[DESCRIPTION]
This document consists of 15
pages, of which this page
is number 1.
FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-11250
DIONEX CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 94-2647429
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1228 TITAN WAY, SUNNYVALE, CALIFORNIA 94086
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (408) 737-0700
NONE
(Former name, former address and former fiscal year, if changed
since last report.)
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 X NO
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of May 8, 1995:
CLASS NUMBER OF SHARES
Common Stock 6,994,266
<PAGE> 1
DIONEX CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS PAGE
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 1995 and June 30, 1994.................. 3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31, 1995 and 1994........ 4
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Nine Months Ended March 31, 1995 and 1994......... 5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended March 31, 1995 and 1994......... 6-7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS........................................ 8-10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.............. 11-14
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................ 15
SIGNATURES............................................... 15
<PAGE> 2
<TABLE>
DIONEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
- - - - -------------
<CAPTION>
March 31, June 30,
ASSETS 1995 1994
(unaudited)
<S> <C> <C>
Current assets:
Cash and equivalents (including invested cash of
$31,442 at March 31, 1995 and $39,861 at
June 30, 1994)................................... $ 37,380 $ 47,177
Temporary cash investments......................... 12,948 4,102
Accounts receivable (net of allowance for
accounts of $424 at March 31, 1995 and $414
at June 30, 1994)................................ 26,969 25,571
Inventories........................................ 9,563 9,759
Deferred tax benefits.............................. 5,341 4,760
Prepaid expenses and other......................... 1,047 1,133
Total current assets........................ 93,248 92,502
Property, plant and equipment,net.................... 33,717 33,328
Other assets ........................................ 4,985 7,448
$131,950 $133,278
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks............................. $ 2,377 $ 816
Accounts payable................................... 3,034 4,122
Accrued liabilities................................ 13,561 11,655
Income taxes payable............................... 2,949 2,056
Accrued product warranty........................... 2,654 2,439
Total current liabilities................... 24,575 21,088
Long-term debt....................................... 92 104
Deferred taxes....................................... 1,393 947
Stockholders' equity:
Preferred stock (par value $.001 per share;
1,000,000 shares authorized; none outstanding)... - -
Common stock (par value $.001 per share; 20,000,000
shares authorized; outstanding: 7,038,866 shares
at March 31, 1995 and 7,568,768 shares at
June 30, 1994)................................... 32,314 33,180
Retained earnings.................................. 72,748 77,868
Accumulated translation adjustments................ 828 91
Total stockholders' equity.................. 105,890 111,139
$131,950 $133,278
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 3
<TABLE>
DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(In thousands, except per share amounts)
- - - - ------------------
<CAPTION>
1995 1994
(unaudited)
<S> <C> <C>
Net sales..................................... $30,581 $27,717
Cost of sales................................. 9,726 8,899
Gross profit.................................. 20,855 18,818
Operating expenses:
Selling, general and administrative......... 10,779 9,715
Research and product development............ 2,717 2,429
Total operating expenses................. 13,496 12,144
Operating income.............................. 7,359 6,674
Interest income............................... 564 355
Interest expense.............................. (30) (41)
Income before taxes on income................. 7,893 6,988
Taxes on income............................... 2,743 2,446
Net income.................................... $ 5,150 $ 4,542
Net income per common and equivalent share.... $.71 $.59
Common and equivalent shares used in
computing per share amounts................. 7,232 7,729
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 4
<TABLE>
DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED MARCH 31, 1995 AND 1994
(In thousands, except per share amounts)
- - - - ------------------
<CAPTION>
1995 1994
(unaudited)
<S> <C> <C>
Net sales..................................... $88,249 $81,310
Cost of sales................................. 28,510 26,022
Gross profit.................................. 59,739 55,288
Operating expenses:
Selling, general and administrative......... 32,028 29,527
Research and product development............ 7,708 7,511
Write-off of goodwill....................... 2,168 -
Total operating expenses................. 41,904 37,038
Operating income.............................. 17,835 18,250
Other income.................................. 4,130 -
Interest income............................... 1,599 1,056
Interest expense.............................. (111) (215)
Income before taxes on income................. 23,453 19,091
