This document consists of 10 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 September 30, 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 November 7, 1995:
CLASS NUMBER OF SHARES
Common Stock 6,701,129
<PAGE>
DIONEX CORPORATION
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS Page
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 1995 and June 30, 1995......................... 3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended September 30, 1995 and 1994............... 4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended September 30, 1995 and 1994............... 5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS.................................................. 6-7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS................... 8-9
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K........................ 10
SIGNATURES...................................................... 10
2
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<TABLE>
DIONEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
-------------
September 30, June 30,
ASSETS 1995 1995
<S> <C> (unaudited) <C>
Current assets:
Cash and equivalents (including invested cash of $26,555
at September 30, 1995 and $31,479 at June 30, 1995)..... $ 31,890 $ 36,165
Temporary cash investments................................ 13,941 13,382
Accounts receivable (net of allowance for doubtful accounts
of $471 at September 30, 1995 and $486 at June 30, 1995). 25,600 27,767
Inventories................................................ 9,526 9,125
Deferred tax benefits...................................... 5,471 5,626
Prepaid expenses and other................................. 986 1,346
Total current assets......................................... 87,414 93,411
Property, plant and equipment, net............................ 32,885 33,347
Other assets ................................................. 4,978 5,022
$125,277 $131,780
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks......................................$ 1,808 $ 2,118
Accounts payable............................................ 3,836 3,773
Accrued liabilities......................................... 12,683 14,016
Income taxes payable........................................ 3,354 3,448
Accrued product warranty.................................... 2,858 2,807
Total current liabilities.................................... 24,539 26,162
Long-term debt................................................ 82 86
Deferred taxes................................................ 1,518 1,661
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: 6,700,492 shares at
September 30, 1995 and 6,856,981 shares at
June 30, 1995............................................. 32,508 32,398
Retained earnings........................................... 66,123 70,426
Accumulated translation adjustments......................... 507 1,047
Total stockholders' equity................................... 99,138 103,871
$125,277 $131,780
See notes to condensed consolidated financial statements.
3
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<TABLE>
DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(In thousands, except per share amounts)
------------------
1995 1994
<S> <C> (unaudited)<C>
Net sales................................................ $30,056 $27,044
Cost of sales............................................ 9,668 8,767
Gross profit............................................. 20,388 18,277
Operating expenses:
Selling, general and administrative.................... 11,422 10,376
Research and product development....................... 2,684 2,463
Write-off of goodwill.................................. - 2,168
Total operating expenses............................ 14,106 15,007
Operating income......................................... 6,282 3,270
Other income............................................. - 4,130
Interest income.......................................... 563 489
Interest expense......................................... (28) (49)
Income before taxes on income............................ 6,817 7,840
Taxes on income.......................................... 2,369 3,638
Net income...............................................$ 4,448 $ 4,202
Net income per common and equivalent share...............$ .63 $ .55
Common and equivalent shares used in
computing per share amounts............................ 7,046 7,652
See notes to condensed consolidated financial statements.
4
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<TABLE>
DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(In thousands)
--------------
1995 1994
(unaudited)
<S> <C> <C>
Cash and equivalents provided by (used for):
Cash flows from operating activities:
Net income...............................................$ 4,448 $ 4,202
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.......................... 618 606
Deferred taxes......................................... 12 (291)
Write-off of goodwill.................................. - 2,168
Changes in assets and liabilities:
Accounts receivable.................................. 527 1,053
Inventories.......................................... (818) (666)
Prepaid expenses and other assets.................... 327 87
Accounts payable..................................... 176 (665)
Accrued liabilities.................................. (1,400) (542)
Income taxes payable................................. (89) 1,078
Accrued product warranty............................. 88 9
Net cash provided by operating activities................. 3,889 7,039
Cash flows from investing activities:
Purchase of temporary cash investments.................. (8,700) (6,016)
Proceeds from maturities of temporary cash
investments........................................... 8,141 -
Purchase of property, plant and equipment............... (243) (371)
Other................................................... (39) 80
Net cash used for investing activities.................... (841) (6,307)
Cash flows from financing activities:
Net change in notes payable to banks.................... (3) 997
Sale of common stock.................................... 1,046 554
Repurchase of common stock.............................. (9,687) (4,355)
Other................................................... (198) 74
Net cash used for financing activities.................... (8,842) (2,730)
Effect of exchange rate changes on cash................... 1,519 (74)
Net decrease in cash and equivalents...................... (4,275) (2,072)
Cash and equivalents, beginning of period................. 36,165 47,177
Cash and equivalents, end of period....................... $31,890 $ 45,105
Supplemental disclosures of cash flow information:
Income taxes paid....................................... $ 2,151 $ 2,841
Interest paid........................................... $ 27 $ 46
See notes to condensed consolidated financial statements.
5
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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 finan-
cial statements be read in conjunction with the consolidated finan-
cial statements and the notes thereto included in the Company's
Annual Report to Stockholders for the fiscal year ended June 30, 1995.
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, 1996.
2. Inventories
Inventories consist of (in thousands):
<TABLE>
September 30, June 30,
1995 1995
<S> <C> <C>
Finished goods $4,201 $3,732
Work in process 2,005 2,153
Raw materials and subassembies 3,320 3,240
$9,526 $9,125
</TABLE>
6
<PAGE>
DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
------------------
3. Income Taxes
The effective income tax rate for the first quarter of fiscal 1996
was 34.8% compared to 46.4% in the first quarter of fiscal 1995.
