## A Letter from Dow Wilson 

CHIEF EXECUTIVE OFFICER 

TO OUR STOCKHOLDERS,  Varian Medical Systems delivered solid results in fiscal year 2013, successfully managing through a number of market challenges. Annual revenues for the company rose by 5 percent and earnings per diluted share increased by 6 percent. In the 65th year since the company’s founding in 1948, we maintained our leadership in radiation oncology and X-ray imaging components with good momentum for future growth in all our businesses. 

Oncology Systems annual revenues rose 3 percent with solid gains in service and emerging markets offsetting U.S. weakness related to healthcare reform and reimbursement uncertainties. Markets outside the United States now represent around 55 percent of our Oncology business. Our performance in emerging markets was particularly pleasing, with solid growth in China, Brazil, and Africa. The Oncology service business again generated double-digit growth as our installed base of linear accelerators expanded to some 7,200 units. We further expanded our product portfolio with new offerings for stereotactic radiosurgery as well as enhanced software for treatment planning and information management. 

Annual revenues in our X-Ray Products business increased by 11 percent with healthy demand for tubes as well as our flat panel detectors for filmless digital imaging. During the year, we successfully reorganized our Security and Inspection Products business, including establishing a new strategic focus and capitalizing on synergies with the X-Ray Products business. We expect this will drive further growth for these two components-based businesses. Our proton business reached several important milestones during the year and we are now setting the stage for the commencement of patient treatments at Scripps Proton Therapy Center early in 2014. 

We owe our success in fiscal 2013 to five strategic initiatives: Innovation, Globalization, Service and Software, Commercializing Protons, and Operational Excellence. Each of these initiatives will continue to contribute to our growth in 2014 and I will highlight the vital role that they play in the rest of this letter. 

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