Taxes on income............................... 9,063 6,682
Net income.................................... $14,390 $12,409
Net income per common and equivalent share.... $1.94 $1.61
Common and equivalent shares used in
computing per share amounts................. 7,434 7,722
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 5
<TABLE>
DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED MARCH 31, 1995 AND 1994
(In thousands)
- - - - ------------------
<CAPTION>
1995 1994
(unaudited)
<S> <C> <C>
Cash and equivalents provided by (used for):
Cash flows from operating activities:
Net income............................................ $14,390 $12,409
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization....................... 1,842 1,839
Deferred taxes...................................... (135) (312)
Write-off of goodwill............................... 2,168 -
Changes in assets and liabilities:
Accounts receivable............................... 172 (1,505)
Inventories....................................... 765 799
Prepaid expenses and other assets................. 126 328
Accounts payable.................................. (1,214) 771
Accrued liabilities............................... 1,713 651
Income taxes payable.............................. 898 (719)
Accrued product warranty.......................... 142 82
Net cash provided by operating activities............. 20,867 14,343
Cash flows from investing activities:
Purchase of temporary cash investments.............. (13,957) (15,872)
Proceeds from sales and maturities of temporary
cash investments.................................. 5,111 32,767
Purchase of property, plant and equipment........... (1,638) (7,084)
Other............................................... 198 -
Net cash provided by (used for) investing activities.. (10,286) 9,811
Cash flows from financing activities:
Net change in notes payable to banks................ 1,308 (486)
Sale of common stock................................ 1,840 1,579
Repurchase of common stock.......................... (22,216) (3,213)
Other............................................... 77 (123)
Net cash used for financing activities................ (18,991) (1,997)
Effect of exchange rate changes on cash............... (1,387) (280)
Net increase(decrease) in cash and equivalents........ (9,797) 21,877
Cash and equivalents, beginning of period............. 47,177 20,596
Cash and equivalents, end of period................... $37,380 $42,473
</TABLE>
(continued)
<PAGE> 6
<TABLE>
DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED MARCH 31, 1995 AND 1994
(In thousands)
- - - - ------------------
<CAPTION>
1995 1994
(unaudited)
(continued)
<S> <C> <C>
Supplemental disclosures of cash flow information:
Income taxes paid................................... $ 8,751 $ 7,708
Interest paid....................................... $ 104 $ 206
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 7
DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- - - - ------------------
1. BASIS OF PRESENTATION
The condensed consolidated financial statements included
herein have been prepared by the Company, without audit,
pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote
disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such
rules and regulations, although the Company believes the
disclosures which are made are adequate to make the
information presented not misleading. It is suggested that
these condensed consolidated financial statements be read
in conjunction with the consolidated financial statements
and the notes thereto included in the Company's Annual
Report to Stockholders for the fiscal year ended
June 30, 1994.
The unaudited condensed consolidated financial statements
included herein reflect all adjustments (which include only
normal, recurring adjustments) which are, in the opinion of
management, necessary to state fairly the results for the
periods presented. The results for such periods are not
necessarily indicative of the results to be expected for
the entire fiscal year ending June 30, 1995.
2. INVENTORIES
Inventories consist of (in thousands):
March 31, June 30,
1995 1994
Finished goods $ 4,289 $ 4,078
Work in process 1,785 1,868
Raw materials and subassemblies 3,489 3,813
$ 9,563 $ 9,759
<PAGE> 8
DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- - - - ------------------
3. TEMPORARY CASH INVESTMENTS
The Company adopted Statement of Financial Accounting
Standards No. 115 (SFAS No. 115) "Accounting for Certain
Investments in Debt and Equity Securities", effective
July 1, 1994. The Company has classified its short-term
investments as "held-to-maturity" securities, and the
carrying value of these securities is amortized cost. There
was no cumulative or current period effect of adopting
SFAS No. 115 on the Company's financial statements for the
nine months ended March 31, 1995.
4. WRITE-OFF OF GOODWILL
Operating expenses in the first nine months of fiscal 1995
reflect a first quarter $2.2 million non-recurring charge to
write-off the remaining goodwill associated with the 1988
acquisition of Lee Scientific, Inc. The Company determined
that this goodwill was not recoverable through future
operations of the business acquired.
5. OTHER INCOME
In the first quarter of fiscal 1995 the Company received a
payment of $4.1 million (net of related expenses incurred by
the Company) when a proposed acquisition by Dionex of a new
business was terminated by the seller in favor of another
buyer.
