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
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-11250
DIONEX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-2647429
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1228 Titan Way, Sunnyvale, California 94086
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (408) 737-0700
NONE
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO_____
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of November 11, 1998:
CLASS NUMBER OF SHARES
Common Stock 22,204,612
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DIONEX CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS Page
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 1998 and June 30, 1998............ 3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended September 30, 1998 and 1997.. 4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended September 30, 1998 and 1997.. 5-6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS...................................... 7-9
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
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DIONEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
- -------------
September 30, June 30,
ASSETS 1998 1998
(unaudited)
Current assets:
Cash and equivalents (including invested cash
of $7,695 at September 30, 1998 and $5,364
at June 30, 1998)............................ $ 13,739 $ 13,184
Temporary cash investments..................... 5,000 5,850
Accounts receivable (net of allowance for
doubtful accounts of $605 at September 30, 1998
and $606 at June 30, 1998)................... 29,654 31,350
Inventories.................................... 11,306 9,921
Deferred tax benefits.......................... 7,542 7,965
Prepaid expenses and other..................... 1,457 1,089
Total current assets.................... 68,698 69,359
Property, plant and equipment, net............... 34,075 30,070
Other assets .................................... 8,284 7,830
$111,057 $107,259
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks......................... $ 733 $ -
Accounts payable............................... 4,933 5,681
Accrued liabilities............................ 15,561 17,394
Income taxes payable........................... 7,905 6,526
Accrued product warranty....................... 4,010 4,013
Total current liabilities............... 33,142 33,614
Deferred taxes and other......................... 2,757 2,956
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:
22,210,656 shares at September 30, 1998 and
22,315,910 shares at June 30, 1998).......... 39,275 38,926
Retained earnings.............................. 35,265 32,106
Accumulated other comprehensive income (loss).. 618 (343)
Total stockholders' equity............. 75,158 70,689
$111,057 $107,259
See notes to condensed consolidated financial statements.
3
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DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(In thousands, except per share amounts)
- ------------------
1998 1997
(unaudited)
Net sales................................... $34,845 $33,933
Cost of sales............................... 11,031 10,767
Gross profit................................ 23,814 23,166
Operating expenses:
Selling, general and administrative....... 11,516 11,565
Research and product development.......... 3,435 3,107
Total operating expenses............... 14,951 14,672
Operating income............................ 8,863 8,494
Interest income............................. 258 348
Interest expense............................ (25) (41)
Income before taxes on income............... 9,096 8,801
Taxes on income............................. 3,047 2,992
Net income.................................. $ 6,049 $ 5,809
Basic earnings per share.................... $ .27 $ .25
Diluted earnings per share ................. $ .26 $ .23
Shares used in computing per share amounts:
Basic ................................. 22,288 23,373
Diluted ............................... 23,410 24,740
See notes to condensed consolidated financial statements.
4
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DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(In thousands)
- ------------------
1998 1997
(unaudited)
Cash and equivalents provided by (used for):
Cash flows from operating activities:
Net income............................................ $ 6,049 $ 5,809
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization....................... 658 624
Deferred taxes...................................... 428 (631)
Changes in assets and liabilities:
Accounts receivable............................... 2,533 (49)
Inventories....................................... (1,097) (1,212)
Prepaid expenses and other assets................. (322) 133
Accounts payable.................................. (805) (29)
Accrued liabilities............................... (2,056) (3,746)
Income taxes payable.............................. 1,319 2,526
Accrued product warranty.......................... (50) (61)
Net cash provided by operating activities............. 6,657 3,364
Cash flows from investing activities:
Purchase of temporary cash investments.............. (3,500) (4,450)
Proceeds from maturities of temporary
cash investments................................. 4,350 6,000
Purchase of property, plant and equipment........... (4,509) (302)
Other............................................... (32) 99
Net cash provided by (used for) investing activities.. (3,691) 1,347
Cash flows from financing activities:
Net change in notes payable to banks................ 709 843
Sale of common stock................................ 597 722
Repurchase of common stock.......................... (3,137) (12,582)
Lease obligations and other......................... (353) 7
Net cash used for financing activities................ (2,184) (11,010)
Effect of exchange rate changes on cash............... (227) 420
Net increase(decrease)in cash and equivalents......... 555 (5,879)
Cash and equivalents, beginning of period............. 13,184 24,624
Cash and equivalents, end of period................... $13,739 $18,745
(continued)
5
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DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(In thousands)
- ------------------
1998 1997
(unaudited)
(continued)
Supplemental disclosures of cash flow information:
Income taxes paid................................. $1,597 $1,160
Interest paid..................................... $ 28 $ 41
See notes to condensed consolidated financial statements.
