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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended June 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
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.001 per share
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/
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The aggregate market value of the Registrant's Common Stock held by
nonaffiliates on September 19, 1996 (based upon the closing price of such stock
as of such date) was $428,921,729.
As of September 19, 1996, 12,168,930 shares of the Registrant's Common Stock
were outstanding.
Portions of the Registrant's 1996 Annual Report to Stockholders are incorporated
by reference in Parts I, II and IV of this Report. Portions of the Registrant's
definitive Proxy Statement for the Annual Meeting of Stockholders to be held on
October 25, 1996 are incorporated by reference in Part III of this Report.
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PART I
Item 1. BUSINESS
Dionex Corporation* designs, manufactures, markets and services
analytical instrumentation and related accessories and chemicals. The Company's
products are used to analyze chemical substances in the environment and in a
broad range of industrial and scientific applications. Since July 1, 1995, there
have been no material changes in the mode of conducting the business of the
Company.
Industry Segment Information
The Company operates in a single industry segment consisting of
analytical instruments and related services.
Products
Dionex develops, manufactures, markets and services a range of
chromatography systems, sample preparation devices and related products that are
used by chemists to isolate and quantify the individual components of complex
chemical mixtures in many major industrial, research and laboratory markets.
Typically, the Company's chromatography systems include several components: a
specially designed liquid pumping and flow system, a sample injection system, a
separator column, a suppressor or other post-column device, a detector and a
data collection and analysis system. These components are designed to be modular
so that systems can be configured to meet the particular analytical requirements
of individual customers. Moreover, individual components may be sold separately
to existing customers who wish to expand their systems.
The Company's chromatography systems are currently focused in several
product areas: ion chromatography, bioseparations and sample extraction. In
addition to these product areas, the Company develops and manufactures columns,
detectors, data analysis systems and other products. Each of these product areas
is described below.
ION CHROMATOGRAPHY - Ion Chromatography (IC) is a form of chromatography that
separates ionic (charged) molecules, usually found in water-based solutions, and
typically identifies them based on their electrical conductivity. The sale of
Dionex IC systems and related columns, suppressors, detectors, and automation
and other products accounts for a majority of the Company's revenues.
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* Unless the context otherwise requires, the terms "Dionex" and "the
Company" as used herein include Dionex Corporation, a Delaware
corporation, and its subsidiaries. Dionex was initially incorporated in
California in 1980. In 1986, the Company reincorporated in Delaware.
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Dionex IC products are used in a wide range of applications, including
environmental monitoring, corrosion monitoring, evaluation of raw materials,
quality control of industrial processes, research and development, and
regulation of the chemical composition of food, beverage and cosmetic products.
Major customers include environmental testing laboratories, life science and
food companies, chemical and petrochemical firms, power generating facilities,
electronics manufacturers, government agencies and academic institutions.
In the first quarter of fiscal 1994, the Company introduced the DX 500
Series of chromatography systems for Ion Chromatography and High Performance
Liquid Chromatography (HPLC) in the North American and European markets. In the
third quarter of fiscal 1995, the DX 500 line was introduced in Japan and it is
now marketed worldwide. These modular, high performance systems meet the needs
of various applications, including classical IC as well as bioscience and
environmental HPLC analyses.
In April 1996, the Company introduced the DX-120, a cost-effective IC
system for the customers who need simple, dedicated instrumentation for routine
ion analysis. The DX-120 was designed for improved reliability and automation
and allows quick set-up, simple operation and high quality isocratic
performance. The DX-120 is marketed worldwide and is gradually replacing the
DX-100 that was introduced in 1990.
The Company also manufactures the Series 8200 Process Analyzer, a
product designed for continuous on-line monitoring of ions in industrial
applications. The Series 8200, introduced in fiscal 1992, uses industry standard
PC-based automation, similar to that used in laboratory chromatography. A major
application for the Company's process analyzer has been in the power industry
for the continuous monitoring of corrosive contaminants in boiler water.
BIOSEPARATIONS - The Company offers certain configurations of the DX 500 Series
chromatograph to analyze biological molecules such as proteins, carbohydrates,
and amino acids. The Company's customers include biological research and
biotechnology groups and pharmaceutical companies. In the field of
bioseparations, the Company offers several detection modes based on
conductivity, electrochemistry and optics. This versatility of detection allows
customers to perform a wide range of bioseparations applications.
SAMPLE EXTRACTION - The Company offers the ASE(TM) 200 system for automated
sample extraction. In March 1995, the Company introduced a new extraction
technology called Accelerated Solvent Extraction or ASE. The ASE 200 system is
based upon a new extraction technology that extracts solid samples using common
solvents at elevated temperatures and pressures. The ASE 200 system extracts
solid samples in an automated fashion using the same solvents
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used in traditional soxhlet techniques. Competitive techniques include soxhlet,
sonication, microwave extraction and supercritical extraction. The ASE 200
system offers several advantages over other solvent based extraction techniques
including lower solvent consumption, reduced extraction time, higher throughput
and ease of use. ASE 200 systems are used worldwide for a number of
environmental, industrial and food and beverage applications.
AUTOMATION PRODUCTS - As part of its efforts to make chemical analyses simpler,
faster and more reliable, Dionex offers a family of products that automate
sample handling, system operation and data analysis for chromatography systems.
These products include the PeakNet and AI-450 chromatography workstations and
integrators. In addition, automated sample injectors are available.
In fiscal 1994, the PeakNet PC-based Chromatography Workstations were
introduced to complement the DX 500 systems. PeakNet is the Company's latest
release of Windows-based applications for chromatography. PeakNet Workstations
are multi-featured, high performance computer systems that automate control,
data acquisition, analysis and reporting for the DX-120 and DX 500 systems. In
fiscal 1996, the Company introduced its latest version of the software, PeakNet
4.3, which offers new capabilities including data smoothing options to reduce
noise and enhanced reporting formats to meet the changing documentation
requirements of our customers.
In March 1994, the universal interface (UI20) module was added to the
PeakNet/DX 500 Series. It allows PeakNet workstations to accept data from other
Dionex instruments such as the DX-100, as well as instruments manufactured by
other vendors. A revision of the PeakNet software was also introduced at that
time to support the new interfacing capabilities.
Also in March 1994, a new Automated Sample Injection module (AS40) was
added to the DX 500 Series.
COLUMNS AND SUPPRESSORS - A chromatography column generally consists of a hollow
cylinder packed under high pressure with a chemical resin. The column's function
is to separate various chemical components in a sample. The Company develops and
manufactures its own resins using proprietary processes. Dionex currently
manufactures and markets a broad range of column types designed for particular
applications in the liquid chromatography market.
Several consumable products were introduced in fiscal 1996, including the IonPac
AS14 for faster separation and superior flouride retention, the IonPac CS5A for
transition metals analysis and the CarboPac PA10 for quantification of
monosacharides.
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These products follow a steady stream of columns and chemistry
introduced previously, including the AS12A IonPac, the IonPac CS12A, the ICE-AS6
columns and the OnGuard Barium sample prep cartridge in the two previous fiscal
years. These products cover a range of applications.
In addition to columns, Dionex manufactures suppressors that are used
to enhance detection in ion chromatography. The Company has proprietary
positions in the technology of suppression used in ion chromatography as well as
in the application of suppression techniques. The Company's suppressors lower
background conductivity while allowing separations using higher capacity columns
and more concentrated eluents (liquids used to carry a sample through a liquid
chromatography system). In fiscal 1993, Dionex enhanced its suppression
technology with the introduction of a new AutoSuppression product. The product,
called the Self-Regenerating Suppressor (SRS(TM)), enhances IC performance while
operating with low maintenance requirements.
DETECTORS - Detectors are used to measure the quantity of various sample
components after they have been separated in a chromatography column. Dionex
currently offers several detector products based on conductivity,
electrochemistry and optics, including a photodiode array detector introduced in
1995. This range of detectors is designed to meet customer requirements for
analysis of organics, inorganics, metals, amino acids and other biological
compounds.
SERVICE AND OTHER - The Company also generates revenue from its Customer Service
organization through service contracts, spare part sales, customer training and
sales of other products and services. (See Technical Support, Installation and
Service below.)
Marketing and Customers
The Company's market strategy is twofold. First, in those applications
where Dionex technology is well established, the Company works to increase
demand for its chromatography systems through direct mailings, advertising in
trade publications, seminars and workshops, conferences and expositions, and
direct sales calls. Growth in these markets results from identifying new
customers in existing sales regions, extending geographic penetration and
increasing demand for the Company's products and technical support capabilities
among existing customers.
The second component of the Company's marketing strategy is to work
closely with existing and potential customers to develop new applications.
Technical support staff assist such customers in problem definition, development
of applications chemistry needed to solve problems and providing user training
and ongoing user support. By combining this support function with
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direct sales efforts, the Company works to increase the range of applications
and the potential market for its products.
The Company currently markets and distributes its products and services
through its own sales force in the United Kingdom, Germany, Italy, France, the
Netherlands, Belgium, Switzerland, Japan, Canada and the United States. In each
of these countries, the Company maintains one or more local sales offices in
order to service customers in regional markets. In other international locations
where it does not have a sales force, the Company has developed a network of
distributors and sales agents.
The Company's products are used extensively in environmental analysis
and by the pharmaceutical, life science, biotechnology, chemical, petrochemical,
power generation, food and beverage, and electronics industries. Its customers
include a number of the largest industrial companies worldwide, as well as
government agencies, research institutions and universities. Geographically,
sales outside of North America accounted for 61% of consolidated sales in fiscal
1996, 59% of consolidated sales in fiscal 1995 and 57% of consolidated sales in
fiscal 1994. No single customer accounted for 10% or more of the Company's sales
in fiscal 1996, 1995 or 1994.
Demand for the Company's products is dependent upon the size of the
markets for its chromatography systems, the level of capital expenditures of the
Company's customers, the rate of economic growth in the Company's major markets
and competitive considerations. There can be no assurances that the Company's
results of operations will not be adversely impacted by a decline in any of the
factors listed above. The Company believes that demand for its products does not
exhibit any significant seasonal pattern.
Dionex manufactures its products based upon its forecast of customer
demand and maintains inventories of completed modules in advance of receipt of
firm orders from its customers. Orders are generally placed by the customer on
an as-needed basis, and products are usually shipped within four to six weeks
after receipt of an order. Dionex does not maintain a substantial backlog, and
backlog as of any particular date may not be indicative of the Company's actual
sales in any succeeding period. The level of backlog at June 30, 1996 was $19.1
million and at June 30, 1995 was $17.5 million.
Competition
Companies competing with Dionex in the analytical instruments market
include Hewlett-Packard Company, Perkin-Elmer Company, Varian Associates, Inc.,
Shimadzu Corporation and Waters Corporation. The analytical instruments market
is comprised of many different analytical techniques. One of these analytical
techniques is Ion Chromatography (IC). The Company
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believes it has a major position in IC. Competitors of the Company in IC
include HPLC vendors such as Hewlett-Packard Company, Waters Corporation,
Alltech Associates and other smaller companies. The Company believes no single
competitor has a dominant position in the analytical instruments market.
Competition in the Company's business segment is based upon the
performance capabilities of the analytical instrument, technical support and
after-market service, the manufacturer's reputation as a technological leader,
and price. Management believes that performance capabilities are the most
important of these criteria. Customers measure system performance in terms of
sensitivity (the ability to discern minute quantities of a particular sample
component), selectivity (the ability to distinguish between similar components),
speed of analysis and the breadth of samples which the system can effectively
analyze. Management believes that Dionex enjoys a favorable reputation in terms
of performance capabilities, technical support and service.
Dionex ion chromatography systems generally compete with a number of
analytical techniques used in identifying and quantifying ionic and polar
compounds. The two primary sources of competition for ion chromatography are
conventional manual and automated wet chemistry procedures and certain modified
liquid chromatography systems. Some suppliers of liquid chromatography systems
have developed a single column ion chromatography (SCIC) method that does not
use a suppressor device. SCIC methods compete favorably with Dionex ion
chromatography for the analysis of a limited number of ions and in situations
when chemical composition of the sample is not complex or when high sensitivity
is not required. The introduction in 1993 by the Company of AutoSuppression
technology considerably improves the ease of use of chemical suppression. In
addition to SCIC products, the Company's competitors also offer other products
to compete in ion analysis and chromatography products using technology similar
to that of the Company.
The Company's DX 500 Series competes directly with other manufacturers'
HPLC systems in certain traditional HPLC applications. Dionex is a relatively
new entrant in the highly competitive HPLC and biological separations markets.
Nonetheless, management believes that the DX 500 Series has certain benefits
over competing systems, including a totally non-metallic flow system and the
capability of performing gradient ion chromatography, as well as HPLC, on a
single analytical system.
The Company's ASE 200 competes directly with standard soxhlet,
sonication and microwave extraction techniques provided by other companies.
Management believes that the ASE 200, a new extraction technology, has certain
benefits compared to competing techniques, including faster extraction time,
reduced solvent usage and built-in automation.
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The Company believes that competition in the ion analysis market will
continue to increase in the future. Moreover, the Company's entrance into the
HPLC, biological separations and sample extraction markets has resulted in
increased competition. Many of the companies whose products compete with those
of the Company have substantially greater financial resources and larger
technical staffs and sales forces at their disposal. There can be no assurances
that the Company's marketing and sales efforts will compete successfully against
such other companies in the future.
Patents and Licenses
The Company has exclusive rights under patents and patent applications
licensed from the Dow Chemical Company ("Dow") (except for rights retained by
Dow and its subsidiaries) covering certain of the Company's current products.
The primary benefits of this exclusivity are presently limited to the United
States and certain other foreign countries where patents have been issued. The
licenses reserve to Dow and its subsidiaries the right to practice the patents,
and Dow has made products covered by the patent rights for its own use. The
Company believes that Dow has not made products covered by the patent rights for
sale to third parties.
As a matter of Company policy, the Company vigorously protects its
intellectual property rights and seeks patent coverage on all developments that
it regards as material and patentable. However, there can be no assurances that
any patents held by the Company will not be challenged, invalidated or
circumvented or that the rights granted thereunder will provide competitive
advantages to the Company. The Company's patents, including those licensed from
others, expire on various dates through 2007. The Company believes that, while
its patent portfolio has value, no single patent or patent application is in
itself essential and that the invalidity or expiration of any single patent
would not have a material adverse effect on its business.
The Company regards its PeakNet software as proprietary and relies on a
combination of copyrights, trademarks, trade secret laws and other proprietary
rights, laws, license agreements and other restrictions on disclosure, copying
and transferring title to protect its rights to its software products. The
Company has no patents covering its software, and existing copyright laws afford
only limited practical protection. In addition, the laws of some foreign
countries do not protect the Company's proprietary rights to the same extent as
do the laws of the United States.
International Operations
Financial information about foreign and domestic operations and export
sales required by Item 1 of Form 10-K is incorporated by reference to Note 12 of
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the Notes to Consolidated Financial Statements at page 27 of the Registrant's
1996 Annual Report to Stockholders. A copy of the applicable page is attached
hereto as Exhibit 13.1.
The Company has subsidiaries in the United Kingdom, Germany, Italy,
France, the Netherlands, Belgium, Switzerland, Japan and Canada. The Company's
foreign sales are affected by fluctuations in currency exchange rates and by
regulations adopted by foreign governments. Export sales are subject to certain
controls and restrictions, but the Company has not experienced any material
difficulties related to these limitations. There can be no assurances that the
Company's results of operation will not be adversely impacted by fluctuations in
currency exchange rates in the future.
Manufacturing and Suppliers
The Company produces chemicals and resins and assembles systems and
components in its California manufacturing facilities. Dionex has developed
proprietary processes for the manufacture of polystyrene-based resins and for
packing columns with these resins. The Company believes that its resins, columns
and suppressor manufacturing know-how are critical to the performance and
reliability of its chromatography systems. The Company requires each employee to
sign a nondisclosure agreement to protect its proprietary processes. However,
there can be no assurances that these agreements will provide meaningful
protection or adequate remedies for the Company's proprietary processes in the
event of unauthorized use or disclosure.
The Company has emphasized a modular design for the principal
subsystems of its pumping flow systems, sample injection systems, chromatography
modules, detectors, and control and data analysis systems. The Company believes
that this modular approach has enabled it to meet the wide range of system
configurations required by its customers while effectively managing inventory
levels.
Many components used in the Company's products, including proprietary
analog and digital circuitry, are manufactured by Dionex. Other components,
including packaging materials, integrated circuits, microprocessors,
microcomputers and certain detector and data analysis modules, are acquired from
other manufacturers. Most of the raw materials, components and supplies
purchased by the Company are available from a number of different suppliers;
however, a number of items are purchased from limited or single sources of
supply, and disruption of these sources could have a temporary adverse effect on
shipments and the financial results of the Company. The Company believes
alternative sources could ordinarily be obtained to supply these materials, but
a prolonged inability to obtain certain materials or components could have an
adverse effect on the Company's results of
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operations and could result in damage to its relationship with its customers.
Technical Support, Installation and Service
Users of the Company's chromatography systems require substantial
technical support before and after the system sale to ensure that analysis
problems are resolved. As part of its support services, the Company's technical
support staff provides, typically at no additional cost, individual assistance
in solving chemical analysis problems. The Company offers training courses and
periodically sends its customers information on applications development.
Chromatography systems sold by the Company generally include a one-year
warranty, installation and certain user training, all at no additional cost.
Service contracts may be purchased by customers to cover equipment no longer
under warranty. Service work not performed under warranty or service contracts
is performed on a time and materials basis. The Company installs and services
its products through its own field service organization in the United Kingdom,
Germany, Italy, France, the Netherlands, Belgium, Switzerland, Japan, Canada
and the United States. Installation and service in other foreign countries are
typically provided by the Company's distributors or agents.
