This document consists of 14
pages, of which this page
is number 1.
FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- - -------------------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-11250
DIONEX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-2647429
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1228 Titan Way, Sunnyvale, California 94086
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (408) 737-0700
NONE
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO_____
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of May 9, 1997:
CLASS NUMBER OF SHARES
Common Stock 11,894,255
<PAGE>
DIONEX CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS Page
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 1997 and June 30, 1996.................. 3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31, 1997 and 1996........ 4
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Nine Months Ended March 31, 1997 and 1996......... 5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended March 31, 1997 and 1996......... 6-7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS........................................ 8-9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS............. 10-13
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................ 14
SIGNATURES............................................... 14
2
<PAGE>
DIONEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
- - -------------
March 31, June 30,
ASSETS 1997 1996
(unaudited)
Current assets:
Cash and equivalents (including invested cash
of $13,262 at March 31, 1997 and $10,244
at June 30, 1996)........................ $ 23,590 $ 16,986
Temporary cash investments................. 6,252 16,551
Accounts receivable (net of allowance for
doubtful accounts of $433 at March 31,1997
and $488 at June 30, 1996)............... 29,570 28,078
Inventories................................ 8,900 8,258
Deferred tax benefits...................... 7,048 6,590
Prepaid expenses and other................. 1,173 1,336
Total current assets................ 76,533 77,799
Property, plant and equipment, net........... 30,517 30,409
Other assets ................................ 6,773 4,978
$113,823 $113,186
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks..................... $ 1,211 $ 273
Accounts payable........................... 5,221 4,381
Accrued liabilities........................ 16,838 18,398
Income taxes payable....................... 4,208 3,642
Accrued product warranty................... 3,640 3,217
Total current liabilities........... 31,118 29,911
Deferred taxes............................... 1,813 1,071
Stockholders' equity:
Preferred stock (par value $.001 per share;
1,000,000 shares authorized; none
outstanding)............................. - -
Common stock (par value $.001 per share;
40,000,000 shares authorized; outstanding:
11,933,499 shares at March 31, 1997 and
12,369,877 shares at June 30, 1996)...... 36,051 32,683
Retained earnings.......................... 44,562 49,251
Accumulated translation adjustments........ (1,103) 34
Unrealized gain on securities.............. 1,382 236
Total stockholders' equity.......... 80,892 82,204
$113,823 $113,186
See notes to condensed consolidated financial statements.
3
<PAGE>
DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(In thousands, except per share amounts)
- - ------------------
1997 1996
(unaudited)
Net sales...................................... $36,646 $34,030
Cost of sales.................................. 11,044 10,627
Gross profit................................... 25,602 23,403
Operating expenses:
Selling, general and administrative.......... 11,784 11,317
Research and product development............. 3,397 2,837
Total operating expenses.................. 15,181 14,154
Operating income............................... 10,421 9,249
Other income................................... - 1,003
Interest income................................ 310 502
Interest expense............................... (18) (21)
Income before taxes on income.................. 10,713 10,733
Taxes on income................................ 3,697 3,729
Net income..................................... $ 7,016 $ 7,004
Net income per common and equivalent share..... $ .55 $ .51
Common and equivalent shares used in
computing per share amounts.................. 12,644 13,632
See notes to condensed consolidated financial statements.
4
<PAGE>
DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED MARCH 31, 1997 AND 1996
(In thousands, except per share amounts)
- - ------------------
1997 1996
(unaudited)
Net sales................................... $104,754 $98,096
Cost of sales............................... 31,782 30,810
Gross profit................................ 72,972 67,286
Operating expenses:
Selling, general and administrative....... 35,549 34,593
Research and product development.......... 9,271 8,508
Total operating expenses............... 44,820 43,101
Operating income............................ 28,152 24,185
Other income................................ - 1,003
Interest income............................. 1,022 1,615
Interest expense............................ (66) (67)
Income before taxes on income............... 29,108 26,736
Taxes on income............................. 10,043 9,290
Net income.................................. $ 19,065 $17,446
Net income per common and equivalent share.. $ 1.49 $ 1.26
Common and equivalent shares used in
computing per share amounts............... 12,754 13,876
See notes to condensed consolidated financial statements.