6
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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, 1998.
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, 1999.
2. Inventories
Inventories consist of (in thousands):
September 30, June 30,
1998 1998
Finished goods $ 4,248 $3,459
Work in process 3,369 3,548
Raw materials and subassemblies 3,689 2,914
$11,306 $9,921
3. Income Taxes
The effective income tax rate for the first three months of
fiscal 1999 was 33.5%, compared to 34.0% reported in the same
period of fiscal 1998.
7
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DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- ------------------
4. Comprehensive Income
In the first quarter of fiscal 1999, the Company adopted
Statement of Financial Accounting Standards ("SFAS") No. 130,
"Reporting Comprehensive Income". SFAS No. 130 establishes
standards for the reporting and display of comprehensive
income. Components of comprehensive income include net
income, foreign currency translation adjustments and
unrealized gain on equity securities available for sale. As
such, Accumulated Other Comprehensive Income (Loss) in the
Condensed Consolidated Balance Sheets represents cumulative
foreign currency translation adjustments and unrealized gain
on equity securities available for sale. Comprehensive income
was $7,010,000 and $6,405,000 for the three months ended
September 30, 1998 and 1997, respectively. The adoption of
SFAS No. 130 required additional disclosure but did not impact
the Company's consolidated financial position, results of
operations or cash flows.
5. Net Income Per Share
Basic earnings per share excludes dilution and is computed by
dividing net income by the weighted average of common shares
outstanding for the period. Diluted earnings per share
reflects the potential dilution from securities and other
contracts which are exercisable or convertible into common
stock. Diluted earnings per share is computed by dividing net
income by the weighted average number of common shares that
would have been outstanding during the period assuming the
issuance of common shares for all dilutive potential common
shares outstanding. The difference between the number of
shares outstanding for basic and diluted earnings per share is
due to stock options outstanding during the period.
6. Common Stock Repurchases
During the first three months of fiscal 1999, the Company
repurchased 140,000 shares of its common stock on the open
market compared with 541,100 shares repurchased in the
first three months of the previous fiscal year. During all
of fiscal 1998, the Company repurchased 1,851,460 shares.
8
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DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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7. New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued
SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," which is effective for all fiscal
quarters of fiscal years beginning after June 15, 1999.
Earlier application is permitted. The statement establishes
accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other
contracts and for hedging activities. It requires that an
entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure
those instruments at fair value. Management has not
determined the impact of this new standard on the Company's
results of operations and financial position.
8. Subsequent Event
On October 20, 1998, the Company, through a wholly owned
subsidiary, purchased all of the issued and outstanding shares
of Softron GmbH, a limited liability company organized under
the laws of Germany (Softron), for a purchase price of
DM 34,000,000 (approximately $20.7 million in cash and common
stock on the closing date). In addition, the shareholders of
Softron have the right to receive an earn-out, to be paid by
February 1, 1999, in the event Softron achieves certain
business goals in calendar year 1998, which earn-out shall not
exceed an aggregate of DM 6,000,000 (equivalent to
approximately $3.7 million based on the October 20, 1998
exchange ratio of 1.64 marks to the dollar). The Company
expects to record an after-tax charge of between $6 million
and $8 million in the second quarter of fiscal 1999 in
connection with the acquisition. In anticipation of the
acquisition, the Company increased its existing bank line of
credit to $25 million. The Company utilized $9.8 million of
its bank line of credit to fund the acquisition of Softron.
Softron, which markets its products primarily in Europe,
specializes in high performance liquid chromatography systems
used by scientific, pharmaceutical and industrial laboratories
to analyze the chemical components of compounds.
9
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DIONEX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations - Three Months Ended September 30, 1998
and 1997
Net sales for the first quarter of fiscal 1999 were $34.8 million,
an increase of 3% from the $33.9 million reported for the same
period last year. The Company experienced sales growth despite a
stronger U.S. dollar and weak demand in Asia. Sales in both North
America and Europe increased over the prior year period. Had
currency rates been the same as in last year's first quarter, sales
growth would have been 5%.