Research and Development
The Company's research and development efforts are focused on
increasing the performance of its chromatography and other products and
expanding the number of chemical compounds that can be analyzed efficiently with
its products. Research and product development expenditures were $11,527,000,
$10,500,000 and $9,902,000 in fiscal 1996, 1995, and 1994, respectively. The
Company pursues active development programs in the areas of system hardware,
applications, computer software, and resin and column technologies. There can be
no assurances that the Company's product development efforts will be successful
or that the products developed will be accepted by the marketplace.
Environmental Laws and Regulations
Compliance by the Company with federal, state and local environmental
laws during fiscal 1996 had no material effect upon capital expenditures,
earnings or its competitive position.
Employees
Dionex had 665 employees at June 30, 1996, compared with 647 employees
at June 30, 1995. The Company believes that its future success
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depends in large part upon its continued ability to attract and retain highly
skilled employees.
Item 2. PROPERTIES
As of September 18, 1996 the Company owns nine buildings in Sunnyvale,
California, providing 252,000 square feet of space utilized for
Administration, Marketing, Sales, Service, Research and Product
Development, and Manufacturing. The Company also owns a building
utilized for Sales, Service and Administration in Idstein, Germany.
The Company leases sales and service offices in: Smyrna, Georgia;
Houston, Texas; Westmont, Illinois; Marlton, New Jersey; Sunnyvale,
California; and in the United Kingdom, Germany, France, Italy, the
Netherlands, Belgium, Switzerland, Japan and Canada. In addition, the
Company leases marketing and research and development offices in Salt
Lake City.
As of the date of this report, the Company's facilities are well
maintained, adequate to conduct the Company's current business, and
substantially utilized by the Company.
Several of the Company's properties are located in an area under
investigation by the California Regional Water Quality Control Board
(the "Water Board".) The Water Board's investigation addresses the
presence of certain volatile organic compounds in portions of the
local groundwater system and focuses principally on the activities of
several other companies located near the Company. The Water Board
review has encompassed the property acquired by the Company in July
1986. The Company believes that any remedial work affecting the
subject property will be performed by or at the expense of other
parties responsible for any release of chemicals onto the property, or
at the expense of the previous owner of the property. As a result,
management believes that any action required by the Water Board's
investigation will not have a material adverse effect on the Company's
financial position or results of operations.
Item 3. LEGAL PROCEEDINGS
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
quarter ended June 30, 1996.
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Executive Officers of the Registrant
The following table lists the names and positions of all current
executive officers of the Company, and their ages, as of September 18, 1996.
There are no family relationships between any director or executive officer and
any other director or executive officer of the Registrant. Executive officers
serve at the discretion of the Board of Directors.
<TABLE>
<CAPTION>
Name Age Positions
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<S> <C> <C>
A. Blaine Bowman 50 President, Chief Executive
Officer and Director
Barton Evans, Jr. 48 Senior Vice President
Nebojsa Avdalovic 61 Vice President
Bruce L. Barton 37 Vice President
Christopher Pohl 45 Vice President
Michael W. Pope 30 Vice President
Susan E. Strong 44 Vice President
</TABLE>
Mr. Bowman has served as the Registrant's President and Chief Executive
Officer and as a director since the Registrant began operations in 1980.
Mr. Evans has served as Senior Vice President, Operations for the
Registrant since September 1993. Prior to that, he served as Vice President,
Operations and in various other capacities for the Registrant since it began
operations in 1980.
Dr. Avdalovic has served as Vice President, Research and Development
for the Registrant since August 1990. Prior to joining the Registrant, Dr.
Avdalovic served as Research Manager and Manager of Technology Assessment for
Beckman Instruments Spinco Division in Palo Alto, California.
Mr. Barton has served as Vice President, International Operations for
the Registrant since July 1996. Prior to that, he served as Director of
International Operations and in various other capacities since joining the
Company in 1987.
Mr. Pohl has served as Vice President, Consumables for the Registrant
since September 4, 1996. Prior to that, he served as Technical Director and in
various other capacities for the Registrant since joining the Company in 1979.
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Mr. Pope has served as Vice President, Finance and Administration for
the Registrant since April 1995. Prior to that, he served as Director of Finance
and Senior Financial Analyst with the Company. Mr. Pope has been with the
Company since June 1992. Before joining the Company, Mr. Pope was employed at
the Federal Reserve Bank of New York.
Ms. Strong has served as Vice President, Marketing for the Registrant
since July 1995. Prior to that, she served as Director of Marketing and in
various other capacities since joining the Company in August 1990.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The information required by Item 5 of Form 10-K is incorporated by
reference to the information contained in the section captioned
"Supplemental Information" at page 30 of the Registrant's 1996 Annual
Report to Stockholders. A copy of the applicable page is attached
hereto as Exhibit 13.1.
Item 6. SELECTED CONSOLIDATED FINANCIAL DATA
The information required by Item 6 of Form 10-K is incorporated by
reference to the information contained in the section captioned
"Selected Financial Information" at page 15 of the Registrant's 1996
Annual Report to Stockholders. A copy of the applicable page is
attached hereto as Exhibit 13.1.
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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Result of Operations
The following table summarizes the consolidated income statement items as a
percentage of sales.
<TABLE>
<CAPTION>
Percentage of Net Sales
-------------------------------
Years Ended June 30 1996 1995 1994
-------------------------------
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of sales 31.1 32.0 32.1
-------------------------------
Gross profit 68.9 68.0 67.9
Selling, general and administrative 34.8 36.2 36.1
Research and product development 8.7 8.7 9.0
Write-off of goodwill - 1.8 -
-------------------------------
Operating income 25.4 21.3 22.8
Other income .8 3.4 -
Interest income, net 1.4 1.7 1.1
-------------------------------
Income before taxes 27.6 26.4 23.9
Taxes on income 9.6 9.9 8.3
-------------------------------
Net income 18.0% 16.5% 15.6%
</TABLE>
Net Sales and Gross Profit. In fiscal 1996, the Company reported record sales
and earnings for the 16th consecutive year. The Company's total sales increased
11% to $133.0 million in fiscal 1996, compared with $120.0 million in fiscal
1995 and $109.5 million in fiscal 1994. Sales growth was fueled by our
international markets, especially our European market, in fiscal 1996 and 1995.
Sales in our North American market increased moderately in both years.
Sales outside of North America accounted for 61% of consolidated sales in fiscal
1996, compared to 59% in fiscal 1995 and 57% in fiscal 1994. The Company sells
directly through its sales forces in the United Kingdom, Germany, Italy, France,
the Netherlands, Belgium, Switzerland, Japan, Canada and the United States.
Direct sales accounted for 89% of consolidated sales in fiscal 1996, compared to
91% in fiscal 1995 and 90% in fiscal 1994. International distributors and
representatives in Europe, the Far East and other international markets
accounted for the balance of consolidated sales. The Company is subject to the
effects of currency fluctuations, which can have an impact on reported sales and
margins. Currency fluctuations had no effect on reported sales in fiscal 1996,
increased reported sales by 5% in fiscal 1995 and reduced reported sales in
fiscal 1994 by 1%. There were no significant price changes during the three-year
period.
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Gross profit as a percentage of consolidated sales was 68.9% in fiscal 1996,
compared with 68.0% in fiscal 1995 and 67.9% in fiscal 1994. The increase in
gross profit in fiscal 1996 was attributable to a larger percentage of
international shipments, increased sales of higher-margin products, and lower
manufacturing costs. In fiscal 1995, gross profit was essentially unchanged from
fiscal 1994. However, gross profit was positively affected by a weaker U.S.
dollar, offset by an increase in manufacturing costs in fiscal 1995.
Operating Expenses. Selling, general and administrative ("SG&A") expenses as a
percentage of consolidated sales decreased to 34.8% in fiscal 1996 from 36.2% in
fiscal 1995 and 36.1% in fiscal 1994. SG&A expenses increased 7% to $46.3
million in fiscal 1996 from $43.4 million in fiscal 1995, due to increased
selling costs and higher personnel-related costs. SG&A expenses in fiscal 1995
increased by $3.8 million, due primarily to the effects of currency fluctuations
and the addition of a subsidiary in Switzerland in the fourth quarter of fiscal
1994. The Company anticipates that SG&A expenses as a percentage of sales will
be in the range of 34% to 38% in the near term.
Research and product development expenses in fiscal 1996 were 8.7% of
consolidated sales, compared with 8.7% in fiscal 1995 and 9.0% in fiscal 1994.
The Company's research and product development expenses increased 10% to $11.5
million in fiscal 1996 due to higher personnel and project material costs
associated with various product development projects. Research and development
spending depends on both the breadth of the Company's research and product
development efforts and the stage of specific product development projects. The
Company expects the level of research and product development expenses as a
percentage of sales to remain in the 8% to 10% range in the near term.
Write-off of Goodwill. In the first quarter of fiscal 1995, the Company wrote
off the remaining goodwill of $2.2 million that resulted from the 1988
acquisition of Lee Scientific, Inc. as the Company determined that the goodwill
was not recoverable.
Other Income. Other income in fiscal 1996 included a gain of $1.0 million on the
sale of undeveloped property. Proceeds (net of selling expenses) from the sale
of the property were $3.9 million. The proceeds consisted of cash and the
assumption by the buyer of an industrial revenue bond associated with the
property. In fiscal 1995, other income included a payment 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.
Interest Income and Expense. Interest income in fiscal 1996 was $2.0 million,
compared with $2.2 million in fiscal 1995 and $1.5 million in fiscal 1994. The
decrease in interest income was due to lower average cash balances and lower
yields. The increase in interest income in fiscal 1995 was due to higher average
16
<PAGE> 17
cash balances and higher yields on invested cash. Interest expense in fiscal
1996 decreased to $93,000 due to lower average foreign borrowings and lower
interest rates on the borrowings. Interest expense in fiscal 1995 declined due
to lower interest rates on foreign borrowings.
Income Taxes. The Company's effective tax rate for fiscal 1996 was 34.8%,
compared with 37.6% in fiscal 1995 and 34.8% in fiscal 1994. The increase in the
Company's effective tax rate in fiscal 1995 was due to the write-off of
goodwill, discussed above, which was not deductible for income tax purposes. The
Company anticipates that its effective tax rate will be in the 34% to 35% range
in the near term.
Earnings Per Share. Earnings per share in fiscal 1996 increased to $1.75 per
share, compared with $1.34 per share in fiscal 1995 and $1.10 per share in
fiscal 1994. Common and equivalent shares outstanding for fiscal 1996 were 13.7
million, compared with 14.7 million in fiscal 1995 and 15.4 million in fiscal
1994. The common and equivalent shares outstanding decreased each year due to
the Company's continuing stock repurchase program. On December 29, 1995, the
Company effected a two-for-one split of its common stock. All per-share and
share amounts have been restated to reflect the split.
Liquidity and Capital Resources
In fiscal 1996, the Company maintained its strong liquidity and financial
condition. The Company's working capital was $47.9 million at June 30, 1996.
Working capital declined in fiscal 1996 due to the Company's stock repurchase
programs. In fiscal 1996, the Company repurchased 1,601,000 shares for $49.1
million, compared with 1,633,156 shares in fiscal 1995 for $30.9 million and
250,000 shares in fiscal 1994 for $4.0 million.
Cash generated by operating activities decreased to $27.7 million, compared with
$28.3 million in fiscal 1995 and $19.7 million in fiscal 1994. The decrease in
operating cash flow was due to changes in operating assets and liabilities
partially offset by better operating results.
Net capital expenditures in fiscal 1996 increased to $3.0 million, compared with
$2.0 million in fiscal 1995 and $7.8 million in fiscal 1994. The increase in
fiscal 1996 was due to the renovation of a manufacturing building which was
completed in the fourth quarter of fiscal 1996. In fiscal 1994, capital
expenditures included the purchase of two buildings and the addition of capital
equipment related to the DX 500 product line.
17
<PAGE> 18
At June 30, 1996, the Company's international subsidiaries had utilized $273,000
of the Company's $15.0 million bank lines of credit, which are used to meet
working capital requirements and reduce exposure to foreign currency
fluctuations. The Company believes that its cash flow from operations, its
current cash and cash investments, and the remainder of the bank lines of credit
are sufficient to meet its cash requirements for the foreseeable future.
The impact of inflation on the Company's financial position and results of
operations was not significant during any of the periods presented.
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 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 the Securities and Exchange
Commission. See "Business" for a more complete discussion of the risk factors
outlined above.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Financial Statements and Financial Statement Schedules
appearing on page 24 of this Form 10-K.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
18
<PAGE> 19
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Identification of Directors
The information required by Item 10 of Form 10-K with respect to
identification of directors is incorporated by reference to the
information contained in the section captioned "Nominees" at page 2 of
the Registrant's definitive Proxy Statement for the Annual Meeting of
Stockholders to be held October 25, 1996, which has been previously
filed.
Identification of Officers
See Page 13 of this Report.
Item 11. EXECUTIVE COMPENSATION
The information required by Item 11 of Form 10-K is incorporated by
reference to the information contained in the section captioned
"Executive Compensation," at pages 6 through 8 of the Registrant's
definitive Proxy Statement for the Annual Meeting of Stockholders to be
held October 25, 1996, which has been previously filed.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Item 12 of Form 10-K is incorporated by
reference to the information contained in the sections captioned
"Security Ownership of Certain Beneficial Owners and Management" at
pages 4 and 5 of the Registrant's definitive Proxy Statement for the
Annual Meeting of Stockholders to be held October 25, 1996, which has
been previously filed.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
19
<PAGE> 20
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) Financial Statements - See Index to Financial Statements and
Financial Statement Schedules at page 24 of this Report.
(2) Financial Statement Schedules - See Index to Financial
Statements and Financial Statement Schedules at page 24 of
this Report.
(3) Exhibits - See Exhibit Index at page 21 and 22 of this Report.
(b) Reports on Form 8-K - The Company did not file any reports on Form
8-K during the quarter ended June 30, 1996.
20
<PAGE> 21
DIONEX CORPORATION
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description Reference
- ------- ----------- ---------
<S> <C> <C>
3.1 Restated Certificate of Incorporation, filed December 12, 1988.... (5)
3.2 Bylaws, as amended on October 21, 1988............................ (5)
4.1 Shareholder Rights Agreement dated June 27, 1989, between the
Registrant and The First National Bank of Boston............. (4)
4.2 Amendment No. 1 to the Rights Agreement dated
November 17, 1995............................................
10.1 Agreement, effective as of January 1, 1975, between The Dow
Chemical Company and International Plasma Corporation........ (1)
10.2 Memorandum agreement, dated March 14, 1975, between
The Dow Chemical Company and International Plasma
Corporation.................................................. (1)
10.3 Agreement, dated March 6, 1975, between International Plasma
Corporation and the former Dionex Corporation................ (1)
10.4 Consent to Assignment executed as of March 26, 1980, between
the Dow Chemical Company and the former Dionex Corporation.... (1)
10.5 Amendatory Agreement, effective as of November 1, 1981, between
The Dow Chemical Company and the Registrant (with certain
confidential information deleted)............................ (1)
10.6 Amendatory Agreement, effective as of July 1, 1982, between
The Dow Chemical Company and the Registrant (with certain
confidential information deleted)........................... (1)
10.7 Registrant's Supplemental Stock Option Plan (Exhibit 28.4)....... (2)
10.8 Registrant's Medical Care Reimbursement Plan (Exhibit 10.17)........ (1)
10.9 Registrant's Employee Stock Participation Plan (Exhibit 28.3).... (6)
</TABLE>
21
<PAGE> 22
<TABLE>
<CAPTION>
Exhibit
Number Description Reference
- ------- ----------- ---------
<C> <C> <C>
10.10 Credit Agreement dated February 29, 1996 between Bank of America
and the Registrant................................................
10.11 1988 Directors' Stock Option Plan (and related stock option
grant form) (Exhibit 10.20)....................................... (3)
10.12 Dionex Corporation Stock Option Plan, as amended and restated
(formerly, the 1990 Stock Option Plan)............................ (7)
13.1 Portions of the Registrant's 1996 Annual Report to Stockholders
which are incorporated by reference in this Annual Report on
Form 10-K.........................................................
21.1 Subsidiaries of Registrant...........................................
22.1 Registrant's definitive Proxy Statement for the Annual Meeting of
Stockholders to be held October 25, 1996..........................
23.1 Independent Auditors' Consent........................................
27.1 Financial Data Schedule..............................................
</TABLE>
(1) Incorporated by reference to the indicated exhibit in Amendment No. 1
of the Registrant's Registration Statement on Form S-1 filed December
7, 1982.
(2) Incorporated by reference to the indicated exhibit in the Registrant's
Registration Statement on Form S-8 filed March 3, 1987.
(3) Incorporated by reference to the indicated exhibit in the Registrant's
Annual Report on Form 10-K filed September 27, 1988.
(4) Incorporated by reference to the corresponding exhibit in the
Registrant's Current Report on Form 8-K filed June 29, 1989.
(5) Incorporated by reference to the indicated exhibit in the Registrant's
Annual Report on Form 10-K filed September 20, 1989
(6) Incorporated by reference to the indicated exhibit in the Registrant's
Statement on Form S-8 filed May 6, 1994.
(7) Incorporated by reference to the indicated exhibit in the Registrant's
Annual Report on Form 10-K filed September 26, 1995.
