This document consists of 10
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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, 1996
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 8, 1996:
CLASS NUMBER OF SHARES
Common Stock 12,172,294
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DIONEX CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS Page
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 1996 and June 30, 1996.................. 3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended September 30, 1996 and 1995........ 4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended September 30, 1996 and 1995........ 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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DIONEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
- - -------------
<S> <C> <C>
September 30, June 30,
ASSETS 1996 1996
(unaudited)
Current assets:
Cash and equivalents (including invested
cash of $9,947 at September 30, 1996 and
$10,244 at June 30, 1996).............. $ 18,556 $ 16,986
Temporary cash investments............... 12,851 16,551
Accounts receivable (net of allowance for
doubtful accounts of $514 at September 30,
1996 and $488 at June 30, 1996)........ 26,951 28,078
Inventories.............................. 8,935 8,258
Deferred tax benefits.................... 6,791 6,590
Prepaid expenses and other............... 1,053 1,336
Total current assets................. 75,137 77,799
Property, plant and equipment, net......... 30,272 30,409
Other assets .............................. 5,442 4,978
$110,851 $113,186
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks................... $ 1,790 $ 273
Accounts payable......................... 4,154 4,381
Accrued liabilities...................... 14,841 18,398
Income taxes payable..................... 5,523 3,642
Accrued product warranty................. 3,235 3,217
Total current liabilities........... 29,543 29,911
Deferred taxes............................. 1,297 1,071
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:
12,167,105 shares at September 30, 1996
and 12,369,877 shares at June 30, 1996. 32,806 32,683
Retained earnings........................ 46,595 49,251
Accumulated translation adjustments...... 2 34
Net unrealized gain on equity
securities available for sale.......... 608 236
Total stockholders' equity.......... 80,011 82,204
$110,851 $113,186
See notes to condensed consolidated financial statements.
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DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(In thousands, except per share amounts)
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<S> <C> <C>
1996 1995
(unaudited)
Net sales................................. $31,508 $30,056
Cost of sales............................. 9,654 9,668
Gross profit.............................. 21,854 20,388
Operating expenses:
Selling, general and administrative..... 11,481 11,422
Research and product development........ 2,757 2,684
Total operating expenses............. 14,238 14,106
Operating income.......................... 7,616 6,282
Interest income........................... 345 563
Interest expense.......................... (21) (28)
Income before taxes on income............. 7,940 6,817
Taxes on income........................... 2,739 2,369
Net income................................ $ 5,201 $ 4,448
Net income per common and equivalent share $ .40 $ .32
Common and equivalent shares used in
computing per share amounts............. 12,920 14,092
See notes to condensed consolidated financial statements.
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DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(In thousands)
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<S> <C> <C>
1996 1995
(unaudited)
Cash and equivalents provided by (used for):
Cash flows from operating activities:
Net income................................$ 5,201 $ 4,448
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization........... 617 618
Deferred taxes.......................... (208) 12
Changes in assets and liabilities:
Accounts receivable................... 1,028 527
Inventories........................... (710) (818)
Prepaid expenses and other assets..... 286 327
Accounts payable...................... (223) 176
Accrued liabilities................... (3,552) (1,400)
Income taxes payable.................. 1,883 (89)
Accrued product warranty.............. 19 88
Net cash provided by operating activities.. 4,341 3,889
Cash flows from investing activities:
Purchase of temporary cash investments.... (7,600) (8,700)
Proceeds from maturities of temporary cash
investments............................ 11,300 8,141
Purchase of property, plant and equipment (468) (243)
Other.................................... 81 (39)
Net cash provided by (used for)
investing activities...................... 3,313 (841)
Cash flows from financing activities:
Net change in notes payable to banks..... 1,564 (3)
Sale of common stock..................... 749 1,046
Repurchase of common stock............... (8,492) (9,687)
Other.................................... 53 (198)
Net cash used for financing activities..... (6,126) (8,842)
Effect of exchange rate changes on cash.... 42 1,519
Net increase (decrease) in cash and
equivalents.............................. 1,570 (4,275)
Cash and equivalents, beginning of period.. 16,986 36,165
Cash and equivalents, end of period........ $18,556 $31,890
Supplemental disclosures of cash flow information:
Income taxes paid........................ $ 902 $ 2,151
Interest paid............................ $ 20 $ 27
See notes to condensed consolidated financial statements.
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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 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, 1996.
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, 1997.
2. Inventories
Inventories consist of (in thousands):
September 30, June 30,
1996 1996
Finished goods $3,794 $3,160
Work in process 2,150 1,847
Raw materials and subassemblies 2,991 3,251
$8,935 $8,258
6
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DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- - ------------------
3. Income Taxes
The effective income tax rate for the first quarter of fiscal 1997
was 34.5%, down slightly from the 34.8% reported in the first
quarter of fiscal 1996.