6. INCOME TAXES
The effective income tax rate for the first nine months of
fiscal 1995 was 38.6% compared to 35.0% in the same period of
fiscal 1994. This rate is higher due to the write-off of
goodwill in the current fiscal year which is not deductible
for income tax purposes.
<PAGE> 9
DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- - - - -------------
7. NET INCOME PER SHARE
Net income per common and equivalent share is computed by
dividing net income by the weighted average number of common
shares and dilutive common share equivalents outstanding
during each period. The difference between primary and
fully diluted net income per share is not significant in any
period.
8. COMMON STOCK REPURCHASES
During the first nine months of fiscal 1995, the Company
repurchased 609,378 shares of its common stock on the open
market compared with 100,000 shares repurchased in the first
nine months of the previous fiscal year.
<PAGE> 10
DIONEX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations - Three Months Ended March 31, 1995 and 1994
Net sales in the third quarter of fiscal 1995 increased 10%, from
$27.7 million reported in the prior year's third quarter to $30.6
million. This increase reflects continued growth in demand for
the Company's products and services in all its major geographic
markets, as well as strengthing of major currencies against the
U.S. dollar. Had currency rates been the same as in last year's
third quarter, sales growth would have been 6%.
Gross margin for the quarter ended March 31, 1995 was 68.2%,
compared to 67.9% reported in the prior year's third quarter.
Gross margin was favorably impacted by currency fluctuations which
were partially offset by higher manufacturing costs. There were
no significant selling price changes between these periods.
Operating expenses of $13.5 million for the quarter were up 11%
from the $12.1 million reported for the corresponding period in the
prior period. Total operating expenses were 44% of sales, the
same as reported for the prior year's third quarter. At $10.8
million in the current quarter, selling, general and
administrative (SG&A) expenses were up 11% from the $9.7 million
reported in the prior year's third quarter. The increase in SG&A
is mainly due to increased international sales expenses, including
the addition of a subsidiary in Switzerland established in the
fourth quarter of fiscal 1994, as well as the impact of currency
fluctuations.
Research and product development (R&D) expenses totalled $2.7
million, up 12% from the $2.4 million reported in the third
quarter of the prior year. The level of R&D spending varies
depending on both the breadth of the Company's R&D efforts and the
stage of specific product development projects. The increase in
R&D expenses during the third quarter is attributable to increased
personnel and project materials costs associated with several
development programs.
<PAGE> 11
In the third quarter of fiscal 1995, interest income increased to
$564,000 from $355,000 in the corresponding period of fiscal
1994. This increase is attributable to increased yields on
invested funds, as well as higher average cash balances invested
during the third quarter of fiscal 1995.
The effective income tax rate was 34.75% in the third quarter of
fiscal 1995, unchanged from the 34.75% reported for all of fiscal
1994.
Net income of $5.2 million increased 13% from the third quarter
of fiscal 1994. Net income per share grew 20% for the same
period and was favorably impacted by the Company's stock
repurchase programs.
Results of Operations - Nine Months Ended March 31, 1995 and 1994
Net sales for the nine month period ended March 31, 1995
increased 9%, to $88.2 million, from the $81.3 million reported
in the same period of the prior year. This reflects continued
growth in all the Company's major geographic markets, as well as
strengthening of major currencies against the U.S. dollar.
Currency effects favorably impacted sales growth by 3% in the
first nine months of fiscal 1995.
Gross margin for the first nine months of fiscal 1995 was 67.7%,
down slightly from the 68.0% reported for the same period of the
prior year. Groos profit was favorably impacted by currency
fluctuations offset by higher manufacturing costs. There were
no significant selling price changes between these periods.
Operating expenses of $41.9 million were up 13% from the $37.0
million reported in the same period of the prior year. Included
in current year expenses is a $2.2 million non-recurring charge
for the write-off of the remaining goodwill that resulted from
the 1988 acquisition of Lee Scientific, Inc. The Company deter-
mined in the first quarter of fiscal 1995 that this goodwill was
not recoverable through future operations of the business
acquired. Excluding the non-recurring charge, operating expenses
increased 7% from the prior year. Total operating expenses in
the first nine months of fiscal 1995 were 47% of sales, 45%
excluding the goodwill write-off, compared to 46% in the prior
year.