22
<PAGE> 23
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 September 23, 1996 By /s/ A. Blaine Bowman
----------------------------- ---------------------------------
A. Blaine Bowman
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ A. Blaine Bowman President, Chief Executive September 23, 1996
- ------------------------ Officer, and Director
A. Blaine Bowman (Principal Executive Officer)
/s/ Michael W. Pope Vice President of Finance
- ------------------------ and Administration September 23, 1996
Michael W. Pope (Principal Financial and
Accounting Officer)
/s/ David L. Anderson Director September 23, 1996
- ------------------------
David L. Anderson
/s/ James F. Battey Director September 23, 1996
- ------------------------
James F. Battey
/s/ B. J. Moore Director September 23, 1996
- ------------------------
B.J. Moore
</TABLE>
23
<PAGE> 24
DIONEX CORPORATION
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
Page
----
<S> <C>
FINANCIAL STATEMENTS
Consolidated Balance Sheets at June 30, 1996 and 1995 *
Consolidated Statements of Income for the years
ended June 30, 1996, 1995 and 1994 *
Consolidated Statements of Stockholders' Equity for
the years ended June 30, 1996, 1995 and 1994 *
Consolidated Statements of Cash Flows for the years
ended June 30, 1996, 1995 and 1994 *
Notes to Consolidated Financial Statements *
Independent Auditors' Report *
</TABLE>
*Incorporated by reference to information contained on pages 16 through 29 of
the Registrant's 1996 Annual Report to Stockholders. A copy of the applicable
pages is attached hereto as Exhibit 13.1
FINANCIAL STATEMENT SCHEDULES
Independent Auditors' Report 25
Schedule II - Valuation and Qualifying Accounts and Reserves 26
All other schedules are omitted because they are not required, are not
applicable or then formation is included in the consolidated financial
statements or notes thereto.
24
<PAGE> 25
INDEPENDENT AUDITORS' REPORT
Dionex Corporation
We have audited the consolidated financial statements of Dionex Corporation and
its subsidiaries as of June 30, 1996 and 1995, and for each of the three years
in the period ended June 30, 1996, and have issued our report thereon dated July
19, 1996; such financial statements and report are included in your 1996 Annual
Report to Stockholders and are incorporated herein by reference. Our audits also
included the consolidated financial statement schedule of Dionex Corporation and
its subsidiaries, listed in the accompanying Index to Financial Statements and
Financial Statement Schedules. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits. In our opinion, such financial statement schedule,
when considered in relation to the basic consolidated financial statements taken
as a whole, presents fairly in all material respects the information set forth
therein.
DELOITTE & TOUCHLLP
San Jose, California
July 19, 1996
25
<PAGE> 26
SCHEDULE II
DIONEX CORPORATION
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEARS ENDED JUNE 30, 1996, 1995, AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
Charged
Balance Charged to (Credited) Balance
Beginning Costs and to Other End of
of Year Expenses Accounts (1) Deductions Year
------- -------- ------------ ---------- -------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JUNE 30, 1994:
Allowance for doubtful
account $ 475 $ (73) $ 16 $ (4) (2) $ 414
------ ------ ------ ------- ------
Accrued product warranty
and installation $2,454 $2,221 $ 31 $(2,267) (3) $2,439
------ ------ ------ ------- ------
YEAR ENDED JUNE 30, 1995:
Allowance for doubtful
accounts $ 414 $ 123 $ 34 $ (85) (2) $ 486
------ ------ ------ ------- ------
Accrued product warranty
and installation $2,439 $2,601 $ 89 $(2,322) (3) $2,807
------ ------ ------ ------- ------
YEAR ENDED JUNE 30, 1996:
Allowance for doubtful
accounts $ 486 $ 24 $ (30) $ 8 (2) $ 488
------ ------ ------- ------- ------
Accrued product warranty
and installation $2,807 $2,134 $ (74) $(1,650) (3) $3,217
------ ------ ------- ------- ------
</TABLE>
(1) Effects of exchange rate changes
(2) Accounts written off, net of recoveries
(3) Product warranty and installation costs
26
<PAGE> 1
EXHIBIT 4.2
AMENDMENT NO. 1
TO
THE RIGHTS AGREEMENT
BETWEEN
THE FIRST NATIONAL BANK OF BOSTON
AND
DIONEX CORPORATION
Effective as of November 17, 1995
THIS AMENDMENT NO. 1 (this "Amendment") amends the Rights Agreement (the
"Rights Agreement"), dated June 27, 1989, between The First National Bank of
Boston ("Rights Agent") and Dionex Corporation (the "Company"). All capitalized
terms used but not defined in this Amendment shall retain the same meaning as
given them in the Rights Agreement.
WHEREAS, the parties desire to amend the Rights Agreement to delete Section
7(e) of the Rights Agreement, which requires the Company to keep available out
of its authorized and unissued Common Shares the number of Common Shares
sufficient to permit the exercise in full of all Rights outstanding under the
Rights Plan and to correct certain clerical errors in Sections 11(a) and 25(a)
of the Rights Plan;
NOW, THEREFORE, in consideration of the premises and the mutual agreements set
forth herein, the parties hereby agree as follows:
A. The parties hereby agree to amend the Rights Agreement as follows:
1. Section 7(e) of the Rights Agreement is hereby deleted in its
entirety.
2. Reference to Section 7(e) in clause (i) of Section 13(a) of the
Rights Agreement is hereby deleted.
3. Section 11(n) is hereby deleted in its entirety.
4. Clause (vi) of Section 25(a), which reads "(vi) to declare or
pay any dividend on the Common Shares payable in Common Shares
or to effect a subdivision, combination or consolidation of the
Common Shares (by reclassification or otherwise than by payment
of dividends in Common Shares)," is hereby deleted.
1.
<PAGE> 2
B. All other terms of the Rights Agreement remaining full force and effect.
IN WITNESS WHEREOF, the Company and Rights Agent have caused this
Amendment No. 1 to be executed by their duly authorized representatives as of
the date first written above.
ATTEST: DIONEX CORPORATION
/s/ Michael W. Pope By /s/ A. Blaine Bowman
- ------------------------- -------------------------
Michael W. Pope A. Blaine Bowman
Title President & CEO
----------------------
Countersigned:
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Gordon C. Stevenson
-------------------------
Authorized Signature
2.
<PAGE> 1
EXHIBIT 10.10
================================================================================
CREDIT AGREEMENT
DATED AS OF FEBRUARY 29, 1996
BETWEEN
DIONEX CORPORATION,
AND
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
<S> <C>
ARTICLE I
DEFINITIONS AND FINANCIAL REQUIREMENTS.............. 1
1.01 Definitions........................................................ 1
1.02 Financial Requirements............................................. 5
ARTICLE II
THE CREDIT FACILITIES......................... 5
2.01 The Revolving Facility............................................. 5
2.02 Advances Under the Revolving Facility.............................. 5
2.03 Commercial Letters of Credit under the Revolving Facility.......... 6
2.04 Standby Letters of Credit Under the Revolving Facility............. 7
2.05 Local Currency Advances............................................ 8
2.06 Mandatory Payment.................................................. 8
2.07 Commitment Fee..................................................... 8
2.08 Default Rate....................................................... 8
2.09 Early Termination of Commitment.................................... 8
ARTICLE III
EXTENSIONS OF CREDIT, PAYMENTS AND INTEREST CALCULATIONS...... 9
3.01 Requests for Credit................................................ 9
3.02 Disbursements and Payments......................................... 9
3.03 Branch Accounts.................................................... 9
3.04 Evidence of Indebtedness........................................... 9
3.05 Interest Calculation............................................... 9
3.06 Late Payments; Compounding......................................... 9
3.07 Business Day....................................................... 9
3.08 Taxes and Other Charges............................................ 9
3.09 Illegality......................................................... 10
3.10 Increased Costs.................................................... 10
3.11 Funding Losses..................................................... 11
3.12 Inability to Determine Rates....................................... 11
3.13 Certificate of the Bank............................................ 11
3.14 Debits to Borrower's Account....................................... 11
3.15 Survival........................................................... 11
ARTICLE IV
CONDITIONS TO AVAILABILITY OF CREDIT................ 11
4.01 Conditions to First Extension of Credit............................ 11
4.02 Conditions to Each Extension of Credit............................. 12
ARTICLE V
REPRESENTATIONS AND WARRANTIES................... 12
5.01 Corporate Existence and Power...................................... 12
5.02 Authorization...................................................... 12
5.03 Enforceability..................................................... 13
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Section Page
<S> <C>
5.04 Compliance with Laws.............................................. 13
5.05 Permits, Franchises............................................... 13
5.06 Litigation........................................................ 13
5.07 No Event of Default............................................... 13
5.08 Other Obligations................................................. 13
5.09 Tax Returns....................................................... 13
5.10 Information Submitted............................................. 13
5.11 No Material Adverse Effect........................................ 13
5.12 ERISA Compliance.................................................. 13
5.13 Environmental Matters............................................. 14
ARTICLE VI
AFFIRMATIVE COVENANTS....................... 14
6.01 Notices of Certain Events......................................... 14
6.02 Financial and Other Information................................... 14
6.03 Books, Records, Audits and Inspections............................ 15
6.04 Use of Facility................................................... 15
6.05 Insurance......................................................... 15
6.06 Compliance with Laws.............................................. 15
6.07 Change in Name, Structure or Location............................. 15
6.08 Existence and Properties.......................................... 15
6.09 Additional Acts................................................... 15
ARTICLE VII
NEGATIVE COVENANTS........................ 16
7.01 Liens ........................................................... 16
7.02 Acquisitions...................................................... 16
7.03 Loans ........................................................... 16
7.04 Liquidations and Mergers.......................................... 16
7.05 Sale of Assets.................................................... 16
7.06 Business Activities............................................... 16
7.07 Regulations G, T, U, and X........................................ 17
7.08 Tangible Net Worth................................................ 17
7.09 Total Liabilities to Tangible Net Worth........................... 17
7.10 Quick Ratio....................................................... 17
7.11 Maintenance of Profitability...................................... 17
ARTICLE VIII
EVENTS OF DEFAULT......................... 17
8.01 Events of Default................................................. 17
(a) Failure to Pay........................................ 17
(b) Breach of Representation or Warranty.................. 17
(c) Specific Defaults..................................... 17
(d) Other Defaults........................................ 18
(e) Judgments............................................. 18
(f) Failure to Pay Debts; Voluntary Bankruptcy............ 18
(g) Involuntary Bankruptcy................................ 18
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Section Page
<S> <C>
(h) Default of Other Financial Obligations............... 18
(i) Default under other Credit Documents................. 18
(j) Default of Other Bank Obligations.................... 18
(k) Material Adverse Effect.............................. 18
(l) ERISA................................................ 18
(m) Change of Control.................................... 18
8.02 Remedies......................................................... 19
ARTICLE IX
MISCELLANEOUS........................... 19
9.01 Successors and Assigns........................................... 19
9.02 Consents and Waivers............................................. 19
9.03 Governing Law.................................................... 19
9.04 Costs and Attorneys' Fees........................................ 19
9.05 Integration; Amendment........................................... 20
9.06 Borrower's Documents............................................. 20
9.07 Participations................................................... 20
9.08 General Indemnification.......................................... 20
9.09 Arbitration; Reference Proceeding................................ 20
9.10 Notices.......................................................... 21
9.11 Headings; Interpretation......................................... 21
9.12 Severability..................................................... 21
9.13 Counterparts..................................................... 22
</TABLE>
iii
<PAGE> 5
CREDIT AGREEMENT
(MULTICURRENCY-I)
THIS CREDIT AGREEMENT (MULTICURRENCY) (this "Agreement") is
entered into as of February 29, 1996, between DIONEX CORPORATION (the
"Borrower"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (the
"Bank").
In consideration of the mutual covenants and agreements contained
herein, the Borrower and the Bank agree as follows:
ARTICLE I
DEFINITIONS AND FINANCIAL REQUIREMENTS.
1.01 Definitions. The following terms (including plural and singular
versions thereof) have the meanings indicated:
"Acceptable Subsidiary": a Subsidiary of the Borrower acceptable to the
Bank in its sole discretion that (a) is specified as a "Borrower" on a
continuing guaranty executed by the Borrower in form and substance satisfactory
to the Bank, and (b) has executed such credit and related documentation with and
in favor of the Bank as the Bank may request.
"Advance": an advance hereunder.
"Availability Period": the period commencing on the date of this
Agreement and ending on the date that is the earlier to occur of (a) December
31, 1997, and (b) the date on which the Bank's commitment to extend credit
hereunder terminates.
"Business Day": any day other than a Saturday, a Sunday, or any other
day on which commercial banks in San Francisco, California, are authorized or
required by law to close and, if the applicable Business Day relates to any
Offshore Rate Advance, means such a day on which dealings are carried on in the
applicable offshore interbank market.
"CD Rate": for any CD Rate Interest Period, the rate of interest (
rounded upward to the next 1/100th of 1%) determined pursuant to the following
formula:
CD Rate = Certificate of Deposit Rate plus Assessment
---------------------------- Rate
1.00 - Reserve Percentage
Where:
"Assessment Rate" means, for any day of such CD Rate
Interest Period, the rate determined by the Bank as equal to the
annual assessment rate in effect on the first day of such CD
Rate Interest Period that is payable to the Federal Deposit
Insurance Corporation ("FDIC") by a member of the Bank Insurance
Fund that is classified as adequately capitalized and within
supervisory subgroup "A" (or a comparable successor assessment
risk classification within the meaning of 12 C.F.R.
Section 327.3(d)) for insuring time deposits at offices of such
member in the United States, or, in the event that the FDIC
shall at any time hereafter cease to assess time deposits based
upon such classifications or successor classifications, equal to
the maximum annual assessment rate in effect on such day that is
payable to the FDIC by commercial banks (whether or not
applicable to the Bank) for insuring time deposits at offices of
such banks in the United States.
1
<PAGE> 6
"Certificate of Deposit Rate" means, for any CD Rate
Interest Period, the rate of interest per annum determined by
the Bank to be the arithmetic mean (rounded upward to the
nearest 1/100th of 1%) of the rates notified to the Bank as the
rates of interest bid by two or more certificate of deposit
dealers of recognized standing selected by the Bank for the
purchase at face value of dollar certificates of deposit issued
by major United States banks, for a maturity comparable to the
CD Rate Interest Period and in the approximate amount of the CD
Rate Advance to be made, at the time selected by the Bank on the
first day of such CD Rate Interest Period.
"Reserve Percentage" means, for any CD Rate Interest
Period the maximum reserve percentage (expressed as a decimal,
rounded upward to the nearest 1/100th of 1%), as determined by
the Bank, in effect on the first day of such interest period
(including any ordinary, marginal, emergency, supplemental,
special and other reserve percentages) prescribed by the FRB for
determining the maximum reserves to be maintained by member
banks of the Federal Reserve System with deposits exceeding
$1,000,000,000 for new non-personal time deposits for a period
comparable to the CD Rate Interest Period and in an amount of
$100,000 or more.
"CD Rate Advance": an Advance that bears interest based on the CD Rate.
"CD Rate Interest Period": for each CD Rate Advance, the period
commencing on the date the CD Rate Advance begins to bear interest at a rate
based on the CD Rate and ending 30, 60, 90, or 180 days thereafter, as requested
by the Borrower; provided, however, that no such CD Rate Interest Period shall
extend beyond the Final Maturity Date.
"Closing Date": the date on which all conditions to the initial
extension of credit hereunder are satisfied.
"Code": the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder as from time to time in effect.
"Credit Documents": collectively, this Agreement and each other
agreement, documents and instrument now or hereafter delivered to the Bank
(including any Offshore Credit Provider) in connection with the credits
established herein and the transactions contemplated hereby.
"Credit Limit": the amount $10,000,000 or the Equivalent Amount
thereof.
"Default": any event or circumstance which, with the giving of notice,
the lapse of time, or both, would (if not cured or otherwise remedied during
such time) constitute an Event of Default.
"Dollars", "dollars" and "$": each, lawful money of the United States.
"Dollar Advances": specified in subsection 2.01(b).
"Environmental Laws": any foreign, federal, state, local, or municipal
laws, rules, orders, regulations, statutes, ordinances, codes, decrees,
requirements of any governmental authority, any and all requirements of law and
any and all common law requirements, rules, and bases of liability regulating,
relating to, or imposing liability or standards of conduct concerning pollution
or protection of human health or the environment, as now or may at any time
hereafter may be in effect.
"Equivalent Amount": (a) whenever this Agreement requires or permits a
determination on any date of the equivalent in dollars of an amount expressed in
a currency other than dollars, the equivalent amount in dollars of any amount
expressed in a currency other than dollars as determined by the Bank on such
date on the basis of the Spot Rate for the purchase of dollars with such other
currency on the relevant date; or (b)
2
<PAGE> 7
whenever this Agreement requires or permits a determination on any date of the
equivalent in a currency other than dollars of an amount expressed in dollars,
the equivalent amount in a currency other than dollars of an amount expressed in
dollars as determined by the Bank on such date on the basis of the Spot Rate for
the purchase of such other currency with dollars on the relevant date.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder as from time to
time in effect.
"ERISA Event": (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by the Borrower from a Pension Plan subject to Section 4063 of
ERISA during a plan year in which it was a substantial employer (as defined in
Section 4001(a)(2) of ERISA) or a cessation of operations which is treated as
such a withdrawal under Section 4062(e) of ERISA; (c) the filing of a notice of
intent to terminate, the treatment of a plan amendment as a termination under
Section 4041 or 4041A of ERISA or the commencement of proceedings by the PBGC to
terminate a Pension Plan subject to Title IV of ERISA; (d) a failure by the
Borrower to make required contributions to a Pension Plan or other Plan subject
to Section 412 of the Code; (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan; (f) the
imposition of any liability under Title IV of ERISA, other than PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon the Borrower; or (g) an
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code with respect to any Pension Plan.
"Event of Default": any event listed in Article VIII of this Agreement.
"FDIC": the Federal Deposit Insurance Corporation, or any entity
succeeding to any of its principal functions.
"Final Maturity Date": (a) in respect of any Advances, December 31,
1997; (b) in respect of any commercial letters of credit, June 30, 1998; and (c)
in respect of any standby letters of credit, December 31, 1998.
