VARIAN MEDICAL SYSTEMS, INC. — 2013 ANNUAL REPORT 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. LETTER CONTINUES ON P.04 P.02