5
<PAGE>
DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED MARCH 31, 1997 AND 1996
(In thousands)
- - ------------------
1997 1996
(unaudited)
Cash and equivalents provided by (used for):
Cash flows from operating activities:
Net income...................................... $19,065 $17,446
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................. 1,886 2,222
Deferred taxes................................ (517) (1,673)
Gain on sale of property...................... - (1,003)
Changes in assets and liabilities:
Accounts receivable......................... (3,278) (2,619)
Inventories................................. (1,126) (298)
Prepaid expenses and other assets........... 98 373
Accounts payable............................ 963 1,101
Accrued liabilities......................... (1,298) 1,457
Income taxes payable........................ 720 (314)
Accrued product warranty.................... 478 313
Net cash provided by operating activities....... 16,991 17,005
Cash flows from investing activities:
Purchase of temporary cash investments........ (14,600) (27,549)
Proceeds from maturities of temporary
cash investments............................ 24,899 25,582
Purchase of property, plant and equipment..... (2,150) (1,661)
Proceeds from sale of property................ - 3,812
Other......................................... (124) 47
Net cash provided by investing activities....... 8,025 231
Cash flows from financing activities:
Net change in notes payable to banks.......... 1,044 (5)
Sale of common stock.......................... 5,212 2,926
Repurchase of common stock.................... (25,599) (29,635)
Other......................................... 21 (407)
Net cash used for financing activities.......... (19,322) (27,121)
Effect of exchange rate changes on cash......... 910 1,962
Net increase(decrease)in cash and equivalents... 6,604 (7,923)
Cash and equivalents, beginning of period....... 16,986 36,165
Cash and equivalents, end of period............. $23,590 $28,242
(continued)
6
<PAGE>
DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED MARCH 31, 1997 AND 1996
(In thousands)
- - ------------------
1997 1996
(unaudited)
(continued)
Supplemental disclosures of cash flow information:
Income taxes paid.............................$8,199 $10,824
Interest paid.................................$ 64 $ 66
See notes to condensed consolidated financial statements.
7
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DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- - ------------------
1. Basis of Presentation
The condensed consolidated financial statements included
herein have been prepared by the Company, without audit,
pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote
disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such
rules and regulations, although the Company believes the
disclosures which are made are adequate to make the
information presented not misleading. It is suggested that
these condensed consolidated financial statements be read
in conjunction with the consolidated financial statements
and the notes thereto included in the Company's Annual
Report to Stockholders for the fiscal year ended
June 30, 1996.
The unaudited condensed consolidated financial statements
included herein reflect all adjustments (which include only
normal, recurring adjustments) which are, in the opinion of
management, necessary to state fairly the results for the
periods presented. The results for such periods are not
necessarily indicative of the results to be expected for
the entire fiscal year ending June 30, 1997.
2. Inventories
Inventories consist of (in thousands):
March 31, June 30,
1997 1996
Finished goods $3,830 $3,160
Work in process 2,577 1,847
Raw materials and subassemblies 2,493 3,251
$8,900 $8,258
3. Income Taxes
The effective income tax rate for the first nine months of
fiscal 1997 was 34.5%, down slightly from the 34.8% reported
in the same period of fiscal 1996.
8
<PAGE>
DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- - ------------------
4. Net Income Per Share
Net income per common and equivalent share is computed by
dividing net income by the weighted average number of common
shares and dilutive common share equivalents outstanding
during each period. The difference between primary and
fully diluted net income per share is not significant in any
period.
5. Common Stock Repurchases
During the first nine months of fiscal 1997, the Company
repurchased 679,450 shares of its common stock on the open
market compared with 1,050,900 shares repurchased in the
first nine months of the previous fiscal year. During all
of fiscal 1996, the Company repurchased 1,601,000 shares.
6. Recently Issued Accounting Standard
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128,
Earnings Per Share (SFAS 128). The Company is required to
adopt SFAS 128 in the second quarter of fiscal 1998 and
will restate at that time earnings per share (EPS) data for
prior periods to conform with SFAS 128. Earlier application
is not permitted.
SFAS 128 replaces current EPS reporting requirements and
requires a dual presentation of basic and diluted EPS.
Basic EPS excludes dilution and is computed by dividing net
income by the weighted average of common shares outstanding
for the period. Diluted EPS reflects the potential dilution
that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock.