"Floating Rate": specified in subsection 2.02(a).
"FRB": the Board of Governors of the Federal Reserve System, or any
entity succeeding to any of its principal functions.
"Hazardous Substance": any hazardous or toxic substance, material, or
waste, defined, listed, classified, or regulated as such in or under any
Environmental Laws, including asbestos, petroleum, or petroleum products
(including gasoline, crude oil, or any fraction thereof), polychlorinated
biphenyls, and urea-formaldehyde insulation.
"IRS": the Internal Revenue Service or any entity succeeding to any of
its principal functions under the Code.
"L/C Outstanding Amount": at any time, the undrawn amount at such time
of any letter of credit issued hereunder, plus the amount of all drafts or
drawings paid or accepted by the Bank which have not yet been reimbursed to the
Bank, plus any other obligation or liability of the Borrower or any Acceptable
Subsidiary to the Bank with respect to any letter of credit issued under this
Agreement.
"Local Currency": specified in subsection 2.01(b).
"Local Currency Advance": specified in subsection 2.01(b).
"Material Adverse Effect": (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of the Borrower or the
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<PAGE> 8
Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the
ability of the Borrower or any Acceptable Subsidiary to perform under any Credit
Document; or (c) a material adverse effect upon the legality, validity, binding
effect or enforceability of any Credit Document.
"Offshore Credit Provider": a foreign office, foreign branch or foreign
affiliate of the Bank, acceptable to the Bank.
"Offshore Rate": for each Offshore Rate Interest Period, the rate of
interest (rounded upward to the next 1/16th of 1%) determined pursuant to the
following formula:
Offshore Rate = Offered Rate
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where:
"Offered Rate" means the rate of interest at
which deposits in the applicable currency in the approximate
amount of the Offshore Rate Advance to be made and having a
maturity comparable to such Offshore Rate Interest Period would
be offered by the Bank's Grand Cayman Branch, Grand Cayman,
British West Indies (or such other office as may be designated
for such purpose by the Bank), to major banks in the offshore
interbank market upon request of such banks at approximately
8:00 a.m. San Francisco time two Business Days prior to the
first day of such Offshore Rate Interest Period.
"Eurodollar Reserve Percentage" means, for any
Offshore Rate Interest Period, the maximum reserve percentage
(expressed as a decimal, rounded upward to the next 1/100th of
1%) in effect on the first day of such Offshore Rate Interest
Period (whether or not applicable to the Bank) under regulations
issued from time to time by the FRB for determining the maximum
reserve requirement (including any emergency, supplemental or
other marginal reserve requirement) with respect to Eurocurrency
funding (currently referred to as "Eurocurrency liabilities")
having a term comparable to such Offshore Rate Interest Period.
"Offshore Rate Advance": an Advance for which interest is based on the
Offshore Rate.
"Offshore Rate Interest Period": for each Offshore Rate Advance the
period commencing on the date the Offshore Rate Advance begins to bear interest
at a rate based on the Offshore Rate and ending one, two, three, or six months
thereafter, as requested by the Borrower; provided, however, that the last day
of each Offshore Rate Interest Period shall be determined in accordance with the
practices of the applicable offshore interbank markets as from time to time in
effect, and provided further that no such interest period shall extend beyond
the Final Maturity Date.
"PBGC": the Pension Benefit Guaranty Corporation or any entity
succeeding to any of its principal functions under ERISA.
"Pension Plan": a pension plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA which the Borrower sponsors, maintains, or to which
it makes, is making, or is obligated to make contributions, or in the case of a
multiple employer plan (as described in Section 4064(a) of ERISA) has made
contributions at any time during the immediately preceding five (5) plan years.
"Plan": an employee benefit plan (as defined in Section 3(3) of ERISA)
which the Borrower sponsors or maintains or to which the Borrower makes, is
making, or is obligated to make contributions and includes any Pension Plan.
"Reference Rate": for any day, the rate of interest in effect for such
day as publicly announced from time to time by the Bank in San Francisco,
California, as its "reference rate." It is a rate set by the Bank
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<PAGE> 9
based upon various factors including the Bank's costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate. Any change in the reference rate announced by the Bank shall take effect
at the opening of business on the day specified in the public announcement of
such change.
"Reference Rate Advance": an Advance that bears interest based on the
Reference Rate.
"Reportable Event": any of the events set forth in Section 4043(c) of
ERISA or the regulations thereunder, other than any such event for which the
30-day notice requirement under ERISA has been waived in regulations issued by
the PBGC.
"Revolving Facility": the line of credit described in Section 2.01.
"Spot Rate": for a currency, the rate quoted by the Bank as the spot
rate for the purchase by the Bank of such currency with another currency through
its Foreign Exchange Trading Center #5193, San Francisco, California, or such
other of the Bank's offices as it may designate from time to time, at
approximately 8:00 a.m. (San Francisco time) on the date two Business Days prior
to the date as of which the foreign exchange computation is made.
"Subsidiary": any corporation, association, partnership, joint venture,
or other business entity of which more than 50% of the voting stock or other
equity interests (in the case of entities other than corporations), is owned or
controlled directly or indirectly by the Borrower or one or more Subsidiaries of
the Borrower or a combination thereof.
1.02 Financial Requirements. Unless otherwise specified in this
Agreement, all accounting terms used in this Agreement shall be interpreted, all
financial computations required under this Agreement shall be made, and all
financial information required under this Agreement shall be prepared, in
accordance with generally accepted accounting principles in effect from time to
time in the United States, consistently applied.
ARTICLE II
THE CREDIT FACILITIES
2.01 The Revolving Facility. (a) From time to time during the
Availability Period, subject to the terms and provisions hereof, the Bank, on a
revolving basis, will (i) make Advances to the Borrower or an Acceptable
Subsidiary, and (ii) issue commercial and standby letters of credit for the
Borrower's or an Acceptable Subsidiary's account.
(b) Advances hereunder may be made in (i) dollars ("Dollar
Advances"), or (ii) in a lawful currency other than dollars which is available
at a branch or affiliate of the Bank located in a country other than the United
States and is the legal tender of that country where the branch or affiliate is
located (a "Local Currency") ("Local Currency Advances").
(c) The aggregate of (i) all Dollar Advances, (ii) the
Equivalent Amount of all Local Currency Advances, and (iii) the L/C Outstanding
Amount may not exceed at any one time the Credit Limit.
2.02 Advances Under the Revolving Facility. (a) Subject to the other
provisions of this Section , Dollar Advances under the Revolving Facility shall
bear interest at a rate per annum equal to the Reference Rate (the Reference
Rate is referred to herein as the "Floating Rate"). The Borrower shall pay or
cause the applicable Acceptable Subsidiary to pay interest quarterly, on the
last day of each calendar quarter until the Final Maturity Date, on which date
all accrued and unpaid interest shall be due and payable. The Borrower shall
repay or cause the applicable Acceptable Subsidiary to repay the principal
amount of each Reference
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<PAGE> 10
Rate Advance on the date such advance is converted into an Offshore Rate Advance
or a CD Rate Advance under subsections (b) or (c) below, and on the Final
Maturity Date.
(b) In lieu of the interest rate described above, the Borrower
or the applicable Acceptable Subsidiary may elect during the Availability Period
to have all or portions of Advances under the Revolving Facility be in dollars
and bear interest at the Offshore Rate plus 0.75% per annum during an Offshore
Rate Interest Period, subject to the following requirements:
(i) Each Offshore Rate Advance shall be for an amount
not less than $1,000,000.
(ii) The Borrower shall pay or shall cause the
applicable Acceptable Subsidiary to pay interest on each Offshore Rate
Advance on the last day of the Offshore Rate Interest Period for such
Advance; provided, however, that if any Interest Period for a Offshore
Rate Advance exceeds three months, interest shall also be payable on the
date which falls three months after the beginning of such Interest
Period and on each date which falls three months after any such interest
payment date. The Borrower shall repay or shall cause the applicable
Acceptable Subsidiary to repay the principal balance of each Offshore
Rate Advance on the last day of the Offshore Rate Interest Period for
such Advance, and (if sooner occurring) on the Final Maturity Date.
(iii) Any payment of an Offshore Rate Advance prior to
the last day of the Offshore Rate Interest Period for such Advance,
whether voluntary, by reason of acceleration or otherwise, including any
mandatory payments required under this Agreement and applied by the Bank
to an Offshore Rate Advance, shall be accompanied by the amount of
accrued interest on the amount repaid and by the amount (if any)
required by Section 3.11.
(c) In lieu of the interest rates described above in this
Section , the Borrower or the applicable Acceptable Subsidiary may elect during
the Availability Period to have all or portions of Advances under the Revolving
Facility be in dollars and bear interest at the CD Rate plus 0.75% per annum
during a CD Rate Interest Period, subject to the following requirements:
(i) Each CD Rate Advance shall be in an amount not
less than $1,000,000.
(ii) The Borrower shall pay or shall cause the
applicable Acceptable Subsidiary to pay interest on each CD Rate Advance
on the last day of the CD Rate Interest Period for such Advance;
provided, however, that if any Interest Period for a CD Rate Advance
exceeds 90 days, interest shall also be payable on the date which falls
90 days after the beginning of such Interest Period and on each date
which falls 90 days after any such interest payment date. The Borrower
shall repay or shall cause the applicable Acceptable Subsidiary to repay
the principal balance of each CD Rate Advance on the last day of the CD
Rate Interest Period for such Advance, and (if sooner occurring) on the
Final Maturity Date.
(iii) Any payment of a CD Rate Advance prior to the
last day of the CD Rate Interest Period for such Advance, whether
voluntary, by reason of acceleration or otherwise, including mandatory
payments required under this Agreement and applied by the Bank to a CD
Rate Advance, shall be accompanied by the amount of accrued interest on
the amount repaid and by the amount (if any) required by Section 3.11.
2.03 Commercial Letters of Credit under the Revolving Facility. (a) Each
commercial letter of credit shall be denominated in dollars and issued pursuant
to the terms and conditions hereof and of a Bank standard form Application and
Security Agreement for Commercial Letter of Credit (or such other form as the
Bank may require) executed by the Borrower or an Acceptable Subsidiary.
(b) Each commercial letter of credit shall:
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<PAGE> 11
(i) expire on or before 180 days after the date such
letter of credit is issued, but in no event later than June 30, 1998;
(ii) require drafts payable in dollars at sight; and
(iii) be otherwise in form and substance and in favor
of beneficiaries and for purposes satisfactory to the Bank.
(c) The Borrower shall pay or cause the applicable Acceptable
Subsidiary to pay to the Bank issuance fees, negotiation fees, and other fees at
the times and in the amounts the Bank advises the Borrower from time to time as
being applicable to the Borrower's or the Acceptable Subsidiary's commercial
letters of credit.
(d) Each draft paid by the Bank under a commercial letter of
credit issued hereunder shall be reimbursed by the Borrower or the applicable
Acceptable Subsidiary to the Bank on the date such draft is paid by the Bank.
Any sum owed to the Bank with respect to a commercial letter of credit issued
for the Borrower's or any Acceptable Subsidiary's account which is not paid when
due shall, at the option of the Bank in each instance, be deemed to be an
Advance to the Borrower outstanding under the Revolving Facility and shall
thereafter bear interest at the Floating Rate.
(e) In addition to any other rights or remedies which the Bank
may have under this Agreement or otherwise, upon the occurrence of an Event of
Default, the Bank may require the Borrower to provide cash collateral in the
amount of the L/C Outstanding Amount of any commercial letters of credit
outstanding under this Agreement.
2.04 Standby Letters of Credit Under the Revolving Facility. (a) Each
standby letter of credit shall be denominated in dollars and issued pursuant to
the terms and conditions hereof and of a Bank standard form Application and
Agreement for Standby Letter of Credit (or such other form as the Bank may
require) executed by the Borrower or an Acceptable Subsidiary.
(b) Each standby letter of credit shall: (i) expire on or before
one year after the date such letter of credit is issued; provided, however, that
there may be outstanding at any one time an aggregate amount of $1,000,000 of
standby letters of credit which at the time of their issuance were to expire
more than one year but no more than two years after the date of their issuance,
but in no event shall any standby letter of credit expire later than December
31, 1998, and (ii) be otherwise in form and substance and in favor of
beneficiaries and for purposes satisfactory to the Bank.
(c) The Borrower shall pay to the Bank a non-refundable fee
equal to 0.75% per annum of the outstanding undrawn amount of each financial
standby letter of credit and a non-refundable fee of 0.50% per annum of the
outstanding undrawn amount of each performance standby letter of credit, payable
in both cases quarterly in advance, and calculated on the basis of the face
amount outstanding on the day the fee is calculated. However, if an Event of
Default exists, at the option of the Bank, the amount of the fee shall be
increased to 2.0% per annum, commencing on the day the Bank provides notice of
the increase to the Borrower. The Borrower shall also pay such other fees and
commissions at the times and in the amounts the Bank advises the Borrower from
time to time as being applicable to the Borrower's standby letters of credit.
(d) Each draft paid by the Bank under a standby letter of credit
issued hereunder shall be reimbursed by the Borrower or the Acceptable
Subsidiary to the Bank on the date such draft is paid by the Bank. Any sum owed
to the Bank with respect to a standby letter of credit issued for the Borrower's
account which is not paid when due shall, at the option of the Bank in each
instance, be deemed to be an Advance outstanding under the Revolving Facility
and shall thereafter bear interest at the Floating Rate.
(e) In addition to any other rights or remedies which the Bank
may have under this Agreement or otherwise, upon the occurrence of an Event of
Default, the Bank may require the Borrower to
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<PAGE> 12
provide cash collateral in the amount of the L/C Outstanding Amount of any
standby letters of credit outstanding under this Agreement.
2.05 Local Currency Advances. (a) From time to time during the
Availability Period, the Bank or any Offshore Credit Provider may, in its sole
discretion, make Local Currency Advances to the Borrower and to Acceptable
Subsidiaries.
(b) Neither the Bank nor any Offshore Credit Provider shall make
any Local Currency Advance unless, at a minimum, the following conditions are
satisfied:
(i) the Bank and the Borrower or the relevant
Acceptable Subsidiary agree, at the time of Borrower's or such Acceptable
Subsidiary's request for a Local Currency Advance, on the currency, the amount,
the principal payment date(s), the interest rate and payment date(s), the
prepayment and overdue payment terms, and the reserve, tax and other material
provisions for such Advance; and
(ii) The Borrower or such Acceptable Subsidiary shall
execute such additional documentation as the Bank or such Offshore Credit
Provider may require relating to each Local Currency Advance.
2.06 Mandatory Payment. If at any time and for any reason the total
amount of credit outstanding under this Agreement exceeds the limitations set
forth herein, the Borrower shall pay to the Bank, upon demand, the amount of the
excess provided, that if the foregoing applies due to a change in applicable
rates of exchange between Dollars and Local Currencies, the Borrower shall be
obligated to pay such amount only if the excess is greater than $500,000 or the
Equivalent Amount thereof. Payments under this Section may be applied to the
obligations of the Borrower to the Bank in the order and manner as the Bank in
its discretion may determine. Payments to be applied to outstanding letters of
credit may be used to prepay, or held as cash collateral to secure, the
Borrower's or any Acceptable Subsidiary's obligations to the Bank with respect
thereto.
2.07 Commitment Fee. The Borrower shall pay to the Bank a commitment
fee at the rate of 0.25% per annum on the average daily unused portion of the
credit provided under this Agreement. For purposes of computing the unused
portion, the L/C Outstanding Amount shall be deemed to be usage. The commitment
fee shall be computed on a calendar quarter basis, except for the first period
which shall commence on the date of this Agreement and end on March 31, 1996.
The commitment fee shall be payable quarterly in arrears on the last day of each
successive calendar quarter thereafter, and on the last day of the Availability
Period.
2.08 Default Rate. Upon the occurrence and during the continuation of
any Event of Default, and without constituting a waiver of any such Event of
Default, (a) Advances under the Revolving Facility shall at the option of the
Bank bear interest at a rate per annum which is 2.0% per annum higher than the
rate of interest otherwise provided under this Agreement, and (b) Local Currency
Advances shall at the option of the Bank be redenominated and converted into the
Equivalent Amount of Reference Rate Advances in Dollars.
2.09 Early Termination of Commitment. The Borrower may at any time
terminate the Bank's (including any Offshore Credit Provider's) commitment to
extend credit hereunder by paying in full the entire amount of credit
outstanding hereunder (including the L/C Outstanding Amount, together with any
sums due under Section 3.11. Payments to be applied to outstanding letters of
credit may, at the Bank's option, be used to prepay, or held as cash collateral
to secure, the Borrower's and Acceptable Subsidiaries' obligations to the Bank
with respect thereto.
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ARTICLE III
EXTENSIONS OF CREDIT, PAYMENTS AND INTEREST CALCULATIONS
3.01 Requests for Credit. Each request for an extension of credit shall
be made in writing on a form acceptable to the Bank or in any other manner
acceptable to the Bank.
3.02 Disbursements and Payments. Each disbursement by the Bank and each
payment by the Borrower under this Agreement shall be made in the funds and at
such branch of the Bank as the Bank may from time to time select.
3.03 Branch Accounts. Each extension of credit under this Agreement
shall be made for the account of such branch, office, or affiliate of the Bank
as the Bank may from time to time select.
3.04 Evidence of Indebtedness. Principal, interest, and all other sums
due to the Bank (or any Offshore Credit Provider) under this Agreement shall be
evidenced by entries in records maintained by the Bank (or such Offshore Credit
Provider), and, if required by the Bank, by a promissory note or notes. Each
payment on and any other credits with respect to principal, interest, and all
other sums due under this Agreement shall be evidenced by entries to records
maintained by the Bank or such Offshore Credit Provider. The loan accounts or
records maintained by the Bank or any Offshore Credit Provider shall be
conclusive absent manifest error of the amount of the credit extended hereunder
and the interest and payments thereon. Any failure to so record or any error in
doing so shall not, however, limit or otherwise affect the obligation of the
Borrower or any Acceptable Subsidiary hereunder to pay any amount owing.
