Varex Imaging CorpVREX
Varex Imaging Corp Fair Value Disclosure
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. The fair values of the Company’s Senior Secured Notes, as defined in Note 6, Borrowings and measured using Level 1 inputs, and as of October 3, 2025 and September 27, 2024 was $375.8 million and $247.6 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 October 3, 2025 | |||||||||||||||||||||||
| (In millions) | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Commercial paper | $ | — | $ | 2.0 | $ | — | $ | 2.0 | |||||||||||||||
| Corporate notes/bonds | — | 4.0 | — | 4.0 | |||||||||||||||||||
| Government agencies | — | 2.0 | — | 2.0 | |||||||||||||||||||
| U.S. treasury bills | — | 15.8 | — | 15.8 | |||||||||||||||||||
Deferred compensation plan(1) | 8.4 | — | — | 8.4 | |||||||||||||||||||
| Marketable equity securities | 3.6 | — | — | 3.6 | |||||||||||||||||||
| Total assets measured at fair value | $ | 12.0 | $ | 23.8 | $ | — | $ | 35.8 | |||||||||||||||
Liabilities: | |||||||||||||||||||||||
Derivative liabilities | $ | — | $ | 10.4 | $ | — | $ | 10.4 | |||||||||||||||
| $ | — | $ | 10.4 | $ | — | $ | 10.4 | ||||||||||||||||
(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.
| Fair Value at September 27, 2024 | |||||||||||||||||||||||
| (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 | $ | — | $ | 24.4 | $ | — | $ | 24.4 | |||||||||||||||
| Corporate notes/bonds | — | 16.5 | — | 16.5 | |||||||||||||||||||
| Government agencies | — | 18.3 | — | 18.3 | |||||||||||||||||||
| U.S. treasury bills | — | 6.1 | — | 6.1 | |||||||||||||||||||
| Certificates of deposit | — | 0.9 | — | 0.9 | |||||||||||||||||||
| Derivative assets | — | 1.0 | — | 1.0 | |||||||||||||||||||
Deferred compensation plan(1) | 7.5 | — | — | 7.5 | |||||||||||||||||||
| Marketable equity securities | 2.6 | — | — | 2.6 | |||||||||||||||||||
| $ | 10.1 | $ | 67.2 | $ | — | $ | 77.3 | ||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Derivative liabilities | $ | — | $ | 8.6 | $ | — | $ | 8.6 | |||||||||||||||
| $ | — | $ | 8.6 | $ | — | $ | 8.6 | ||||||||||||||||
(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.
Nonrecurring Fair Value Measurements
During fiscal year 2025, the Company assessed its goodwill for impairment and concluded that the carrying value of the Medical reporting unit was greater than its fair value. The nonrecurring fair value measurements used by the Company to determine the impairment of the Medical reporting unit goodwill was calculated by equal weighting of the income approach based on estimated discounted future cash flows and the market approach based on comparable publicly traded companies in similar lines of businesses. Under the income approach, fair value is determined based on a discounted cash flow technique that uses estimates of cash flows discounted to present value using rates commensurate with the risks associated with those cash flows. Under the market approach, a market-based value is derived by relating multiples of revenue for a group of comparable public companies to the same measure for
each reporting unit to estimate fair value. This valuation resulted in a Level 3 nonrecurring fair value measurement. See Note 5, Goodwill and Intangible Assets, for further information on the nature of the impairment.
Marketable Debt Securities
The following is a summary of marketable debt securities, which are included within the cash and cash equivalents, marketable securities, and other assets balances on the Consolidated Balance Sheets.
| October 3, 2025 | |||||||||||||||||
| (In millions) | Amortized Costs | Unrealized Losses | Fair Value | ||||||||||||||
| Commercial paper | $ | 2.0 | $ | — | $ | 2.0 | |||||||||||
| Corporate notes/bonds | 4.1 | (0.1) | 4.0 | ||||||||||||||
| U.S. treasury bills | 15.8 | — | 15.8 | ||||||||||||||
| Government agencies | 2.0 | — | 2.0 | ||||||||||||||
| Total marketable debt securities | $ | 23.9 | $ | (0.1) | $ | 23.8 | |||||||||||
| September 27, 2024 | |||||||||||||||||
| (In millions) | Amortized Costs | Unrealized Gains | Fair Value | ||||||||||||||
| Corporate notes/bonds | $ | 16.4 | $ | 0.1 | $ | 16.5 | |||||||||||
| U.S. treasury bills | 6.1 | — | 6.1 | ||||||||||||||
| Government agencies | 18.3 | — | 18.3 | ||||||||||||||
| Certificates of deposit | 0.9 | — | 0.9 | ||||||||||||||
| Total marketable debt securities | $ | 41.7 | $ | 0.1 | $ | 41.8 | |||||||||||
The contractual maturities of marketable debt securities as of October 3, 2025, are shown in the table below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations.
| October 3, 2025 | |||||||||||
| (In millions) | Amortized Costs | Fair Value | |||||||||
| Contractual maturities: | |||||||||||
| Due within one year | $ | 23.9 | $ | 23.8 | |||||||
| Total marketable debt securities | $ | 23.9 | $ | 23.8 | |||||||
During the fiscal year ended October 3, 2025, 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.
The following tables summarize the balance sheet locations for marketable debt securities:
| October 3, 2025 | |||||||||||||||||||||||||||||
| (In millions) | Commercial Paper | Corporate Notes/Bonds | Government Agencies | Treasury Bills | Total | ||||||||||||||||||||||||
| Cash and cash equivalents | $ | — | $ | — | $ | — | $ | 13.7 | $ | 13.7 | |||||||||||||||||||
| Marketable securities | 2.0 | 4.0 | 2.0 | 2.1 | 10.1 | ||||||||||||||||||||||||
| Total marketable debt securities | $ | 2.0 | $ | 4.0 | $ | 2.0 | $ | 15.8 | $ | 23.8 | |||||||||||||||||||
| September 27, 2024 | ||||||||||||||||||||||||||
| (In millions) | Corporate Notes/Bonds | Government Agencies | Treasury Bills | Certificates of Deposit | Total | |||||||||||||||||||||
| Cash and cash equivalents | $ | — | $ | — | $ | 1.0 | $ | — | $ | 1.0 | ||||||||||||||||
| Marketable securities | 10.5 | 16.3 | 4.1 | 0.9 | 31.8 | |||||||||||||||||||||
| Other assets | 6.0 | 2.0 | 1.0 | — | 9.0 | |||||||||||||||||||||
| Total marketable debt securities | $ | 16.5 | $ | 18.3 | $ | 6.1 | $ | 0.9 | $ | 41.8 | ||||||||||||||||
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About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.