If SFAS 128 had been in effect during the current and prior
year periods, basic EPS would have been $.59 and $.54 for
the quarters ended March 31, 1997 and 1996, respectively,
and $1.58 and $1.31 for the nine months ended March 31, 1997
and 1996, respectively. Diluted EPS under SFAS 128 would
not have been significantly different than primary EPS
currently reported for the periods.
9
<PAGE>
DIONEX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations - Three Months Ended March 31, 1997
and 1996
Net sales for the third quarter of fiscal 1997 were $36.6
million, an increase of 8% from the $34.0 million reported for
the same period last year. The increase in sales reflects solid
growth in Japan and North America. Growth in Europe was mixed
across geographies. Had currency rates been the same as in last
year's third quarter, sales growth would have been 13%.
Gross margin for the third quarter of fiscal 1997 was 69.9%, up
1.1% from the 68.8% reported for the same period last year. The
increase in gross margin was due primarily to a more favorable
product mix, partially offset by an unfavorable effect of
currency fluctuations. There were no significant selling price
changes between these periods.
Operating expenses of $15.2 million for the third quarter of
fiscal 1997 were up $1.0 million, or 7%, from the $14.2 million
reported in the same quarter last year. As a percentage of
sales, operating expenses were unchanged from the third quarter
last year. Selling, general and administrative (SG&A) expenses
increased $467,000, or 4%, to $11.8 million in the third quarter
of fiscal 1997. The increase was due to higher personnel and
related costs and higher selling costs, partially offset by the
effect of currency fluctuations on international selling
expenses. SG&A expenses also increased slightly in the third
quarter due to the addition of a new subsidiary in Austria, which
was established effective January 1, 1997.
Research and development (R&D) costs of $3.4 million were up 20%
from the $2.8 million reported in the same period last year. The
increase in costs was due to higher personnel and related costs
and higher project material costs. The level of R&D spending
varies depending on both the breadth of the Company's R&D efforts
and the stage of specific product development.
Interest income for the third quarter of fiscal 1997 declined to
$310,000 from the $502,000 reported in the third quarter last
year. The decline was due to a lower average cash balance. The
lower average cash balance resulted from the Company's share
repurchase programs.
10
<PAGE>
The effective tax rate for the third quarter of fiscal 1997 was
34.5%, compared with 34.8% in the third quarter a year ago.
Variations in the tax rate reflect changes in the mix of taxable
income among the various tax jurisdictions in which the Company
does business. The effective tax rate for the remainder of
fiscal 1997 is expected to be consistent with the first nine
months of fiscal 1997.
Net income in the third quarter of fiscal 1997 was $7.0 million,
unchanged from the $7.0 million reported for the same period last
year. Net income in the third quarter of fiscal 1996 included an
after tax gain of $654,000 from the sale of property. Net income
per share rose $.04, or 8%, to $.55 compared with $.51 for the
same period last year. Excluding the gain on sale of property
which added $.05 per share in the third quarter of fiscal 1996,
earnings per share would have increased 20%. Net income per
share was favorably impacted by the Company's stock repurchase
programs.
Results of operations - Nine Months Ended March 31, 1997
and 1996
Net sales for the nine months ended March 31, 1997 were $104.8
million, an increase of 7% over the $98.1 million reported for
the first nine months of fiscal 1996. The increase in sales was
attributable to improved demand in North America and continued
solid growth in the Company's international markets. Currency
fluctuations had an unfavorable effect on sales growth in the
first nine months of fiscal 1997. Had currency rates been the
same as in the first nine months of last year, sales growth would
have been 11%.
Gross margin in the first nine months of fiscal 1997 was 69.7%,
an increase over the gross margin of 68.6% in the first nine
months of fiscal 1996. The improvement in gross margin is
attributable to a favorable mix of products and services sold and
lower manufacturing costs, partially offset by an unfavorable
effect of currency fluctuations. There were no significant
selling price changes between these periods.
Operating expenses for the first nine months of fiscal 1997 of
$44.8 million increased 4% from the $43.1 million reported for
the first nine months last year. Operating expenses as a
percentage of sales decreased to 43% from the 44% of sales
reported last year. SG&A expenses for the first nine months of
fiscal 1997 increased 3% to $35.5 million. Increases in
personnel and related costs, advertising and selling costs were
partially offset by the effect of currency fluctuations on
international selling expenses. SG&A expenses were 34% of sales
for the first nine months of fiscal 1997 compared with 35% for
the same period last year.