3.05 Interest Calculation. Interest based on the Reference Rate shall
be computed on the basis of a 365/366-day year, actual days elapsed. All other
interest and fees payable under this Agreement shall be computed on the basis of
a 360 day year and actual days elapsed, which results in more interest or a
larger fee than if a 365-366 day year were used.
3.06 Late Payments; Compounding. Any sum payable by the Borrower
hereunder (including unpaid interest) if not paid when due shall bear interest
(payable on demand) from its due date until payment in full at a rate per annum
equal to the Reference Rate plus 2.0% per annum. At the option of the Bank, in
each instance, any sum payable hereunder which is not paid when due (including
unpaid interest) may be added to principal of the Revolving Facility and shall
thereafter bear interest at the rate applicable to principal.
3.07 Business Day. Any sum payable by the Borrower hereunder which
becomes due on a day which is not a Business Day shall be due on the next
Business Day after such due date, unless, in the case of an Offshore Rate Loan,
the result of such extension would be to carry such Offshore Rate Interest
Period into another calendar month, in which event such Offshore Rate Interest
Period shall end on the immediately preceding Business Day. Any payments
received by the Bank on a day which is not a Business Day shall be deemed to be
received on the next Business Day after such date of receipt.
3.08 Taxes and Other Charges. (a) (i) If any taxes (other than taxes on
net income (A) imposed by the country or any subdivision of the country in which
the Bank's principal office or actual lending office is located and (B) measured
by the United States taxable income the Bank would have received if all payments
under or in respect of this Agreement and any instrument or agreement required
hereunder were exempt from taxes levied by the Borrower's country) are at any
time imposed on any payments under or in respect of this Agreement or any
instrument or agreement required hereunder including, but not limited to,
payments made pursuant to this Section , the Borrower shall pay all such taxes
and shall also pay to the Bank, at the time interest is paid, all additional
amounts which the Bank specifies as necessary to preserve the after-tax yield
the Bank would have received if such taxes had not been imposed.
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<PAGE> 14
(ii) The additional amounts necessary to
preserve the after-tax yield the Bank would have received if such taxes had not
been imposed shall be calculated pursuant to the formula:
(w)(t)(i)
y = ---------
1-w-t
where the terms are defined as follows:
y = additional payment to be made to the Bank
w = withholding tax rate levied by foreign government
t = the Bank's combined Federal and state tax rate
i = amount of interest to be paid on Credit
(computed by using the base rate plus quoted
spread)
1 = one
(b) The Borrower will provide the Bank with original tax
receipts, notarized copies of tax receipts, or such other documentation as will
prove payment of tax in a court of law applying the United States Federal Rules
of Evidence, for all taxes paid by the Borrower pursuant to subsection (a)
above. The Borrower will deliver receipts to the Bank within 30 days after the
due date for the related tax.
3.09 Illegality. (a) If the Bank determines that (i) the introduction
of any law, rule, regulation, treaty, or determination of an arbitrator or court
or other governmental authority or any change in or in the interpretation or
administration thereof has made it unlawful, or that any central bank or other
governmental authority has asserted that it is unlawful, for the Bank (directly
or through any Offshore Credit Provider) to make or extend any Advance or other
credit under this Agreement, or (ii) any order, judgment, or decree of any
governmental authority or arbitrator purports by its terms to enjoin or restrain
the Bank (or any Offshore Credit Provider) from making or extending any Advance
or other credit hereunder, then, on notice thereof by the Bank to the Borrower,
the obligation of the Bank to make or extend such Advance or other credit
(directly or through any Offshore Credit Provider) shall be suspended until the
Bank shall have notified the Borrower that the circumstances giving rise to such
determination no longer exist.
(b) If the Bank determines that it is unlawful for it or any
applicable Offshore Credit Provider to maintain any Offshore Rate Advance or
Local Currency Advance hereunder, the Borrower shall prepay in full all Offshore
Rate Advances or Local Currency Advances, as the case may be then outstanding,
together with interest accrued thereon, either on the last day of the applicable
Offshore Rate Interest Period or the interest period applicable to the Local
Currency Advance if the Bank or such Offshore Credit Provider may lawfully
continue to maintain such Advances to such day and such loans have an interest
period, or immediately, if the Bank may not lawfully continue to maintain such
Advances or such loans have no interest period, together with any amounts
required to be paid in connection therewith pursuant to Section 3.11.
3.10 Increased Costs. The Borrower shall pay to the Bank, on demand,
the Bank's costs or losses arising from any statute or regulation, or any
request or requirement of a regulatory agency which is applicable to all
national banks or a class of all national banks. The costs and losses will be
allocated to this facility in a manner determined by the Bank, using any
reasonable method. The costs include the following:
(a) any reserve or deposit requirements; and
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(b) any capital requirements relating to the Bank's assets
and commitments for credit.
3.11 Funding Losses. The Borrower shall reimburse the Bank and hold the
Bank harmless from any loss or expense which the Bank may sustain or incur as a
consequence of the failure of the Borrower (or any Acceptable Subsidiary) to
make any payment or prepayment of principal of any Advance hereunder made at a
rate of interest related to the Offshore Rate or the CD Rate (including payments
made after any acceleration thereof), or to borrow at such a rate, or the
prepayment of an Advance which bears interest at such a rate on a day which is
not the last day of the interest period with respect thereto (including payments
made after any acceleration thereof or because the total amount of credit
exceeds the limitations set forth herein), or the redenomination and conversion,
upon the occurrence of any Event of Default, of an Advance which bears interest
at such a rate; including any such loss or expense arising from the liquidation
or reemployment of funds obtained by it to maintain its Advances made at a rate
related to the Offshore Rate or the CD Rate hereunder or from fees payable to
terminate any deposits from which such funds were obtained or deemed obtained.
3.12 Inability to Determine Rates. The Bank has no obligation to accept
an election for an Offshore Rate Advance or a CD Rate Advance if (a) Dollar
deposits in the principal amount, and for the period equal to the interest
period, for such Advance are not available in the applicable funding market; or
(b) the Offshore Rate or CD Rate does not accurately reflect the cost of such
Advance. Nothing contained herein shall, however, obligate the Bank to obtain
the funds for any Advance in any particular manner.
3.13 Certificate of the Bank. If the Bank claims any reimbursement or
compensation pursuant to Section 3.10 or Section 3.11 hereof, then the Bank
shall deliver to the Borrower a certificate setting forth in reasonable detail
the amount payable to the Bank thereunder and such certificate shall be
conclusive and binding on the Borrower in the absence of manifest error.
3.14 Debits to Borrower's Account. The Borrower hereby authorizes the
Bank to debit the Borrower's deposit account number 14861-00388 at the Global
Payments Operations, Concord, CA, office of the Bank in the amount of principal,
interest, fees, or any other amount due under this Agreement or under any
instrument or agreement required under this Agreement. The Bank may, at its
option, debit the account on the date such amounts become due, or, if such due
date is not a Business Day, on the next Business Day after such due date. If
there are insufficient funds in the account to cover the amount debited to the
accounts in accordance with this Section , such debit may be reversed in whole
or in part, at the option of the Bank in its sole discretion, and the amount not
debited shall be deemed to remain unpaid.
3.15 Survival. The agreements and obligations of the Borrower under
Sections 3.08 through 3.11 hereof shall survive the payment of all other
obligations of the Borrower hereunder.
ARTICLE IV
CONDITIONS TO AVAILABILITY OF CREDIT.
The Bank's obligation to extend credit under this Agreement is subject
to the Bank's receipt of the following, each in form and substance satisfactory
to the Bank:
4.01 Conditions to First Extension of Credit. Before the first
extension of credit:
(a) This Agreement, executed by the Borrower;
(b) Satisfactory evidence of due authorization of the
execution, delivery, and performance by the Borrower and any Acceptable
Subsidiary of this Agreement and any other Credit Documents, including certified
resolutions, incumbency certificate, articles of incorporation and bylaws;
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<PAGE> 16
(c) Certificates of state officials showing that the Borrower
is in good standing or qualified to conduct business under the laws of the state
of its organization and, if requested by the Bank, in any other state in which
the Borrower is required to be so qualified;
(d) A certificate of an appropriate officer of the Borrower
as to the matters set forth in Section 4.02(a) and (b);
(e) Payment of any fee or expense required hereunder prior to
the first extension of credit; and
(f) A continuing guaranty in favor of the Bank, executed by
the Borrower, guaranteeing all debts and obligations (whether contingent or
otherwise) of any and all Acceptable Subsidiaries arising under or in connection
with this Agreement.
4.02 Conditions to Each Extension of Credit. Before each extension or
renewal of credit (including pursuant to any election under Section 2.02(b)),
including the first:
(a) The representations and warranties of the Borrower
contained in this Agreement shall be true on and as of the date of each
extension of credit;
(b) Immediately prior to and immediately after giving effect
to such extension of credit, no Default or Event of Default shall exist; and
(c) Executed originals of all Credit Documents required under
Article II shall have been delivered to the Bank.
Each request for an extension of credit hereunder shall constitute a
representation and warranty by the Borrower, as of the date of each such request
and as of the date of each extension of credit, that the conditions in this
Section are satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
5.01 Corporate Existence and Power. The Borrower, and each Acceptable
Subsidiary: (a) is a corporation duly organized and existing under the laws of
the jurisdiction of its organization; (b) has the power and authority and all
governmental licenses, authorizations, consents, and approvals to own its
assets, carry on its business, and to execute, deliver, and perform its
obligations under, the Credit Documents; and (c) is duly qualified and properly
licensed and in good standing under the laws of each jurisdiction where its
ownership, lease, or operation of property or the conduct of its business
requires such license or qualification.
5.02 Authorization. The execution, delivery, and performance by the
Borrower and each Acceptable Subsidiary of this Agreement and any other Credit
Document to which any of them is a party, have been duly authorized by all
necessary corporate action, and do not and will not:
(a) contravene the terms of any organizational or charter
documents;
(b) conflict with or result in any breach or contravention of,
or the creation of any lien, security interest, or charge under, any agreement,
contract, indenture, document, or instrument to which the Borrower or any
Acceptable Subsidiary is a party or by which any property is bound, or any
order, injunction, writ, or decree of any governmental authority to which the
Borrower or any Acceptable Subsidiary or any property is subject; or
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(c) violate any law, rule, regulation, or determination of an
arbitrator or of a court or other governmental authority, in each case
applicable to or binding upon the Borrower or any Acceptable Subsidiary or any
property.
5.03 Enforceability. This Agreement is a legal, valid, and binding
agreement of the Borrower, enforceable against the Borrower in accordance with
its terms, and the other Credit Documents and any other instrument or agreement
required under this Agreement, when executed and delivered, will be legal,
valid, binding, and enforceable in accordance with its terms against the
Borrower or the Acceptable Subsidiary, as applicable
5.04 Compliance with Laws. Each of the Borrower and the Acceptable
Subsidiaries is in compliance with all foreign, federal, state and local laws,
rules, regulations and determinations of arbitrators, courts and other
governmental authorities materially affecting the business, operations or
property of the Borrower and the Acceptable Subsidiaries (including
Environmental Laws).
5.05 Permits, Franchises. The Borrower or its Subsidiaries possess all
permits, memberships, franchises, contracts, and licenses required and all
trademark rights, trade name rights, patent rights, and fictitious name rights
necessary to enable the Borrower and its Subsidiaries to conduct the businesses
in which they are now engaged.
5.06 Litigation. There is no litigation, tax claim, proceeding,
governmental or administrative action, arbitration proceeding or dispute
pending, or, to the knowledge of the Borrower, threatened, against or affecting
the Borrower or any of its Subsidiaries or any of their properties, the adverse
determination of which would result in a Material Adverse Effect.
5.07 No Event of Default. There exists no Default or Event of
Default.
5.08 Other Obligations. As of the Closing Date, the Borrower is not in
default under any other agreement involving the borrowing of money, the
extension of credit, or the lease of real or personal property, to which the
Borrower is a party as borrower, guarantor, installment purchaser, or lessee,
except as disclosed in writing to the Bank prior to the Closing Date.
5.09 Tax Returns. The Borrower has no knowledge of any material pending
assessments or adjustments with respect to its income tax liabilities for any
year, except as disclosed in writing to the Bank prior to the Closing Date.
5.10 Information Submitted. All financial and other information that
has been submitted by the Borrower to the Bank, including the Borrower's
financial statement delivered to the Bank most recently prior to the Closing
Date: (a) in the case of financial statements, is prepared in accordance with
generally accepted accounting principles consistently applied; and (b) is true
and correct in all material respects and is complete insofar as may be necessary
to give the Bank true and accurate knowledge of the subject matter thereof.
5.11 No Material Adverse Effect. Since June 30, 1995, there has been
no Material Adverse Effect.
5.12 ERISA Compliance. Except as specifically disclosed to the Bank in
writing prior to the Closing Date: (a) each Plan is in compliance in all
material respects with the applicable provisions of ERISA, the Code and other
federal or state law; (b) there are no pending, or to the best knowledge of
Borrower, threatened claims, actions or lawsuits, or action by any governmental
authority, with respect to any Plan which has resulted or could reasonably be
expected to result in a Material Adverse Effect; (c) there has been no
prohibited transaction or other violation of the fiduciary responsibility rule
with respect to any Plan which could reasonably result in a Material Adverse
Effect; (d) each Plan which is intended to qualify under Section 401(a) of the
Code has received a favorable determination letter from the Internal Revenue
Service and to the best knowledge of the Borrower, nothing has occurred which
would cause the loss of such qualification; (e) as of the Closing Date, neither
the Borrower nor any ERISA Affiliate maintains or contributes to any Pension
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Plan or other Plan subject to Section 412 of the Code; and (f) neither the
Borrower or entity under common control with the Borrower in the preceding
sentence has ever contributed to any multiemployer plan within the meaning of
Section 4001(a)(3) of ERISA.
5.13 Environmental Matters. (a) The Borrower has no knowledge or reason
to believe (i) that the properties of the Borrower and its Subsidiaries contain
or have previously contained (at, under, or about any such property) any
Hazardous Substances or other contamination (A) in amounts or concentrations
that constitute or constituted a violation of, or could give rise to a material
liability under, any Environmental Laws, (B) which could materially interfere
with the continued operation of such property, or (C) which could materially
impair the fair market value thereof; or (ii) that there has been transportation
or disposal of Hazardous Substances from, nor any release or threatened release
of Hazardous Substances at or from, any property of the Borrower or any of its
Subsidiaries in violation of or in any manner which could give rise to a
material liability under any Environmental Laws.
(b) Neither the Borrower nor any of its Subsidiaries has
received or is aware of any material claim or notice of material violation,
alleged material violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to the properties or operations of the Borrower or any of its
Subsidiaries, nor does the Borrower have knowledge or reason to believe that any
such action is being contemplated, considered, or threatened.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as credit is available under this Agreement and until full and
final payment of all of the Borrower's and any Acceptable Subsidiaries'
obligations under this Agreement and any other Credit Document:
6.01 Notices of Certain Events. The Borrower shall promptly give
written notice to the Bank of:
(a) all litigation, proceedings or actions affecting the
Borrower or its Subsidiaries where the amount claimed is $2,000,000 or its
Equivalent Amount or more;
(b) any substantial dispute which may exist between the
Borrower or its Subsidiaries and any governmental regulatory body or law
enforcement authority;
(c) any Default or Event of Default;
(d) any of the representations and warranties in Article V
ceasing to be true and correct;
(e) any ERISA event, the adoption of any Pension Plan or any
other new Plan subject to Section 412 of the Code by the Borrower or any entity
under the control of or under common control with the Borrower, or the
commencement of contributions to such a Plan; and
(f) any other matter which has resulted or could reasonably be
expected to result in a Material Adverse Effect.
6.02 Financial and Other Information. The Borrower shall deliver to
the Bank in form and detail satisfactory to the Bank, and in such number of
copies as the Bank may request:
(a) Within 95 days after the end of each fiscal year, the
Borrower's consolidated financial statements for such year audited by a
certified public accountant together with an unqualified opinion of such
certified public accountant;
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(b) Within 50 days after the end of each of the first three
quarterly accounting periods, of Borrower's fiscal year the Borrower's
consolidated financial statements for such period prepared by the Borrower and
certified by the Borrower as fairly presenting Borrower's financial condition
and results of operations;
(c) Within 15 days after the date of filing with the
Securities and Exchange Commission, copies of any of the Borrower's Form 10-K
Annual Reports, Form 10-Q Quarterly Reports and Form 8-K Current Reports; and
(d) Promptly upon request, such other materials and
information relating to the Borrower or its Subsidiaries as the Bank may
request.
6.03 Books, Records, Audits and Inspections. The Borrower shall, and
shall cause its Subsidiaries to, maintain adequate books, accounts and records,
and prepare all financial statements required hereunder in accordance with
generally accepted accounting principles consistently applied, and in compliance
with the regulations of any governmental regulatory body having jurisdiction
over the Borrower or its Subsidiaries, or the Borrower's or its Subsidiaries'
businesses, and permit employees or agents of the Bank at any reasonable time to
inspect the Borrower's and its Subsidiaries' properties, and to examine or audit
the Borrower's and its Subsidiaries' books, accounts, and records and make
copies and memoranda thereof.
6.04 Use of Facility. The Borrower shall use the credit facility
provided herein solely for working capital and other general corporate purposes
not in contravention of any requirement of law.