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 1997, the Company
repurchased 239,500 shares of its common stock on the open market
compared with 391,200 shares repurchased in the first three months
of the previous fiscal year. During all of fiscal 1996, the
Company repurchased 1,601,000 shares.
6. Authorized Shares of Common Stock
On October 25, 1996, the stockholders of the Company approved an
amendment to the Company's Certificate of Incorporation increasing
the number of authorized shares of common stock from 20,000,000 to
40,000,000.
7
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DIONEX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations - Three Months Ended September 30, 1996
and 1995
Net sales in the first quarter of fiscal 1997 were $31.5 million,
a 5% increase over the $30.1 million reported in the same period
last year. Reported sales growth was reduced by the effects of a
much stronger dollar this year, especially against the yen. Had
currency rates remained the same as last year, reported sales
growth would have been 5% higher.
Gross margin for the quarter ended September 30, 1996 was 69.4%
compared to 67.8% reported for the prior year's first quarter. In
spite of the dollar strengthening against major currencies,
margins improved due to a higher percentage of shipments from the
Company's international subsidiaries as well as a more favorable
mix of products and services sold. There were no significant
selling price changes between the periods.
Operating expenses of $14.2 million in the first quarter of fiscal
1997 were up 1% from the $14.1 million reported for the
corresponding period in the prior year. Total operating expenses
in the first quarter of fiscal 1997 were 45% of sales, compared to
47% in the first quarter of fiscal 1996.
Selling, general and administrative (SG&A) expenses were up less
than 1% to $11.5 million, from $11.4 million in the first quarter
of fiscal 1996. Increases in North American promotional expenses
were partially offset by declines in international sales expenses.
The decrease in international sales expenses was due to the impact
of a strengthening dollar. SG&A expenses as a percent of sales
were 36% in the current quarter compared to 38% in the same
quarter of the prior year.
Research and product development (R&D) expenses of $2.8 million
increased 3% from the $2.7 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.
In the first quarter of fiscal 1997 interest income declined 39%,
from $563,000 in the first quarter of fiscal 1996 to $345,000 in
the current quarter. This decrease is mainly attributable to
lower average cash balances and, to a lesser extent, lower yields
on invested funds.
8
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The effective income tax rate was 34.5% in the first quarter of
fiscal 1997, compared to 34.8% in the prior year's first quarter.
Variations in the tax rate reflect variations in the mix of
taxable income among the various tax jurisdictions in which the
Company does business. The effective tax rate for the remainder
of fiscal 1997 is expected to be consistent with the first quarter
rate.
Net income of $5.2 million increased $753,000 or 17%, from the
first quarter of fiscal 1996. Net income per share grew $.08, or
25%, over the same period last year and was favorably impacted by
the Company's stock repurchase programs.
Liquidity and Capital Resources
The Company's liquidity and capital resources remained strong
during the first quarter of fiscal 1997. At September 30, 1996,
the Company had cash and cash investments of $31.4 million.
During the first quarter of fiscal 1997, the Company repurchased
239,500 shares of its common stock compared with 391,200 shares
repurchased in the same period last year. During all of fiscal
1996, the Company repurchased 1,601,000 shares.
At September 30, 1996, the Company's Japanese subsidiary had
utilized approximately $1.8 million of the Company's $14.9 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 $14.9 million bank lines of credit will be
adequate to meet its cash requirements for fiscal 1997 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, 1996.
Except for historical information contained herein, the above
discussion contains forward-looking statements that involve risks
and uncertainties that could cause actual results to differ
materially from those discussed here. Such risks and
uncertainties include: new product development, including market
receptiveness, competition from other products, existing product
obsolescence, worldwide demand for analytical instrumentation,
general economic conditions, foreign currency fluctuations, the
ability to manufacture products on an efficient and timely basis
and at a reasonable cost and in sufficient volume, the ability to
attract and retain talented employees and other risks as detailed
from time to time in the Company's filings with Securities and
Exchange Commission.
9
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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, 1996.
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 11, 1996 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
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN THE
FORM 10-Q OF DIONEX CORORATION FOR THE QUARTER ENDED SEPTEMBER 30,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1996
<CASH> 18556
<SECURITIES> 12851
<RECEIVABLES> 27465
<ALLOWANCES> 514
<INVENTORY> 8935
<CURRENT-ASSETS> 75137
<PP&E> 44825
<DEPRECIATION> 14553
<TOTAL-ASSETS> 110851
<CURRENT-LIABILITIES> 29543
<BONDS> 0
0
0
<COMMON> 32806
<OTHER-SE> 47205
<TOTAL-LIABILITY-AND-EQUITY> 110851
<SALES> 31508
<TOTAL-REVENUES> 31508
<CGS> 9654
<TOTAL-COSTS> 9654
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21
<INCOME-PRETAX> 7940
<INCOME-TAX> 2739
<INCOME-CONTINUING> 5201
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5201
<EPS-PRIMARY> .40
<EPS-DILUTED> .40
</TABLE>