11
<PAGE>
R&D expenses for the first nine months were $9.3 million, an
increase of $763,000, or 9%, from the $8.5 million reported for
the same period last year. Personnel and related costs and
project material costs were the primary reasons for the increase
in R&D expenses. The level of R&D spending varies depending on
both the breadth of the Company's R&D efforts and the stage of
specific product development.
Interest income for the first nine months of fiscal 1997 declined
37% to $1.0 million from $1.6 million reported for the same
period last year. The decline in interest income was due to a
lower average cash balance. The lower average cash balance was
caused by share repurchases under the Company's share repurchase
programs.
The effective income tax rate was 34.5% in the first three
quarters of fiscal 1997, compared to 34.8% in the prior year's
first three quarters. Variations in the tax rate reflect
variations in the mix of taxable income among the various tax
jurisdictions in which the Company does business. The effective
tax rate for the remainder of fiscal 1997 is expected to be
consistent with the rate for the first nine months.
Net income of $19.1 million increased $1.6 million or 9%, from
the first three quarters of fiscal 1996. Net income per share
grew $.23, or 18%, to $1.49 compared with $1.26 for the same
period last year. Excluding the gain on the sale of property,
earnings per share would have increased 23%. Net income per
share was favorably impacted by the Company's stock repurchase
programs.
Liquidity and Capital Resources
The Company's liquidity and capital resources remained strong
during the first nine months of fiscal 1997. At March 31, 1997,
the Company had cash and cash investments of $29.8 million.
During the third quarter of fiscal 1997, the Company repurchased
122,650 shares of its common stock bringing the total repurchases
for fiscal 1997 to 679,450 shares compared with 1,050,900 shares
repurchased in the first nine months of last year. During all of
fiscal 1996, the Company repurchased 1,601,000 shares.
At March 31, 1997, the Company's Japanese subsidiary had utilized
approximately $1.2 million of the Company's $14.5 million in
committed bank lines of credit. The Company believes that its
cash flow from operations, current cash and cash investments and
the remainder of its $14.5 million bank lines of credit will be
adequate to meet its cash requirements for the remainder of
fiscal 1997 and the foreseeable future.
The impact of inflation on Dionex Corporation's financial
position and results of operations was not significant during the
nine months ended March 31, 1997.
12
<PAGE>
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: competition from other products,foreign
currency fluctuations,general economic conditions,existing
product obsolescence, fluctuation in worldwide demand for
analytical instrumentation,new product development, including
market receptiveness, the ability to manufacture products on an
efficient and timely basis and at a reasonable cost and in
sufficient volume, the ability to attract and retain talented
employees and other risks as described in more detail in the
Company's Form 10-K.
13
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) There are no exhibits required to be filed pursuant to
this Report on Form 10-Q.
(b) The Company did not file any reports on Form 8-K during
the quarter ended March 31, 1997.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF
BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED.
DIONEX CORPORATION
(Registrant)
Date: May 9, 1997 By:/s/ A. Blaine Bowman
A. Blaine Bowman
President, Chief Executive
Officer
By:/s/ Michael W. Pope
Michael W. Pope
Vice President, Finance and
and Administration
(Principal Financial and
Accounting Officer)
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN THE
FORM 10-Q OF DIONEX CORPORAATION FOR THE QUARTER ENDED MARCH 31, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
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<S> <C>
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<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 23590
<SECURITIES> 6252
<RECEIVABLES> 30003
<ALLOWANCES> 433
<INVENTORY> 8900
<CURRENT-ASSETS> 76533
<PP&E> 45849
<DEPRECIATION> 15332
<TOTAL-ASSETS> 113823
<CURRENT-LIABILITIES> 31118
<BONDS> 0
0
0
<COMMON> 36051
<OTHER-SE> 44841
<TOTAL-LIABILITY-AND-EQUITY> 113823
<SALES> 104754
<TOTAL-REVENUES> 104754
<CGS> 31782
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<OTHER-EXPENSES> 0
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</TABLE>