6.05 Insurance. The Borrower shall maintain and keep in force insurance
of the types and in amounts customarily carried in lines of businesses similar
to those of the Borrower, including fire, extended coverage, public liability
(including coverage for contractual liability), property damage (including use
and occupance), business interruption, and workers' compensation, all carried by
insurers and in amounts satisfactory to the Bank, with loss payable endorsements
on such types of insurance as the Bank may request, and deliver to the Bank from
time to time, at the Bank's request, a copy of each insurance policy, or if
permitted by the Bank, a certificate of insurance setting forth all insurance
then in effect.
6.06 Compliance with Laws. The Borrower shall at all times comply with,
and cause its Subsidiaries to comply with, all laws, statutes (including any
fictitious name statute), rules, regulations, orders, and directions of any
governmental authority having jurisdiction over the Borrower or any of its
Subsidiaries or the business of the Borrower or any of its Subsidiaries
(including ERISA and all Environmental Laws).
6.07 Change in Name, Structure or Location. The Borrower shall notify
the Bank in writing prior to any change in (a) the Borrower's name or the name
of any Acceptable Subsidiary, (b) the Borrower's or any Acceptable Subsidiary's
business or legal structure, or (c) the Borrower's or any Acceptable
Subsidiary's place of business or chief executive office if the Borrower has
more than one place of business.
6.08 Existence and Properties. The Borrower and each of its
Subsidiaries shall maintain and preserve its existence and all rights,
privileges, and franchises now enjoyed, conduct its business in an orderly,
efficient, and customary manner, keep all the its properties in good working
order and condition, and from time to time make all needed repairs, renewals, or
replacements thereto and thereof so that the efficiency of such property shall
be fully maintained and preserved.
6.09 Additional Acts. The Borrower shall perform, on request of the
Bank, such acts as may be necessary or advisable to perfect any lien or security
interest contemplated hereby or otherwise to carry out the intent of this
Agreement, including the provision of opinions of counsel for the Borrower
addressing such matters as may reasonably be requested by the Bank.
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ARTICLE VII
NEGATIVE COVENANTS
So long as credit is available under this Agreement and until full and
final payment of all of the Borrower's and any Acceptable Subsidiary's
obligations under this Agreement and any other Credit Document:
7.01 Liens. The Borrower shall not, and shall not suffer or permit any
of its Subsidiaries to, create, assume, or suffer to exist any security
interest, deed of trust, mortgage, lien (including the lien of an attachment,
judgment, or execution), or encumbrance, securing a charge or obligation, on or
of any of its or their property, real or personal, whether now owned or
hereafter acquired, except: (a) security interests and deeds of trust in favor
of the Bank; (b) liens, security interests, and encumbrances in existence as of
the date of this Agreement and disclosed to the Bank in writing prior to the
Closing Date; (c) liens for current taxes, assessments, or other governmental
charges which are not delinquent or remain payable without any penalty; (d)
liens in connection with workers' compensation, unemployment insurance, or other
social security obligations; (e) mechanics', worker's, materialmen's,
landlords', carriers', or other like liens arising in the ordinary and normal
course of business with respect to obligations which are not due; (f) purchase
money security interests in personal or real property (other than property
classified as inventory or current assets) hereafter acquired when the security
interest does not extend beyond the property purchased, does not exceed the
value of such property, and secures only obligations incurred to purchase such
property.
7.02 Acquisitions. The Borrower and its Subsidiaries shall not acquire
or purchase control of, or the assets or business of, any other person, firm, or
corporation, unless such person, firm or corporation engages in the same general
line of business as the Borrower, the Borrower or its Subsidiary is the entity
which survives the transaction, and the transaction would not result in the
breach of any warranty or covenant hereunder.
7.03 Loans. Neither the Borrower nor any of its Subsidiaries shall make
any loans, advances, or other extensions of credit to any of the Borrower's or
such Subsidiary's executives, officers, or directors or shareholders (or any
relatives of any of the foregoing) except loans to employees made in the
ordinary course of their employment; or make loans, advances or other extensions
of credit to or invest in any other person, firm, corporation, or other entity
other than (a) investments in cash equivalents; (b) extensions of credit in the
nature of accounts receivable or notes receivable arising from the sale or lease
of goods or services in the ordinary course of business; (c) extensions of
credit by the Borrower to any of its wholly-owned Subsidiaries or by any of its
wholly-owned Subsidiaries to another of its wholly-owned Subsidiaries; and (d)
investments made in the course of transactions permitted by Section 7.02.
7.04 Liquidations and Mergers. The Borrower and its Subsidiaries shall
not liquidate or dissolve or enter into any consolidation, merger, partnership,
joint venture, or other combination, except (i) consolidations or mergers of
Subsidiaries into Borrower, (ii) consolidations or mergers of Subsidiaries of
the Borrower when such a Subsidiary survives the transaction, and (iii)
transactions permissible pursuant to Section 7.02.
7.05 Sale of Assets. Neither the Borrower nor any of its Subsidiaries
shall (a) sell, lease, or otherwise dispose of its business or assets as a whole
or such as in the opinion of the Bank constitutes a substantial portion of its
business or assets; (b) sell, encumber, or otherwise dispose of any of its
accounts receivable except accounts receivable in an aggregate amount not in
excess of $5,000,000 where the account debtor is located in Japan; (c) sell or
otherwise dispose of any of its assets except for full, fair and reasonable
consideration; or (d) enter into any sale and leaseback agreement covering any
of its fixed or capital assets, except sale and leaseback agreements entered
into solely for the purpose of financing the purchase of such assets at the time
of their purchase.
7.06 Business Activities. The Borrower shall not engage in any
business activities or operations substantially different from or unrelated to
present business activities and operations.
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7.07 Regulations G, T, U, and X. The Borrower shall not, and shall not
permit any of its Subsidiaries to, use any portion of the proceeds of any
Advances or extensions of credit hereunder, directly or indirectly, (i) to
purchase or carry margin stock (within the meanings of Regulations G, T, U, and
X of the FRB), (ii) to repay or otherwise refinance indebtedness of the Borrower
or others incurred to purchase or carry any such margin stock, (iii) to extend
credit for the purpose of purchasing or carrying any such margin stock, or (iv)
to acquire any security in any transaction that is subject to Section 13 or 14
of the Securities Exchange Act of 1934, as amended.
7.08 Tangible Net Worth. The Borrower shall not permit as of the last
day of any fiscal quarter on a consolidated basis its Tangible Net Worth to be
less than $88,000,000 plus (i) 75% of net income after income taxes (without
subtracting losses) earned in each quarterly accounting period commencing after
June 30, 1995, plus (ii) the net proceeds from any equity securities issued
after June 30, 1995, less (iii) the amount of equity securities repurchased
after June 30, 1995, where:
"Tangible Net Worth" means the gross book value of the assets
of the Borrower and its Subsidiaries on a consolidated basis (exclusive
of goodwill, patents, trademarks, trade names, organization expense,
treasury stock, unamortized debt discount and expense, deferred charges,
and other like intangibles) less (a) reserves applicable thereto, and
(b) all liabilities (including accrued and deferred income taxes).
7.09 Total Liabilities to Tangible Net Worth. The Borrower shall not
permit as of the last day of any fiscal quarter on a consolidated basis the
ratio of the Borrower's total liabilities to Tangible Net Worth to exceed the
ratio of 1.00 to 1.00, where Tangible Net Worth has the meaning specified in
Section 7.08.
7.10 Quick Ratio. The Borrower shall not permit as of the last day of
any fiscal quarter on a consolidated basis the sum of cash, short-term cash
investments, marketable securities not classified as long-term investments and
accounts receivable to be less than 1.50 times current liabilities, including
the dollar or Equivalent Amount of all outstanding Advances and of the L/C
Outstanding Amount.
7.11 Maintenance of Profitability. The Borrower on a consolidated basis
shall not incur (a) any quarterly net or operating loss in any two consecutive
fiscal quarters or (b) any quarterly net or operating loss in excess of 5.0% of
Tangible Net Worth, where, Tangible Net Worth has the meaning specified in
Section 7.08.
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Events of Default. The occurrence of any of the following events
shall constitute an "Event of Default" under this Agreement:
(a) Failure to Pay. The Borrower or any Acceptable Subsidiary
fails to pay any installment of principal when due, or fails to pay within five
days after the same becomes due any interest, fee or any other sum due under
this Agreement or any other Credit Document in accordance with the terms hereof
or thereof.
(b) Breach of Representation or Warranty. Any representation
or warranty herein or in any other Credit Document proves to have been false or
misleading in any material respect when made or deemed made hereunder.
(c) Specific Defaults. The Borrower fails to perform or
observe any term, covenant or agreement contained in Section 6.01, 6.02 or 6.03
or Article VII hereof.
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(d) Other Defaults. The Borrower fails to perform or observe
any other term or covenant contained in this Agreement or any Credit Document
and such default shall continue unremedied for a period of 30 days after the
earlier of (i) the date upon which an officer of the Borrower knew or reasonably
should have known of such failure or (ii) the date upon which written notice
thereof is given to the Borrower by the Bank.
(e) Judgments. One or more judgments or arbitration awards are
entered against the Borrower or any of its Subsidiaries, or the Borrower or any
of its Subsidiaries enters into any settlement agreement with respect to any
litigation or arbitration, in the aggregate amount of $5,000,000 or an
Equivalent Amount or more on a claim or claims not covered by insurance.
(f) Failure to Pay Debts; Voluntary Bankruptcy. The Borrower
or any Acceptable Subsidiary (i) fails to pay the Borrower's or such
Subsidiary's debts generally as they come due, or (ii) files any petition,
proceeding, case, or action for relief under any bankruptcy, reorganization,
insolvency, or moratorium law, or any other law or laws for the relief of, or
relating to, debtors.
(g) Involuntary Bankruptcy. An involuntary petition is filed
under any bankruptcy or similar statute against the Borrower or any Acceptable
Subsidiary, or a receiver, trustee, liquidator, assignee, custodian,
sequestrator, or other similar official is appointed to take possession of the
properties of the Borrower or any Acceptable Subsidiary.
(h) Default of Other Financial Obligations. Any default occurs
under any other agreement involving the borrowing of money or the extension of
credit having an aggregate principal amount (including undrawn committed or
available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than $1,000,000 or an
Equivalent Amount to which the Borrower or any Subsidiary may be a party as
borrower, guarantor, or installment purchaser, if such default consists of the
failure to pay any obligation when due or if such default gives to the holder of
the obligation concerned the right to accelerate the obligation.
(i) Default under other Credit Documents. Any Credit Document
(other than this Agreement), guaranty, subordination agreement, or other
agreement or instrument required hereunder or executed in connection herewith is
breached or becomes ineffective or any default occurs under any such agreement
or instrument.
(j) Default of Other Bank Obligations. Any default occurs
under any other obligation of the Borrower or any Subsidiary to the Bank or to
any subsidiary or affiliate of the Bank.
(k) Material Adverse Effect. There occurs a Material Adverse
Effect.
(l) ERISA. (i) An ERISA Event shall occur with respect to a
Pension Plan which has resulted or could reasonably be expected to result in
liability of the Borrower under Title IV of ERISA to the Pension Plan or PBGC in
an aggregate amount in excess of $500,000; or (ii) any of the representations
and warranties contained in Section 5.12 shall cease to be true and correct
which, individually or in combination, has resulted or could reasonably be
expected to result in a Material Adverse Effect.
(m) Change of Control. (i) any person or two or more persons
acting in concert shall acquire beneficial ownership, directly or indirectly, of
securities of the Borrower (or other securities convertible into such
securities) representing 25% or more of the combined voting power of all
securities of the Borrower entitled to vote in the election of directors; or
(ii) during any period of up to 12 consecutive months, commencing after the
Closing Date, individuals who at the beginning of such 12-month period were
directors of the Borrower shall cease for any reason to constitute a majority of
the Board of Directors of the Borrower unless the persons replacing such
individuals were nominated by the Board of Directors of the Borrower; or (iii)
any person or two or more persons acting in concert acquiring by contract or
otherwise, or entering into a contract or arrangement which upon consummation
will result in its or their acquisition of, or control over, securities of the
Borrower (or other securities convertible into such securities) representing 25%
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or more of the combined voting power of all securities of the Borrower entitled
to vote in the election of directors.
8.02 Remedies. If any Event of Default occurs,
(a) any indebtedness of the Borrower or of any Acceptable
Subsidiary under any of the Credit Documents, any term thereof to the contrary
notwithstanding, shall at the Bank's option (but automatically upon the
occurrence of an Event of Default described in subsection 8.01(f)(ii) or
subsection 8.01(g)) and without notice become immediately due and payable
without presentment, demand, protest, or notice of dishonor, or any other
notice, all of which are hereby expressly waived by the Borrower to the full
extent permitted by law, and the Bank may declare an amount equal to the maximum
aggregate amount that is or at any time thereafter may become available for
drawing under any then-outstanding letters of credit, (whether or not any
beneficiary shall have presented, or be entitled at such time to present, the
drafts or other documents required to draw under such letters of credit) to be
immediately due and payable;
(b) the obligation, if any, of the Bank (including through any
Offshore Credit Provider) to make further loans or extensions of credit or to
issue further letters of credit hereunder shall immediately cease and terminate;
and
(c) the Bank and each Offshore Credit Provider shall have all
rights, powers, and remedies available under each of the Credit Documents, or
accorded by law, including the right to resort to any or all security for any
credit accommodation described herein, and to exercise any or all of the rights
of a beneficiary or secured party pursuant to applicable law.
All rights, powers, and remedies of the Bank and each Offshore Credit Provider
may be exercised at any time by the Bank or such Offshore Credit Provider and
from time to time after the occurrence of an Event of Default. All rights,
powers, and remedies of the Bank and any Offshore Credit Provider in connection
with each of the Credit Documents are cumulative and not exclusive and shall be
in addition to any other rights, powers, or remedies provided by law or equity.
ARTICLE IX
MISCELLANEOUS
9.01 Successors and Assigns. This Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that the Borrower shall not assign this Agreement or any
other Credit Document or any of the rights, duties or obligations of the
Borrower hereunder without the prior written consent of the Bank.
9.02 Consents and Waivers. No failure to exercise and no delay in
exercising, on the part of the Bank or any Offshore Credit Provider, any right,
remedy, power, or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power, or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power, or privilege. No consent or waiver under this
Agreement shall be effective unless in writing. No waiver of any breach or
default shall be deemed a waiver of any breach or default thereafter occurring.
9.03 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California.
9.04 Costs and Attorneys' Fees. The Borrower shall, whether or not the
transactions contemplated hereby shall be consummated, pay or reimburse the Bank
on demand for all costs and expenses incurred by the Bank in connection with the
development, preparation, delivery, administration, and execution of, and any
amendment, supplement, waiver or modification to, this Agreement and any other
Credit Document and the consummation of the transactions contemplated hereby and
thereby, including reasonable attorney fees and disbursements and the allocated
cost of internal counsel and disbursements, incurred by the Bank with respect
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thereto; and in connection with the enforcement, attempted enforcement or
preservation of any rights or remedies hereunder or under any Credit Document,
including any "workout" or restructuring under this Agreement, including
attorney fees and disbursements and the allocated cost of internal counsel and
disbursements.
9.05 Integration; Amendment. This Agreement, together with the other
Credit Documents, embodies the entire agreement and understanding between the
Borrower and the Bank. This Agreement may be amended or modified only in
writing, signed by the Borrower and the Bank.
9.06 Borrower's Documents. The Bank shall be under no obligation to
return any schedules, invoices, statements, budgets, forecasts, reports or other
papers delivered by the Borrower and shall destroy or otherwise dispose of same
at such time as the Bank, in its discretion, deems appropriate.
9.07 Participations. The Bank may at any time sell, assign, grant
participations in, or otherwise transfer to any other person, firm, corporation
or other entity (a "Participant") all or part of the obligations of the Borrower
and any Acceptable Subsidiary under this Agreement and any other Credit
Document. The Borrower authorizes the Bank and each Participant, upon the
occurrence of an Event of Default, to proceed directly by right of setoff,
banker's lien, or otherwise, against any assets of the Borrower and any
Acceptable Subsidiary which may be in the hands of the Bank or such Participant,
respectively. The Borrower authorizes the Bank to disclose to any prospective
Participant and any Participant any and all information in the Bank's possession
concerning the Borrower and its Subsidiaries, this Agreement or any other Credit
Document.
9.08 General Indemnification. The Borrower shall pay and indemnify the
Bank, the Offshore Credit Providers, the Bank's parent company, and each of
their respective officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an "Indemnified Person") harmless from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses, or disbursements (including
attorneys' fees and disbursements and the allocated costs of internal counsel)
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance, and administration of this Agreement and any other
Credit Documents, or the transactions contemplated hereby and thereby, and with
respect to any investigation, litigation, or proceeding related to this
Agreement, any violation of any Environmental Law by the Borrower or its
Subsidiaries, any release of a Hazardous Substance at or from any property of
the Borrower or any of its Subsidiaries, or the loans and other extensions of
credit hereunder or the use of the proceeds thereof, whether or not any
Indemnified Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); provided, that the Borrower shall have no obligation
hereunder to any Indemnified Person with respect to Indemnified Liabilities
arising from the gross negligence or willful misconduct of such Indemnified
Person. The agreements in this Section shall survive payment of all other
obligations of the Borrower or any Acceptable Subsidiary hereunder or under the
other Credit Documents.
9.09 Arbitration; Reference Proceeding. (a) Any controversy or claim
between or among the parties, including but not limited to those arising out of
or relating to this Agreement or any other Credit Document or other agreements
or instruments relating hereto or delivered in connection herewith and any claim
based on or arising from an alleged tort, shall at the request of any party be
determined by arbitration. The arbitration shall be conducted in accordance with
the United States Arbitration Act (Title 9, U.S. Code), notwithstanding any
choice of law provision in this Agreement, and under the Commercial Rules of the
American Arbitration Association ("AAA"). The arbitrator(s) shall give effect to
statutes of limitation in determining any claim. Any controversy concerning
whether an issue is arbitrable shall be determined by the arbitrator(s).