Gross margin for the first quarter of fiscal 1999 was 68%,
unchanged from the same period last year. Gross margin was
affected by unfavorable currency fluctuations offset by lower
manufacturing costs. There were no significant selling price
changes between these periods.
Operating expenses of $15.0 million for the first quarter of fiscal
1999 were up $279,000, or 2%, from the $14.7 million reported in
the same quarter last year. As a percentage of sales, operating
expenses were 43%, unchanged from the 43% reported for the first
quarter last year. Selling, general and administrative (SG&A)
expenses decreased $49,000 to $11.5 million in the first quarter of
fiscal 1999. The decrease was due to the favorable effect of
currency fluctuations on international selling expenses.
Research and development (R&D) costs of $3.4 million were up 11%
from the $3.1 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 of $258,000 for the first quarter of fiscal 1999
was $90,000 lower than the $348,000 reported in the first quarter
last year. The decrease in interest income was due to lower
average cash balances.
The effective tax rate for the first quarter of fiscal 1999 was
33.5%, compared with 34.0% in the first 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.
10
Net income in the first quarter of fiscal 1999 was $6.0 million, an
increase of 4% from the $5.8 million reported for the same period
last year. Diluted earnings per share rose $.03, or 13%, to $.26
compared with $.23 for the same period last year. Net income per
share was favorably impacted by the Company's stock repurchase
program.
Liquidity and Capital Resources
The Company's liquidity and capital resources remained strong
during the first three months of fiscal 1999. At September 30,
1998, the Company had cash and cash investments of $18.7 million.
During the first quarter of fiscal 1999, the Company repurchased
140,000 shares of its common stock compared with 541,100 shares
repurchased in the first three months of last year. During all of
fiscal 1998, the Company repurchased 1,851,460 shares.
At September 30, 1998, the Company's Japanese subsidiary had
utilized $733,000 of the Company's $29.2 million in committed bank
lines of credit. These funds and existing cash and equivalents
were used to acquire a leasehold right in Japan for approximately
$3.7 million during the first quarter. The Company is in the early
stages of planning construction of a building on the property for
occupancy by its Japanese operations. The Company believes that
its cash flow from operations, current cash and cash investments
and the remainder of its $29.2 million bank lines of credit will be
adequate to meet its cash requirements for fiscal 1999 and the
foreseeable future.
The impact of inflation on Dionex Corporation's financial position
and results of operations was not significant during the three
months ended September 30, 1998.
Subsequent Event
On October 20, 1998, the Company, through a wholly owned
subsidiary, purchased all of the issued and outstanding shares of
Softron GmbH, a limited liability company organized under the laws
of Germany (Softron), for a purchase price of DM 34,000,000
(approximately $20.7 million in cash and common stock on the
closing date). In addition, the shareholders of Softron have the
right to receive an earn-out, to be paid by February 1, 1999, in
the event Softron achieves certain business goals in calendar year
1998, which earn-out shall not exceed an aggregate of DM 6,000,000
(equivalent to approximately $3.7 million based on the October 20,
1998 exchange ratio of 1.64 marks to the dollar). The Company
expects to record an after-tax charge of between $6 million and $8
million in the second quarter of fiscal 1999 in connection with the
acquisition. In anticipation of the acquisition, the Company
increased its existing bank line of credit to $25 million. The
Company utilized $9.8 million of its bank line of credit to fund
the acquisition of Softron.
11
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Year 2000 Compliance
Many older computer software programs refer to years in terms of
their final two digits only. Such programs may interpret the year
2000 to mean the year 1900 instead. If not corrected, those
programs could cause date-related transaction failures. Beginning
in fiscal 1997, the Company started a process to review its
internal systems for year 2000 compliance. Testing of the internal
systems was substantially completed during fiscal 1998 and the
Company believes its current internal systems are compliant.
Dionex believes the products it is currently shipping are year 2000
compliant as well. The Company has no obligation to upgrade
previously shipped products which are not year 2000 compliant but
may make available for sale to customers fixes for certain
products. Additionally, the Company has contacted numerous vendors
and customers to assess their progress in addressing the year 2000
issue. Based upon our assessments, testing and the plans in
progress, the Company does not believe that the year 2000 issue
will have a material adverse effect on the Company's financial
position, results of operation or cash flows. However, the Company
does not have control over whether its vendors or customers will
make any appropriate modifications on a timely basis. If such
modifications are not made in a timely manner, the financial
position and results of operations could be materially adversely
affected. To date, the Company has not incurred any significant
costs related to this issue, and does not expect significant costs
directly related to year 2000 compliance issues in the future.