The fiscal 1995 rate was higher due to the write-off of goodwill
which was not deductible for income tax purposes.
4. 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.
5. Common Stock Repurchases
During the first three months of fiscal 1996, the Company repurchased
195,600 shares of its common stock on the open market compared with
128,600 shares repurchased in the first three months of the previous
fiscal year. During all of fiscal 1995, the Company repurchased
816,578 shares.
7
<PAGE>
DIONEX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations - Three Months Ended September 30, 1995 and 1994
Net sales in the first quarter of fiscal 1996 were $30.1 million, an
11% increase over the $27.0 million reported in the same period last
year. Europe and our other international markets reported strong
growth, while sales growth in Japan improved throughout the quarter.
Demand for analytical instruments in North America remained somewhat
sluggish. Had currency rates remained the same as last year,
reported sales growth would have been 7%.
Gross margin for the quarter ended September 30, 1995 was 67.8%,
slightly higher than the 67.6% reported for the prior year's first
quarter. Currency fluctuations had a favorable impact on gross
margin for the first quarter. Variations in gross margin are also
related to changes in the mix of products and services sold, as well
as the geographic distribution of sales by the Company and its
subsidiaries. There were no significant selling price changes
between these periods.
Operating expenses of $14.1 million in the first quarter of fiscal
1996 were down 6% from the $15.0 million reported for the correspond-
ing period in the prior year. Included in operating expenses for the
first quarter of last year was 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 determined that
this goodwill was not recoverable through future operations of the
business acquired. Excluding the non-recurring charge, operating
expenses increased 10% from the prior year. Total operating expenses
in the first quarter of fiscal 1996 were 47% of sales, compared to
55% in the first quarter of fiscal 1995, but remained constant at 47%
excluding the goodwill write-off.
Selling, general and administrative (SG&A) expenses increased 10%,
from $10.4 million in the first quarter of fiscal 1995 to $11.4
million in the current fiscal year. The increase in SG&A expenses
is mainly attributable to higher international sales expenses. The
increase in international expenses is due primarily to currency fluc-
tuations and, to a lesser extent, increased selling expenses in the
Far East.
Research and product development (R&D) expenses of $2.7 million
increased 9% from the $2.5 million reported in the prior year's first
quarter. 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. R&D expenses as a percent of sales
were 9% in both periods.
8
<PAGE>
The three month period ended September 30, 1994 reflects other income
of $4.1 million (net of expenses) received by the Company when a
proposed acquisition by Dionex of a business was terminated by the
seller in favor of another buyer.
In the first quarter of fiscal 1996 interest income increased 15%, to
$563,000 from $489,000 in the corresponding period of fiscal 1995.
This increase is attributable to increased yields on invested funds.
Interest expense declined from $49,000 to $28,000 primarily due to
reduced interest rates on bank borrowings by the Company's foreign
subsidiaries.
The effective income tax rate was 34.8% in the first quarter of
fiscal 1996. The decrease from the 46.4% reported in the prior
year's first quarter and the 37.6% reported for all of fiscal 1995 is
due to the fiscal 1995 write-off of goodwill which was not deductible
for income tax purposes. The effective tax rate for the remainder of
fiscal 1996 is expected to be consistent with the first quarter rate.
Net income of $4.4 million increased $246,000 or 6%, from the first
quarter of fiscal 1995. Excluding the two fiscal 1995 non-recurring
items and related tax effects, net income grew 17% over the same
period in the prior year. Net income per share grew $.08, or 15%,
over the same period last year and was favorably impacted by the
Company's stock repurchase programs. Excluding the two fiscal 1995
non-recurring items and related tax effects, net income per share
grew 26%.
Liquidity and Capital Resources
The Company's liquidity and capital resources remained strong during
the first quarter of fiscal 1996. At September 30, 1995, the Company
had cash and cash investments of $45.8 million.
During the first quarter of fiscal 1996, the Company repurchased
195,600 shares of its common stock compared with 128,600 shares
repurchased in the same period last year. During all of fiscal 1995,
the Company repurchased 816,578 shares. The Company may, from time
to time, repurchase additional shares on the open market depending
on the price and number of shares available.
At September 30, 1995, the Company's Japanese subsidiary had utilized
approximately $1.8 million of the Company's $15.5 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 $15.5 million bank
lines of credit will be adequate to meet its cash requirements for
fiscal 1996 and the foreseeable future.
The impact of inflation on Dionex Corporation's financial position
and results of operations was not significant during the quarter
ended September 30, 1995.
9
<PAGE>
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 September 30, 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: November 8, 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)
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONDENSED CONSOLIDATED BALANCE SHEETS, CONDENSED CONSOLIDATED STATEMENTS OF
INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 31890
<SECURITIES> 13941
<RECEIVABLES> 26071
<ALLOWANCES> 471
<INVENTORY> 9526
<CURRENT-ASSETS> 87414
<PP&E> 46092
<DEPRECIATION> 13207
<TOTAL-ASSETS> 125277
<CURRENT-LIABILITIES> 24539
<BONDS> 0
<COMMON> 32508
0
0
<OTHER-SE> 66123
<TOTAL-LIABILITY-AND-EQUITY> 125277
<SALES> 30056
<TOTAL-REVENUES> 30056
<CGS> 9668
<TOTAL-COSTS> 9668
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28
<INCOME-PRETAX> 6817
<INCOME-TAX> 2369
<INCOME-CONTINUING> 4448
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4448
<EPS-PRIMARY> .63
<EPS-DILUTED> .63
</TABLE>