Judgment upon the arbitration award may be entered in any court having
jurisdiction. The institution and maintenance of an action for judicial relief
or pursuit of a provisional or ancillary remedy shall not constitute a waiver of
the right of any party, including the plaintiff, to submit the controversy or
claim to arbitration if any other party contests such action for judicial
relief.
(b) Notwithstanding the provisions of subsection (a) of this
Section , no controversy or claim shall be submitted to arbitration without the
consent of all parties if, at the time of the proposed submission, such
controversy or claim arises from or relates to an obligation to the Bank which
is secured by real property
20
<PAGE> 25
collateral located in California. If all parties do not consent to submission of
such a controversy or claim to arbitration, the controversy or claim shall be
determined as provided in subsection (c) of this Section .
(c) A controversy or claim which is not submitted to
arbitration as provided and limited in subsections (a) and (b) of this Section
shall, at the request of any party, be determined by a reference in accordance
with California Code of Civil Procedure Sections 638 et seq. If such an election
is made, the parties shall designate to the court a referee or referees selected
under the auspices of the AAA in the same manner as arbitrators are selected in
AAA-sponsored proceedings. The presiding referee of the panel, or the referee if
there is a single referee, shall be an active attorney or retired judge.
Judgment upon the award rendered by such referee or referees shall be entered in
the court in which such proceeding was commenced in accordance with California
Code of Civil Procedure Sections 644 and 645.
(d) No provision of this paragraph shall limit the right of
any party to this Agreement to exercise self-help remedies such as setoff, to
foreclose against or sell any real or personal property collateral or security,
or to obtain provisional or ancillary remedies from a court of competent
jurisdiction before, after, or during the pendency of any arbitration or other
proceeding. The exercise of a remedy does not waive the right of either party to
resort to arbitration or reference. At the Bank's option, foreclosure under a
deed of trust or mortgage may be accomplished either by exercise of power of
sale under the deed of trust or mortgage or by judicial foreclosure.
9.10 Notices. (a) All notices, requests and other communications
provided for hereunder shall be in writing and mailed or delivered to a party at
its address specified on the signature pages hereof, or to such other address as
shall be designated by such party in a written notice to the other parties.
(b) All such notices and communications shall, when
transmitted by overnight delivery, be effective when delivered for overnight
delivery, or if personally delivered, upon such personal delivery, except that
notices pursuant to Article II shall not be effective until actually received by
the Bank.
(c) The Borrower acknowledges and agrees that any agreement of
the Bank pursuant to Article II hereof to receive notices by telephone or
facsimile is solely for the convenience and at the request of the Borrower.
Telephone requests may be made by any individual identified in writing to the
Bank on a form acceptable to the Bank as being authorized to make such requests.
The Bank shall be entitled to rely upon any written or telephone request from
persons it reasonably believes to be authorized by the Borrower to make such
requests without making independent inquiry. The Borrower assumes the full risk
of, and the Bank shall not be responsible for, any delays or errors in
transmission, and the obligation of the Borrower to repay the loans and other
extensions of credit hereunder shall not be affected in any way or to any extent
by any failure by the Bank to receive written confirmation of any telephonic or
facsimile notice or the receipt by the Bank of a confirmation which is at
variance with the terms understood by the Bank to be contained in the telephonic
or facsimile notice.
9.11 Headings; Interpretation. Article, section, and paragraph headings
are for reference only and shall not affect the interpretation or meaning of any
provisions of this Agreement. The meaning of defined terms shall be equally
applicable to the singular and plural forms of the defined terms. The words
"hereof", "herein", "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement; and subsection, section, schedule and exhibit
references are to this Agreement unless otherwise specified. The term
"including" is not limiting and means "including without limitation." In the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including"; the words "to" and "until" each mean
"to but excluding", and the word "through" means "to and including."
9.12 Severability. The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
21
<PAGE> 26
9.13 Counterparts. This Agreement may be executed in as many
counterparts as may be deemed necessary or convenient, and by the different
parties hereto on separate counterparts each of which, when so executed, shall
be deemed an original but all such counterparts shall constitute but one and the
same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
DIONEX CORPORATION
By: /s/ Michael Pope
-------------------------------------
Typed Name: MICHAEL POPE
-----------------------------
Title: Vice President
----------------------------------
By:
-------------------------------------
Typed Name:
-----------------------------
Title:
----------------------------------
Address where notices to
Borrower are to be sent:
1228 Titan Way
Sunnyvale, California 94086
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ John Cinderey
-------------------------------------
Typed Name: JOHN CINDEREY
-----------------------------
Title: Managing Director
----------------------------------
Address where notices to
Bank are to be sent:
530 Lytton Avenue
Palo Alto, CA 94301
Attn: The Mid-Cap Technology
Group (#3537)
22
<PAGE> 1
EXHIBIT 13.1
Selected Financial Information
Operating
Information
<TABLE>
<CAPTION>
Years ended June 30 1996 1995 1994 1993 1992
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Net sales $133,004 $120,024 $109,526 $105,556 $96,380
Cost of sales 41,406 38,428 35,152 33,027 30,504
Gross profit 91,598 81,596 74,374 72,529 65,876
Operating expenses:
Selling, general
and administrative 46,290 43,401 39,570 39,896 37,144
Research and product
development 11,527 10,500 9,902 9,295 8,251
Write-off of goodwill - 2,168 - - -
Total operating expenses 57,817 56,069 49,472 49,191 45,395
Operating income 33,781 25,527 24,902 23,338 20,481
Other income 1,003 4,130 - - -
Interest income 2,034 2,202 1,465 1,996 2,703
Interest expense (93) (153) (249) (456) (679)
Income before taxes on income 36,725 31,706 26,118 24,878 22,505
Taxes on income 12,762 11,932 9,076 8,583 7,764
Net income $ 23,963 $ 19,774 $ 17,042 $ 16,295 $14,741
Net income per share $ 1.75 $ 1.34 $ 1.10 $ 1.01 $ .89
Common and equivalent shares 13,719 14,728 15,440 16,130 16,580
</TABLE>
All share and per share amounts have been restated to reflect the two-for-one
split of the Company's common stock effective December 29,1995.
The Company has paid no cash dividends.
Balance Sheet
Information
<TABLE>
<CAPTION>
At June 30 1996 1995 1994 1993 1992
(In thousands)
<S> <C> <C> <C> <C> <C>
Working capital $ 47,888 $ 67,249 $ 71,414 $ 60,870 $ 60,913
Total assets 113,186 131,780 133,278 118,082 120,008
Long-term debt - 86 104 121 137
Stockholders' equity 82,204 103,871 111,139 94,874 94,947
</TABLE>
<PAGE> 2
Consolidated Balance Sheets
<TABLE>
<CAPTION>
At June 30 1996 1995
(In thousands, except share and per share amounts)
<S> <C> <C>
Current assets:
Cash and equivalents (including invested cash of $10,244
in 1996 and $31,479 in 1995) $ 16,986 $ 36,165
Temporary cash investments 16,551 13,382
Accounts receivable (net of allowance for doubtful
accounts of $488 in 1996 and $486 in 1995) 28,078 27,767
Inventories 8,258 9,125
Deferred taxes 6,590 5,626
Prepaid expenses and other 1,336 1,346
Total current assets 77,799 93,411
Property, plant and equipment, net 30,409 33,347
Other assets 4,978 5,022
$113,186 $131,780
Current liabilities:
Notes payable to banks $ 273 $ 2,118
Accounts payable 4,381 3,773
Accrued liabilities 18,398 14,016
Income taxes payable 3,642 3,448
Accrued product warranty 3,217 2,807
Total current liabilities 29,911 26,162
Long-term debt - 86
Deferred taxes 1,071 1,661
Commitments (Note 11)
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; shares outstanding:
12,369,877 in 1996 and 13,713,962 in 1995) 32,683 32,398
Retained earnings 49,251 70,426
Accumulated translation adjustments 34 1,047
Net unrealized gain on equity securities
available for sale 236 -
Total stockholders' equity 82,204 103,871
$113,186 $131,780
</TABLE>
See notes to consolidated financial statements.
<PAGE> 3
Consolidated Statements of Income
<TABLE>
<CAPTION>
Years ended June 30 1996 1995 1994
(In thousands, except per share amounts)
<S> <C> <C> <C>
Net sales $133,004 $120,024 $109,526
Cost of sales 41,406 38,428 35,152
Gross profit 91,598 81,596 74,374
Operating expenses:
Selling, general and administrative 46,290 43,401 39,570
Research and product development 11,527 10,500 9,902
Write-off of goodwill - 2,168 -
Total operating expenses 57,817 56,069 49,472
Operating income 33,781 25,527 24,902
Other income 1,003 4,130 -
Interest income 2,034 2,202 1,465
Interest expense (93) (153) (249)
Income before taxes on income 36,725 31,706 26,118
Taxes on income 12,762 11,932 9,076
Net income $ 23,963 $ 19,774 $ 17,042
Net income per common and equivalent share $ 1.75 $ 1.34 $ 1.10
Common and equivalent shares
used in computing per share amounts 13,719 14,728 15,440
</TABLE>
See notes to consolidated financial statements.
<PAGE> 4
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
equity adjustments
common stock accumulated net unrealized
retained translation gain on
shares amount earnings adjustments securities total
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1993 15,193,590 $31,014 $ 64,345 $ (485) $ - $ 94,874
Common stock issued 193,946 2,685 2,685
Repurchase of common stock (250,000) (519) (3,519) (4,038)
Equity adjustments 576 576
Net income 17,042 17,042
Balance at June 30, 1994 15,137,536 33,180 77,868 91 - 111,139
Common stock issued 209,582 2,880 2,880
Repurchase of common stock (1,633,156) (3,662) (27,216) (30,878)
Equity adjustments 956 956
Net income 19,774 19,774
Balance at June 30, 1995 13,713,962 32,398 70,426 1,047 - 103,871
Common stock issued 256,915 4,255 4,255
Repurchase of common stock (1,601,000) (3,970) (45,138) (49,108)
Equity adjustments (1,013) 236 (777)
Net income 23,963 23,963
Balance at June 30, 1996 12,369,877 $32,683 $ 49,251 $ 34 $ 236 $ 82,204
</TABLE>
See notes to consolidated financial statements.
<PAGE> 5
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Years ended June 30 1996 1995 1994
(In thousands)
<S> <C> <C> <C>
Cash and equivalents provided by (used for):
Cash flows from operating activities:
Net income $ 23,963 $ 19,774 $ 17,042
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 2,866 2,615 2,495
Deferred taxes (1,160) (726) (436)
Write-off of goodwill - 2,168 -
Gain on sale of property (1,003) - -
Changes in assets and liabilities:
Accounts receivable (2,937) (49) (877)
Inventories 272 1,197 953
Prepaid expenses and other assets (60) (146) 579
Accounts payable 763 (504) 547
Accrued liabilities 4,155 2,359 458
Income taxes payable 308 1,325 (1,056)
Accrued product warranty 492 279 (51)
Net cash provided by operating activities 27,659 28,292 19,654
Cash flows from investing activities:
Purchase of temporary cash investments (33,601) (18,407) (17,983)
Proceeds from maturities of
temporary cash investments 30,432 9,127 35,767
Purchase of property, plant and equipment (3,008) (1,980) (7,835)
Proceeds from sale of property 3,812 - -
Other 191 214 61
Net cash provided by (used for) investing activities (2,174) (11,046) 10,010
Cash flows from financing activities:
Net change in notes payable to banks (1,489) 1,042 (1,136)
Sale of common stock 4,255 2,880 2,685
Repurchase of common stock (49,108) (30,878) (4,038)
Other (229) 68 (82)
Net cash used for financing activities (46,571) (26,888) (2,571)
Effect of exchange rate changes on cash 1,907 (1,370) (512)
Net increase (decrease) in cash and equivalents (19,179) (11,012) 26,581
Cash and equivalents, beginning of year 36,165 47,177 20,596
Cash and equivalents, end of year $ 16,986 $ 36,165 $ 47,177
See notes to consolidated financial statements
</TABLE>
Notes to Consolidated Financial Statements
<PAGE> 6
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES
Organization. Dionex Corporation (the "Company") is a leading manufacturer and
marketer of chromatography systems for chemical analysis. The Company's systems
are used in environmental analysis and by the pharmaceutical, life sciences,
chemical, petrochemical, power generation and electronics industries in a
variety of applications.
Principles of consolidation. The consolidated financial statements include the
Company and its subsidiaries. All significant intercompany transactions and
accounts are eliminated in consolidation.
Cash equivalents. Cash equivalents are highly liquid debt instruments acquired
with a maturity at date of purchase of three months or less.
Investments. The Company classifies its debt and equity securities as "held to
maturity" or "available for sale." Securities classified as "held to maturity"
are reported at amortized cost and "available for sale" securities are reported
at fair market value, with a corresponding recognition of the unrealized gains
and losses (net of tax effect) as a separate component of stockholders' equity.
Temporary cash investments consist of short-term debt investments which are
classified as "held-to-maturity" securities. The Company's investments in
marketable equity securities have been classified as "available for sale" and
are included with other noncurrent assets, consistent with the Company's
investment strategy.
Inventories. Inventories are stated at the lower of standard cost (which
approximates cost on a first-in, first-out basis) or market.
Property, plant and equipment. Property, plant and equipment are stated at cost.
Depreciation is computed using the straight-line method based on estimated
useful lives of 3 to 30 years. Leasehold improvements are amortized over the
lesser of the useful life or the remaining term of the lease.
Intangibles. The excess of cost over net assets of businesses acquired is
amortized on a straight-line basis over periods not exceeding seven years.
Impairment of long-lived assets. Statement for Financial Accounting Standards
No. 121, (SFAS No. 121), "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of," requires adoption in the first quarter
of fiscal 1997. The new rules require recognition of an impairment
loss in accordance with SFAS No. 121 when a review of long-lived assets
indicates that, due to a change in circumstance, the carrying amount of an asset
may not be recoverable. Adoption of SFAS No. 121 is not expected to have a
material impact on the Company's consolidated financial statements.
Revenue recognition. Revenue related to systems is recognized upon shipment.
Service contract revenue is deferred and recognized on a pro rata basis over the
contractual period. Installation and product warranty costs are accrued at the
time revenue is recognized.
Taxes on income. The Company currently accounts for income taxes in accordance
with Statement of Financial Accounting Standards No. 109 (SFAS No. 109),
"Accounting for Income Taxes," which requires the asset and liability approach
to account for deferred income taxes.
Stock-based compensation. SFAS No. 123, "Accounting for Stock-Based
Compensation," will be effective for the Company beginning in fiscal 1997. The
new standard defines a fair value method of accounting for stock options and
other equity instruments, such as stock purchase plans. Under this method,
compensation cost is measured based on the fair value of the stock award when
granted and is recognized as an expense over the service period, which is
usually the vesting period. This standard requires measurement of awards made
beginning in fiscal 1996.
<PAGE> 7
The new standard permits companies to continue to account for equity
transactions with employees under existing accounting rules, but requires
disclosure in a note to the financial statements of the pro forma net income and
earnings per share as if the company had applied the new method of accounting.
The Company intends to implement these disclosure requirements for its employee
stock plans beginning in fiscal 1997. Based on the Company's current use of
equity instruments, adoption of the new standard will not impact reported net
income or net income per share, and will have no effect on the Company's cash
flows.
Stock Split. In November 1995, the Company's Board of Directors approved a
two-for-one split, in the form of a stock dividend, of the Company's common
stock, effective on December 29, 1995 for shareholders of record on December 4,
1995. All share and per share amounts have been restated to reflect the stock
split for all periods presented.
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 (stock options) outstanding during each year. The
difference between primary and fully diluted net income per share is not
significant in any year.
Common stock repurchases. The Company repurchases shares in the open market
under its ongoing stock repurchase programs. For each share repurchased, the
Company reduces the common stock account by the average value per share
reflected in the account prior to the repurchase with the excess allocated to
retained earnings. The Company currently retires all shares repurchased.
Translation of foreign currency. The Company's foreign operations are measured
using local currencies as the functional currency. Assets and liabilities are
translated into U.S. dollars at year-end rates of exchange, and results of
operations are translated at average rates for the year. The Company enters into
foreign exchange forward contracts to manage its exposure to fluctuations in
foreign currency exchange rates. Gains and losses on these contracts are
recorded in net income currently. These contracts generally have maturities of
approximately 30 days and require the Company to exchange foreign currencies for
U.S. dollars at maturity. The Company does not engage in foreign currency
speculation.The Company's foreign exchange forward hedging activities do not
subject the Company to risk due to exchange rate movements because gains and
losses on these contracts generally offset losses and gains on the underlying
items being hedged.
At June 30, 1996, the Company had forward exchange contracts
to sell foreign currencies totalling $9.7 million dollars, including
approximately $5.5 million of Japanese yen, $1.3 million of French francs,
$650,000 of Deutschemarks, and the remainder in Italian lire, Dutch gilders,
British pounds, Swiss francs, Belgium francs and Canadian dollars.
Certain risks and uncertainties. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of investments and trade receivables. The
Company invests in high-grade instruments which it places for safekeeping with
high quality financial institutions. The Company sells its products primarily to
large organizations in diversified industries worldwide. Credit risk is further
mitigated by the Company's credit evaluation process and the reasonably short
collection terms. The Company does not require collateral or other security to
support accounts receivable. While the Company does maintain allowances for
potential credit losses, actual bad debt losses have not been significant.