However, should the need arise, the Company has adequate resources
and would use them to resolve significant year 2000 issues in a
timely manner.
Forward-looking statements
Except for historical information contained herein, the above
discussion and the letter to shareholders contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, Section 21E of the Securities and Exchange Act
of 1934, as amended and the Private Securities Litigation Reform
Act of 1995, and are made under the safe harbor provisions thereof.
Such statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those
discussed here. Such risk and uncertainties include: general
economic conditions, foreign currency fluctuations, new product
development, including market receptiveness, competition from other
products, existing product obsolescence, fluctuation in
12
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worldwide demand for analytical instrumentation, the ability to
manufacture products on an efficient and timely basis and at a
reasonable cost and in sufficient volume, year 2000 compliance
issues, the ability to attract and retain talented employees and
other risks as described in more detail in the Company's Form
10-K for the year ended June 30, 1998. Readers are cautioned not
to place undue reliance on these forward-looking statements which
reflect management's analysis only as of the date hereof. The
Company undertakes no obligation to publicly release the results of
any revision to these forward-looking statements which may be made
to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
13
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Third Amendment to the Credit Agreement dated
February 29, 1998 between BankAmerica and
Dionex Corporation.
27 Financial Data Schedule for the period ended
September 30, 1998.
(b) The Company did not file any reports on Form 8-K
during the quarter ended September 30, 1998.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF
1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED.
DIONEX CORPORATION
(Registrant)
Date: November 13, 1998 By: /s/ A. Blaine Bowman
A. Blaine Bowman
President, Chief Executive
Officer
By: /s/ Michael W. Pope
Michael W. Pope
Vice President, Finance and
Administration
(Principal Financial and
Accounting Officer)
14
THIRD AMENDMENT TO CREDIT AGREEMENT (MULTICURRENCY)
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (MULTICURRENCY)
(the "Amendment"), dated as of September 30, 1998, is entered
into by and between DIONEX CORPORATION (the "Borrower") and BANK
OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (the "Bank").
RECITALS
A. The Borrower and the Bank are parties to a Credit
Agreement (Multicurrency), dated as of February 29, 1996, as
amended by a First Amendment to Credit Agreement (Multicurrency)
dated as of December 15, 1997 and a Second Amendment to Credit
Agreement (Multicurrency) dated as of January 30, 1998 (the
"Credit Agreement"), pursuant to which the Bank has extended
certain credit facilities to the Borrower and certain of its
Subsidiaries.
B. The Borrower has requested that the Bank agree to
certain amendments of the Credit Agreement.
C. The Bank is willing to amend the Credit Agreement,
subject to the terms and conditions of this Amendment.
NOW, THEREFORE, for valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings, if any,
assigned to them in the Credit Agreement.
2. Amendments to Credit Agreement.
(a) Section 1.01 of the Credit Agreement shall be
amended at the defined term "Availability Period" by amending and
restating such defined term as follows:
"'Availability Period': the period commencing on the
date of this Agreement and ending on the date that is the
earlier to occur of (a) September 30, 2000, and (b) the date
on which the Bank's commitment to extend credit hereunder
terminates."
(b) Section 1.01 of the Credit Agreement shall be
amended at the defined term "Credit Limit" by amending and
restating such defined term as follows:
"'Credit Limit': the amount of $25,000,000 or the
Equivalent Amount thereof."
(c) Section 1.01 of the Credit Agreement shall be
amended at the defined term "Final Maturity Date" by amending and
restating such defined term as follows:
"'Final Maturity Date': (a) in respect of any
Advances, September 30, 2000; (b) in respect of any
commercial letters of credit, March 31, 2001; and (c) in
respect of any standby letters of credit, September 30,
2001."
(d) Section 2.01 of the Credit Agreement shall be
amended by adding to it the following new subsection:
"(d) The aggregate L/C Outstanding Amount may not
exceed at any one time $10,000,000."
