.2 
Derivative assets— 7.5 — 7.5 
Deferred compensation plan(1)
5.4 — — 5.4 
Marketable equity securities2.5 — — 2.5 
Total assets measured at fair value$7.9 $64.1 $— $72.0 
Liabilities:
Derivative liabilities$— $0.3 $— $0.3 
Total liabilities measured at fair value$— $0.3 $— $0.3 
(1) The assets held under the Company’s deferred compensation plan are classified in Level 1 as they relate primarily to publicly traded mutual funds for which there are observable market prices in active markets.
Marketable Debt Securities
    The following tables summarize the Company’s marketable debt securities:
June 30, 2023
(In millions)Amortized CostsUnrealized LossesFair Value
Commercial paper$2.5 $— $2.5 
Corporate notes/bonds3.7 — 3.7 
U.S. Treasury bills21.5 (0.1)21.4 
Government agencies11.3— 11.3
Total marketable debt securities$39.0 $(0.1)$38.9 
September 30, 2022
(In millions)Amortized CostsUnrealized LossesFair Value
Commercial paper$5.9 $— $5.9 
Corporate notes/bonds3.7 (0.1)3.6 
U.S. Treasury bills10.2 — 10.2 
Government agencies0.3— 0.3
Total marketable debt securities$20.1 $(0.1)$20.0 
    The contractual maturities of marketable debt securities as of June 30, 2023, are shown in the table below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations.
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June 30, 2023
(In millions)Amortized CostsFair Value
Contractual maturities:
Due within one year$38.5 $38.4 
Due after one year through five years0.5 0.5 
Total marketable debt securities$39.0 $38.9 
    During the three and nine months ended June 30, 2023, there were no gross realized gains or losses from the sale of certain marketable debt securities that were reclassified out of accumulated other comprehensive (loss) income.
    The following tables summarize the balance sheet locations for marketable debt securities:
June 30, 2023
(In millions)Commercial paperCorporate notes/bondsGovernment agenciesTreasury billsTotal
Cash and cash equivalents$2.0 $— $2.0 $0.9 $4.9 
Prepaid expenses and other current assets0.5 3.7 9.3 20.0 33.5 
Other assets— — — 0.5 0.5 
Total marketable debt securities$2.5 $3.7 $11.3 $21.4 $38.9 
September 30, 2022
(In millions)Commercial paperCorporate notes/bondsGovernment agenciesTreasury billsTotal
Cash and cash equivalents$— $— $