<PAGE> 8
The Company is subject to certain risks and uncertainties and believes that
changes in any of the following areas could have a material adverse affect on
the Company's future financial position or results of operations: 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 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 the
Securities and Exchange Commission.
NOTE 2: INVESTMENTS
The carrying value and fair market value of short term investments at June 30
classified as "held to maturity" are as follows:
<TABLE>
<CAPTION>
gross fair
amortized unrealized market
cost gains(losses) value
(In thousands)
<S> <C> <C> <C>
1996
Obligations of states and political subdivisions $ 4,799 $ 1 $ 4,800
U.S. corporate debt securities 11,752 $ (3) 11,749
$16,551 $ (2) $ 16,549
1995
U.S. treasury note $ 1,991 $ (2) $ 1,989
Obligations of states and political subdivisions 5,191 (38) 5,153
U.S. corporate debt securities 3,200 - 3,200
Municipal auction rate preferred stock 3,000 - 3,000
$13,382 $ (40) $ 13,342
</TABLE>
All maturities during fiscal 1996 were held-to-maturity investments. There were
no sales of securities for the years ended June 30, 1996 and 1995. All temporary
cash investments at June 30, 1996 mature within one year.
In December 1989, the Company invested $3.0 million in the stock of Molecular
Devices Corporation (MDC), a privately held supplier of bioanalytical
instrumentation and biosensor measurement systems. The Company's President and a
director serve on the Board of Directors of MDC. In December 1995, MDC had its
initial public offering. The Company's ownership interest in MDC is
approximately 5% and is held as a long-term investment. The Company's investment
in MDC and other equity securities have a cost basis of $3,002,000 and have been
classied as "available for sale" securities since December 1995. Prior to this
date, these investments were accounted for at cost. At June 30, 1996, the fair
value of these investments was $3,395,000.
NOTE 3: INVENTORIES
Inventories at June 30 consist of:
<TABLE>
<CAPTION>
1996 1995
(In thousands)
<S> <C> <C>
Finished goods $3,160 $3,732
Work in process 1,847 2,153
Raw materials and subassemblies 3,251 3,240
$8,258 $9,125
</TABLE>
<PAGE> 9
NOTE 4: PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at June 30 consist of:
<TABLE>
<CAPTION>
1996 1995
(In thousands)
<S> <C> <C>
Land $ 13,414 $ 16,375
Buildings and improvements 17,094 16,668
Machinery, equipment and tooling 9,965 9,357
Furniture and fixtures 4,006 3,890
44,479 46,290
Accumulated depreciation and amortization (14,070) (12,943)
Property, plant and equipment, net $ 30,409 $ 33,347
</TABLE>
During the third quarter of fiscal 1996 the Company sold a parcel of undeveloped
land. The Company received proceeds of $3.9 million, net of selling expenses,
from the sale. The proceeds consisted of cash and the assumption by the buyer of
an industrial revenue bond associated with the property. The Company recorded a
pretax gain of $1.0 million on the sale of the property.
NOTE 5: WRITE-OFF OF GOODWILL
Operating expenses in 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.
NOTE 6: FINANCING ARRANGEMENTS
The Company has unsecured lines of credit with various domestic and foreign
banks totalling approximately $15.0 million which are used primarily to minimize
the Company's exposure to foreign currency fluctuations. These lines of credit
expire between December 31, 1996 and December 31, 1997. At June 30, 1996, the
Company's foreign subsidiaries had utilized $273,000 of these lines of credit.
Borrowings in each country bear interest at the local reference rates which
ranged from 1.1% to 9.3% at June 30, 1996.
The weighted average interest rate on borrowings at June 30, 1996 and 1995 was
1.3% and 2.1%, respectively.
Such line of credit agreements impose certain financial restrictions relating to
payment of cash dividends, working capital and tangible net worth. At June 30,
1996, the Company was in compliance with such covenants.
One of the Company's foreign subsidiaries discounts trade notes receivable with
a bank. Total notes receivable discounted were approximately $3,400,000 in
fiscal 1996 and $4,900,000 in fiscal 1995. The uncollected balances of notes
receivable due the discounting bank at June 30, 1996 and 1995 were approximately
$1,400,000 and $1,500,000, respectively. The Company is contingently liable for
these unpaid balances.
Total interest paid was $95,000 in 1996, $155,000 in 1995 and $243,000 in 1994.
<PAGE> 10
NOTE 7: ACCRUED LIABILITIES
Accrued liabilities at June 30 consist of:
<TABLE>
<CAPTION>
1996 1995
(In thousands)
<S> <C> <C>
Accrued payroll and related expenses $ 7,125 $ 6,353
Deferred revenues 3,285 3,057
Accrued stock repurchases 2,611 -
Other accrued liabilities 5,377 4,606
$18,398 $14,016
</TABLE>
NOTE 8: STOCK OPTION AND PURCHASE PLANS
Stock Option Plans. The Company has stock option plans under which incentive and
nonqualified options may be granted. Options are granted at the stock's fair
market value at the grant date. Options generally become exercisable in 25%
increments each year beginning one year from the date of grant and expire five
or ten years from the grant date.
Activity under the plans for the three-year period ended June 30, 1996 is
summarized below.
<TABLE>
<CAPTION>
shares price per share
<S> <C> <C>
Balance at June 30, 1993 1,156,576 $8.00 - $16.38
Granted 521,900 15.88 - 17.00
Exercised (147,376) 8.00 - 16.38
Canceled (44,000) 8.75 - 16.38
Balance at June 30, 1994 1,487,100 8.00 - 17.00
Granted 400,200 16.69 - 20.88
Exercised (158,714) 8.00 - 16.38
Canceled (37,152) 8.75 - 16.38
Balance at June 30, 1995 1,691,434 8.00 - 20.88
Granted 18,500 25.88 - 27.75
Exercised (214,615) 8.00 - 20.88
Canceled (48,675) 13.00 - 20.88
Balance at June 30, 1996 1,446,644 $8.75 - $27.75
</TABLE>
At June 30, 1996, the average exercise price of outstanding options was $14.84
per share, options for 930,143 shares were exercisable and 1,104,927 shares were
available for future grants. In July 1995, the Board of Directors of the Company
approved certain amendments to one of the Company's stock option plans. The
amendments include, but are not limited to, an additional 700,000 shares
authorized for issuance and an extension of the termination date to July 2005.
The amendments were approved at the October 1995 annual shareholders' meeting.
Stock Purchase Plan. The Company has an employee stock purchase plan covering
most U.S. employees. Under the plan, employees may contribute up to 10% of their
compensation to purchase shares of the Company's common stock at 85% of the
stock's fair market value at the beginning or end of each six-month offering
period. In fiscal 1996, 42,300 shares were purchased at an average price of
$18.62 per share. Comparable figures for 1995 and 1994 were 50,868 shares at
$14.22 per share and 46,570 shares at $13.82 per share, respectively. At June
30, 1996, 706,832 shares were reserved for purchase by employees under the plan.
<PAGE> 11
NOTE 9: EMPLOYEE BENEFIT PLANS
The Company has an employee profit sharing plan covering most North American
employees. Cash distributions are determined by the Board of Directors and were
$2,534,000 for 1996, $1,971,000 for 1995 and $1,924,000 for 1994.
The Company has a 401(k) tax deferred savings plan covering most U.S. employees.
Participants may contribute up to 10% of their compensation and the Company
makes matching contributions ($874,000 in 1996, $834,000 in 1995 and $833,000 in
1994) limited to 5% of each participant's compensation. Matching
contributions vest in 25% increments each year beginning two years after the
participant's date of employment.
NOTE 10: TAXES ON INCOME
The provision for taxes on income consists of:
<TABLE>
<CAPTION>
Years ended June 30 1996 1995 1994
(In thousands)
<S> <C> <C> <C>
Current:
Federal $ 9,286 $ 9,043 $ 6,310
State 2,030 1,984 1,470
Foreign 2,606 1,631 1,732
Total current 13,922 12,658 9,512
Deferred:
Federal (971) (721) 90
State (130) (113) 22
Foreign (59) 108 (548)
Total deferred (1,160) (726) (436)
$12,762 $11,932 $ 9,076
</TABLE>
Domestic and foreign income before taxes on income is as follows:
<TABLE>
<CAPTION>
Years ended June 30 1996 1995 1994
(In thousands)
<S> <C> <C> <C>
Domestic $30,871 $28,102 $22,801
Foreign 5,854 3,604 3,317
$36,725 $31,706 $26,118
</TABLE>
<PAGE> 12
Deferred income taxes for 1996 and 1995 reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The components
of the current and noncurrent deferred tax assets and liabilities are as
follows:
<TABLE>
<CAPTION>
Years ended June 30 1996 1995
(In thousands)
<S> <C> <C>
Current deferred tax assets:
Accounting accruals deductible
in different periods for tax purposes $5,955 $4,653
State income tax 472 537
Other 163 436
Total deferred tax assets 6,590 5,626
Noncurrent deferred tax liabilities:
Accelerated depreciation 813 968
Foreign currency accumulated
translation adjustments 23 574
Net unrealized gain on available
for sale securities 157 -
Other 78 119
Total deferred tax liabilities 1,071 1,661
Net deferred tax assets $5,519 $3,965
</TABLE>
Total income tax expense differs from the amount computed by applying the
statutory Federal income tax rate to income before taxes as follows:
<TABLE>
<CAPTION>
Years ended June 30 1996 1995 1994
<S> <C> <C> <C>
Statutory Federal income tax rate 35.0% 35.0% 35.0%
State income taxes, net of Federal
income tax effect 3.6 3.8 3.5
FSC income not taxed (3.7) (3.6) (3.2)
</TABLE>
<TABLE>
<S> <C> <C> <C>
Foreign taxes at differing rates 1.2 .8 .9
Goodwill - 2.4 .3
Other (1.3) (.8) (1.7)
34.8% 37.6% 34.8%
</TABLE>
Income taxes paid were $13,380,000 in 1996, $10,847,000 in 1995 and $9,950,000
in 1994.
The Company has not provided for Federal income taxes on approximately $11.0
million of undistributed earnings of foreign subsidiaries, which have been
permanently reinvested in subsidiary operations. If these earnings were
distributed to the parent company, foreign tax credits available under current
law would substantially eliminate the resulting Federal income tax liability.
NOTE 11: COMMITMENTS
Certain facilities and equipment are leased under noncancelable operating
leases. The Company generally pays taxes, insurance and maintenance costs on
leased facilities and equipment. Minimum annual rental commitments under these
noncancelable operating leases are $1,627,000 for 1997, $1,202,000 for 1998,
$920,000 for 1999, $676,000 for 2000, $579,000 for 2001 and $1,670,000
thereafter.
Total rental expense for all operating leases was $2,763,000 in 1996, $2,657,000
in 1995 and $2,417,000 in 1994.
<PAGE> 13
NOTE 12: BUSINESS SEGMENT INFORMATION
The Company develops, manufactures, markets and services analytical
instrumentation and related accessories in its one industry segment.
The Company's products are manufactured in the United States and are sold
worldwide. The Company markets and distributes internationally through both
exports and foreign-based sales operations.
The following table presents a summary of operations by geographic region.
Research and development and general corporate expenses are reflected in
operating income from North American operations.
<TABLE>
<CAPTION>
1996 1995 1994
(In thousands)
Net sales to unaffiliated customers:
<S> <C> <C> <C>
North America $ 67,033 $ 60,834 $ 58,273
Europe 44,332 38,382 32,520
Far East 21,639 20,808 18,733
Consolidated net sales to
unaffiliated customers $133,004 $120,024 $109,526
Operating income:
North America $ 28,873 $ 22,113 $ 21,615
Europe 4,111 2,457 1,651
Far East 1,617 1,169 1,868
Eliminations (820) (212) (232)
Consolidated operating income $ 33,781 $ 25,527 $ 24,902
Identifiable assets:
North America $ 62,543 $ 62,025 $ 64,348
Europe 20,088 19,344 19,544
Far East 12,169 13,733 12,109
General corporate assets
(cash investments) 26,795 44,861 43,963
Eliminations (8,409) (8,183) (6,686)
Consolidated assets $113,186 $131,780 $133,278
</TABLE>
Interarea transfers, which have been eliminated in consolidation and are not
included in the above table, represent transfers from domestic operations to
international subsidiaries and are based on prices that approximate selling
prices to foreign distributors. Interarea transfers from the United States to
international subsidiaries were $38,457,000, $33,125,000 and $28,558,000 in
1996, 1995 and 1994, respectively. North American sales to unaffiliated
customers include export sales of $14,753,000, $11,256,000 and $10,861,000,
respectively, for 1996, 1995 and 1994.
<PAGE> 14
NOTE 13: OTHER INCOME
During 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 business was terminated by the seller in favor of
another buyer.
NOTE 14: QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the unaudited quarterly results of operations for
the years ended June 30, 1996 and 1995.
<TABLE>
<CAPTION>
quarter
first second third fourth
(In thousands, except per share amounts)
Fiscal 1996
<S> <C> <C> <C> <C>
Net sales $30,056 $34,010 $34,030 $34,908
Gross profit 20,388 23,495 23,403 24,312
Net income 4,448 5,994 7,004 6,517
Net income per share $ .32 $ .43 $ .51 $ .49
Fiscal 1995
Net sales $27,044 $30,624 $30,581 $31,775
Gross profit 18,277 20,607 20,855 21,857
Net income 4,202 5,038 5,150 5,384
Net income per share $ .27 $ .34 $ .36 $ .38
</TABLE>
<PAGE> 15
Independent Auditors' Report
The Board of Directors and Stockholders, Dionex Corporation:
We have audited the accompanying consolidated balance sheets of Dionex
Corporation and its subsidiaries as of June 30, 1996 and 1995, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended June 30, 1996. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Dionex Corporation and its
subsidiaries at June 30, 1996 and 1995, and the results of their operations and
their cash flows for each of the three years in the period ended June 30, 1996
in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
San Jose, California
July 19, 1996
<PAGE> 16
Supplemental Stockholder Information
The Company's common stock is traded in the over-the-counter market through the
Nasdaq national market system under the symbol DNEX. The following table sets
forth, for the periods indicated, the high and low sales prices as reported by
Nasdaq.
<TABLE>
<CAPTION>
Fiscal 1996 Fiscal 1995
quarter high low high low
<S> <C> <C> <C> <C>
First $26 1/4 $22 1/2 $18 1/8 $16 7/16
Second 29 1/4 24 7/8 19 1/2 17 7/8
Third 39 3/4 27 3/4 21 1/4 18 1/2
Fourth 39 1/4 32 23 20
</TABLE>
As of June 30, 1996 there were 1,759 holders of record of the Company's common
stock as shown on the records of its transfer agent.
DIVIDENDS
The Company has paid no cash dividends on its common stock and anticipates that
for the foreseeable future it will continue to retain its earnings for use in
its business.
TRANSFER AGENT AND REGISTRAR
Boston EquiServe
P.O. Box 644
Boston,
Massachusetts 02102-0644
ANNUAL MEETING
The Annual Meeting of Stockholders of Dionex Corporation will be held at 501
Mercury Drive, Sunnyvale, California on Friday, October 25, 1996 at 9 a.m.
FORM 10-K
The Company's annual report to the Securities and Exchange Commission on Form
10-K may be obtained without charge by writing to:
Investor Relations
Dionex Corporation
1228 Titan Way
P.O. Box 3603
Sunnyvale, California 94088-3603
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF DIONEX CORPORATION
The following table sets forth the names of the subsidiaries of the
Registrant, the state or other jurisdiction of incorporation or organization of
each, and the names under which subsidiaries do business as of June 30, 1996.
<TABLE>
<CAPTION>
State or other
jurisdiction of Name under which
incorporation or subsidiary does
Name of Subsidiary organization business
- ------------------ ---------------- ----------------
<S> <C> <C>
Dionex (U.K.) Limited England Dionex (U.K.) Limited
Dionex GmbH Federal Republic Dionex GmbH
of Germany
Dionex S.r.l. Italy Dionex S.r.l.
Dionex S.A. France Dionex S.A.
Dionex Export Corporation U.S. Virgin Islands Dionex Export Corporation
Dionex Canada Ltd./Ltee. Canada Dionex Canada Ltd./Ltee.
Dionex B.V. The Netherlands Dionex B.V.
Nippon Dionex K.K. Japan Nippon Dionex K.K.
Dionex N.V. Belgium Dionex N.V.
Dionex (Switzerland) AG Switzerland Dionex (Switzerland) AG
</TABLE>
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos.
33-12399, 33-40796, 33-78584 and 33-65081 of Dionex Corporation on Form S-8 of
our reports dated July 19, 1996, appearing in and incorporated by reference in
this Annual Report on Form 10-K of Dionex Corporation for the year ended June
30, 1996.
DELOITTE & TOUCHE LLP
San Jose, California
September 23, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF INCOME OF DIONEX
CORPORATION AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B)
CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 16,986
<SECURITIES> 16,551
<RECEIVABLES> 28,566
<ALLOWANCES> 488
<INVENTORY> 8,258
<CURRENT-ASSETS> 77,799
<PP&E> 44,479
<DEPRECIATION> 14,070
<TOTAL-ASSETS> 113,186
<CURRENT-LIABILITIES> 29,911
<BONDS> 0
0
0
<COMMON> 32,683
<OTHER-SE> 49,521
<TOTAL-LIABILITY-AND-EQUITY> 113,186
<SALES> 133,004
<TOTAL-REVENUES> 133,004
<CGS> 41,406
<TOTAL-COSTS> 41,406
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 93
<INCOME-PRETAX> 36,725
<INCOME-TAX> 12,762
<INCOME-CONTINUING> 23,963
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,963
<EPS-PRIMARY> 1.75
<EPS-DILUTED> 1.75
</TABLE>