(e) Section 2.02(b) of the Credit Agreement shall be
amended by deleting the percentage "0.75%" and inserting the
percentage "0.625%" in place thereof.
(f) Section 2.02(c) of the Credit Agreement shall be
amended by deleting the percentage "0.75%" and inserting the
percentage "0.625%" in place thereof.
(g) Article V of the Credit Agreement shall be amended
by adding the following Section 5.14:
"5.14 Y2K Representation. On the basis of a
comprehensive review and assessment of the Borrower's and
each Acceptable Subsidiaries' systems and equipment and
inquiry made of the Borrower's and each Acceptable
Subsidiaries' material suppliers, vendors and customers, the
Borrower's management is of the view that the "Year 2000
problem" (that is, the inability of computers, as well as
embedded microchips in non-computing devices, to perform
properly date-sensitive functions with respect to certain
dates prior to and after December 31, 1999), including costs
of remediation, will not result in a Material Adverse
Effect. The Borrower and the Acceptable Subsidiaries have
developed feasible contingency plans adequately to ensure
uninterrupted and unimpaired business operation in the event
of failure of their own or a third party's systems or
equipment due to the Year 2000 problem, including those of
vendors, customers, and suppliers, as well as a general
failure of or interruption in its communications and
delivery infrastructure."
(h) Section 7.08 of the Credit Agreement shall be
amended and restated in its entirety as follows:
"7.08 Tangible Net Worth. The Borrower shall not
permit on a consolidated basis its Tangible Net Worth to be
less than 90% of Tangible Net Worth as of June 30, 1998,
plus (i) 75% of quarterly net income after income taxes
(without subtracting losses) earned in each quarterly
accounting period commencing after June 30, 1998, plus (ii)
100% of the net proceeds from any equity securities issued
after June 30, 1998, less (iii) 100% of capital stock
repurchases after June 30, 1998, less (iv) the amount of
asset write-downs related to acquisitions which are taken
in the quarterly accounting period in which the acquisition
occurs up to an aggregate maximum amount recorded after
June 30, 1998, of $20,000,000, 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)."
(i) Section 7.09 of the Credit Agreement shall be
amended and restated in its entirety as follows:
"7.09 Leverage Ratio. The Borrower shall not as of
the last day of any quarterly accounting period permit on a
consolidated basis the ratio of (a) funded debt
(including off balance sheet debt) to (b) Adjusted EBITDA
(calculated on a rolling four quarter basis) to be greater
than 1.00 to 1.00 where:
'Adjusted EBITDA' means consolidated operating income
for the four immediately prior quarterly accounting
periods ended on that day plus depreciation and
amortization to the extent included in the
determination of such operating income, plus the
amount of asset write-downs related to acquisitions
which are taken in the quarterly accounting period in
which the acquisition occurs up to an aggregate
maximum amount recorded after June 30, 1998, of
$20,000,000."
(j) Section 7.10 of the Credit Agreement shall be
amended and restated in its entirety as follows:
"7.10 Quick Ratio. The Borrower shall not permit at
any time on a consolidated basis the ratio of (a) the sum of
cash, short-term cash investments, marketable securities not
classified as long-term investments and current net accounts
receivable to (b) current liabilities to be less than 1.25."
(k) Section 7.11 of the Credit Agreement shall be
deleted in its entirety.
3. Representations and Warranties. The Borrower hereby
represents and warrants to the Bank as follows:
(a) No Event of Default or event which, with the
giving of notice or passage of time or both, would be an Event of
Default has occurred and is continuing.
(b) The execution, delivery and performance by the
Borrower of this Amendment have been duly authorized by all
necessary corporate and other action and do not and will not
require any registration with, consent or approval of, notice to
or action by, any person (including any governmental authority)
in order to be effective and enforceable. The Credit Agreement
as amended by this Amendment constitutes the legal, valid and
binding obligations of the Borrower, enforceable against it in
accordance with its respective terms, without defense,
counterclaim or offset.
(c) All representations and warranties of the Borrower
contained in the Credit Agreement are true and correct.
(d) The Borrower is entering into this Amendment on
the basis of its own investigation and for its own reasons,
without reliance upon the Bank or any other person.