<PAGE> 12
Selling, general and administrative (SG&A) expenses increased 8%,
from $29.5 million in the first nine months of fiscal 1994 to
$32 million in the current fiscal year. The increase in SG&A
expenses is mainly attributable to higher international sales
expenses. The increase in international sales expenses was due
to the addition of a subsidiary in Switzerland in the fourth
quarter of fiscal 1994, increased sales and marketing activities
in Japan and the impact of currency fluctuations.
Research and product development (R&D) expenses of $7.7 million
were up 3% from the $7.5 million reported in the prior year. The
level of R&D spending varies depending on both the breadth of the
Company's R&D efforts and the stage of specific product
development projects.
Other income in the first nine months of fiscal 1995 includes a
payment of $4.1 million (net of expenses) received by the Company
in the first quarter of fiscal 1995 when a proposed acquisition
by Dionex of a new business was terminated by the seller in favor
of another buyer.
In the first nine months of fiscal 1995, interest income
increased 51%, to $1,559,000 from $1,056,000 in the corresponding
period of fiscal 1994. This increase is attributable to higher
average cash balances invested during fiscal 1995 to date, as
well as increased yields on invested funds.
The effective income tax rate was 38.6% for the first three
quarters of fiscal 1995. The increase over the 35.0% reported in
the prior year's first nine months and the 34.75% reported for
all of fiscal 1994 is due to the write-off of goodwill in fiscal
1995 which was not deductible for income tax purposes. The
effective tax rate for the remainder of fiscal 1995 is expected
to be approximately 35%.
Net income of $14.4 milion increased $2.0 million, or 16%, from
the same period of the prior year. Excluding the two
non-recurring items and related tax effects, net income grew 13%
over the same period in the prior year. Net income per share
grew 20% over the same period and was favorably impacted by both
the non-recurring items and the Company's stock repurchase
programs. Excluding the non-recurring items, net income per
share grew 17%.
<PAGE> 13
Liquidity and Capital Resources
The Company's liquidity and capital resources remained strong
during the first nine months of fiscal 1995. At March 31, 1995,
the Company had cash and cash investments of 50.3 million.
During the first nine months of fiscal 1995, the Company
repurchased 609,378 shares of its common stock compared with
100,000 shares repurchased in the same period last year. The
Company may, from time to time, repurchase additional shares in
the open market depending on the price and number of shares
available.
At March 31, 1995, the Company's Japanese subsidiary had utilized
approximately $2.4 million of the Company's $16.0 million
committed bank lines of credit to meet its local working capital
requirements. The Company believes that its cash flow from
operations, its current cash and cash investments and the
remainder of the $16.0 million bank lines of credit will be
adequate to meet its cash requirements for fiscal 1995 and the
foreseeable future.
The impact of inflation on the Company's financial position and
results of operations was not significant during the nine month
period ended March 31, 1995.
<PAGE> 14
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) There are no exhibits required to be filed pursuant to
this Report on Form 10-Q.
(b) The Company did not file any Reports on Form 8-K during
the quarter ended March 31, 1995.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT
OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED.
DIONEX CORPORATION
(Registrant)
Date: MAY 9, 1995 By: /s/ A. BLAINE BOWMAN
A. Blaine Bowman
President, Chief Executive
Officer
By: /s/ MICHAEL W. POPE
Michael W. Pope
Vice President, Finance
and Administration
(Principal Financial and
Accounting Officer)
<PAGE> 15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN THE
COMPANY'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED
MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 37380
<SECURITIES> 12948
<RECEIVABLES> 27393
<ALLOWANCES> 424
<INVENTORY> 9563
<CURRENT-ASSETS> 93248
<PP&E> 46034
<DEPRECIATION> 12317
<TOTAL-ASSETS> 131950
<CURRENT-LIABILITIES> 24575
<BONDS> 0
<COMMON> 32314
0
0
<OTHER-SE> 73576
<TOTAL-LIABILITY-AND-EQUITY> 131950
<SALES> 88249
<TOTAL-REVENUES> 88249
<CGS> 28510
<TOTAL-COSTS> 28510
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 111
<INCOME-PRETAX> 23453
<INCOME-TAX> 9063
<INCOME-CONTINUING> 14390
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14390
<EPS-PRIMARY> 1.94
<EPS-DILUTED> 0
</TABLE>