4. Effective Date. This Third Amendment will become
effective as of the date first above written (the "Effective
Date"), provided that each of the following conditions precedent
has been satisfied:
(a) The Bank has received from the Borrower a duly
executed original (or, if elected by the Bank, an executed
facsimile copy) of this Amendment; and
(b) The Bank has received from the Borrower a copy of
a resolution passed by the board of directors of such
corporation, certified by the Secretary or an Assistant Secretary
of such corporation as being in full force and effect on the date
hereof, authorizing the execution, delivery and performance of
this Amendment.
5. Reservation of Rights. The Borrower acknowledges and
agrees that the execution and delivery by the Bank of this
Amendment shall not be deemed to create a course of dealing or
otherwise obligate the Bank to enter into amendments under the
same, similar or any other circumstances in the future.
6. Reaffirmation of Guaranty. The Borrower, to the extent
it has issued any one or more guaranties of the obligations of
any Subsidiaries pursuant to the Credit Agreement, and in its
capacity as guarantor thereunder, reaffirms and agrees that its
obligations under such guaranties are in full force and effect,
without defense, offset or counterclaim.
7. Miscellaneous.
(a) Except as herein expressly amended, all terms,
covenants and provisions of the Credit Agreement are and shall
remain in full force and effect and all references therein to
such Credit Agreement shall henceforth refer to the Credit
Agreement as amended by this Amendment. This Amendment shall be
deemed incorporated into, and a part of, the Credit Agreement.
(b) This Amendment shall be binding upon and inure to
the benefit of the parties hereto and to the Credit Agreement and
their respective successors and assigns. No third party
beneficiaries are intended in connection with this Amendment.
(c) This Amendment shall be governed by and construed
in accordance with the law of the State of California.
(d) This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all
such counterparts together shall constitute but one and the same
instrument. Each of the parties hereto understands and agrees
that this document (and any other document required herein) may
be delivered by any party thereto either in the form of an
executed original or an executed original sent by facsimile
transmission to be followed promptly by mailing of a hard copy
original, and that receipt by the Bank of a facsimile transmitted
document purportedly bearing the signature of the Borrower shall
bind the Borrower with the same force and effect as the delivery
of a hard copy original. Any failure by the Bank to receive the
hard copy executed original of such document shall not diminish
the binding effect of receipt of the facsimile transmitted
executed original of such document which hard copy page was not
received by the Bank, and the Bank is hereby authorized to make
sufficient photocopies thereof to assemble complete counterparty
documents.
(e) This Amendment, together with the Credit
Agreement, contains the entire and exclusive agreement of the
parties hereto with reference to the matters discussed herein and
therein. This Amendment supersedes all prior drafts and
communications with respect thereto. This Amendment may not be
amended except in writing executed by the Borrower and the Bank.
(f) If any term or provision of this Amendment shall
be deemed prohibited by or invalid under any applicable law, such
provision shall be invalidated without affecting the remaining
provisions of this Amendment or the Credit Agreement,
respectively.
(g) Borrower covenants to pay to or reimburse the
Bank, upon demand, for all costs and expenses (including
allocated costs of in-house counsel) incurred in connection with
the development, preparation, negotiation, execution and delivery
of this Amendment.
IN WITNESS WHEREOF, the parties hereto have executed
and delivered this Amendment as of the date first above written.
DIONEX CORPORATION
By: /s/ Michael W. Pope
Name: Michael W. Pope
Title: Vice President
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By: /s/ Debra G. Staiger
Name: Debra G.Staiger
Title: Vice President
157709.03
3
126750.01
<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 Corporation for the quarter ended September 30,
1998 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> SEP-30-1998
<CASH> 13739
<SECURITIES> 5000
<RECEIVABLES> 30259
<ALLOWANCES> 605
<INVENTORY> 11306
<CURRENT-ASSETS> 68698
<PP&E> 51360
<DEPRECIATION> 17285
<TOTAL-ASSETS> 111057
<CURRENT-LIABILITIES> 33142
<BONDS> 0
0
0
<COMMON> 39275
<OTHER-SE> 35883
<TOTAL-LIABILITY-AND-EQUITY> 111057
<SALES> 34845
<TOTAL-REVENUES> 34845
<CGS> 11031
<TOTAL-COSTS> 11031
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25
<INCOME-PRETAX> 9096
<INCOME-TAX> 3047
<INCOME-CONTINUING> 6049
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6049
<EPS-PRIMARY> .27
<EPS-DILUTED> .26
</TABLE>
