This document consists of 13
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
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 10, 2000:
CLASS NUMBER OF SHARES
Common Stock 22,093,949
DIONEX CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS Page
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2000 and June 30, 1999............ 3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended September 30, 2000 and 1999.. 4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended September 30, 2000 and 1999.. 5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS...................................... 6-9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS............... 10-12
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISKS................................ 12
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.................. 13
SIGNATURES................................................. 13
2
DIONEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
-------------
September 30, June 30,
ASSETS 2000 2000
(unaudited)
Current assets:
Cash and equivalents (including invested cash
of $3,419 at September 30, 2000 and $5,397
at June 30, 2000)............................ $ 10,731 $ 9,386
Accounts receivable (net of allowance for
doubtful accounts of $741 at September 30, 2000
and $765 at June 30, 2000)................... 44,705 42,965
Inventories.................................... 19,235 16,809
Deferred tax assets............................ 9,656 9,757
Prepaid expenses and other..................... 1,696 1,706
Total current assets.................... 86,023 80,623
Property, plant and equipment, net............... 41,454 40,842
Intangible assets ............................... 7,588 8,451
Marketable equity securities .................... 37,558 26,450
Other assets .................................... 6,811 6,787
$179,434 $163,153
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks......................... $ 2,025 $ 1,891
Accounts payable............................... 5,898 5,661
Accrued liabilities............................ 16,647 17,783
Income taxes payable........................... 4,676 2,253
Accrued product warranty....................... 4,058 4,645
Total current liabilities............... 33,304 32,233
Deferred tax liabilities......................... 16,767 12,478
Long-term debt................................... 2,221 -
Stockholders' equity:
Preferred stock (par value $.001 per share;
1,000,000 shares authorized; none
outstanding)................................. - -
Common stock (par value $.001 per share;
80,000,000 shares authorized; issued and
outstanding: 22,051,399 shares at
September 30, 2000 and 22,122,863 shares
at June 30, 2000)............................ 61,463 60,957
Retained earnings.............................. 52,001 48,285
Accumulated other comprehensive income ........ 13,678 9,200
Total stockholders' equity............. 127,142 118,442
$179,434 $163,153
See notes to condensed consolidated financial statements.
3
DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(In thousands, except per share amounts)
------------------
2000 1999
(unaudited)
Net sales............................................ $42,675 $41,790
Cost of sales........................................ 14,533 13,574
Gross profit......................................... 28,142 28,216
Operating expenses:
Selling, general and administrative................ 14,369 13,743
Research and product development................... 3,579 3,671
Total operating expenses........................ 17,948 17,414
Operating income..................................... 10,194 10,802
Interest income...................................... 202 220
Interest expense..................................... (87) (101)
Income before taxes on income........................ 10,309 10,921
Taxes on income...................................... 3,350 3,549
Income before cumulative effect of
change in accounting principle..................... 6,959 7,372
Cumulative effect of change in accounting principle.. (359) -
Net income...................................... $ 6,600 $ 7,372
Basic earnings per share:
Income before cumulative effect of change in
accounting principle ............................ $ 0.32 $ 0.33
Cumulative effect of change in accounting principle (0.02) -
Net income....................................... $ 0.30 $ 0.33
Diluted earnings per share:
Income before cumulative effect of change in
accounting principle ............................ $ 0.31 $ 0.31
Cumulative effect of change in accounting principle (0.02) -
Net income....................................... $ 0.29 $ 0.31
Shares used in computing per share amounts:
Basic.............................................. 22,065 22,263
Diluted............................................ 22,795 23,691
See notes to condensed consolidated financial statements.
4
DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(In thousands)
------------------
2000 1999
(unaudited)
Cash and equivalents provided by (used for):
Cash flows from operating activities:
Net income............................................ $ 6,600 $ 7,372
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization....................... 1,201 1,103
Deferred taxes...................................... (197) 955
Changes in assets and liabilities:
Accounts receivable............................... (3,054) 4,054
Inventories....................................... (3,052) (1,544)
Prepaid expenses and other assets................. (61) (25)
Accounts payable.................................. 308 (884)
Accrued liabilities............................... (833) (5,148)
Income taxes payable.............................. 2,602 744
Accrued product warranty.......................... (500) (66)
Net cash provided by operating activities............. 3,014 6,561
Cash flows from investing activities:
Purchase of property, plant and equipment........... (2,216) (713)
Other............................................... (240) 259
Net cash used for investing activities................ (2,456) (459)
Cash flows from financing activities:
Net change in notes payable to banks................ 2,405 3,584
Sale of common stock................................ 819 1,770
Repurchase of common stock.......................... (3,197) (10,283)
Other............................................... 145 (230)
Net cash provided by (used for) financial activities.. 172 (5,159)
Effect of exchange rate changes on cash............... 615 (844)
Net increase in cash and equivalents. ................ 1,345 99
Cash and equivalents, beginning of period............. 9,386 11,336
Cash and equivalents, end of period................... $10,731 $11,435
Supplemental disclosures of cash flow information:
Income taxes paid................................... $ 933 $2,073
Interest paid....................................... $ 93 $ 119
See notes to condensed consolidated financial statements.
5
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 accounting principles generally accepted in
the United States of America 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, 2000.
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, 2001.
2. Inventories
Inventories consist of (in thousands):
September 30, June 30,
2000 2000
Finished goods $ 6,782 $ 6,217
Work in process 3,954 3,115
Raw materials and subassemblies 8,499 7,477
$19,235 $16,809
3. Income Taxes
The effective income tax rate for the first three months of
fiscal 2001 was 32.5%, unchanged from the same period in
fiscal 2000.
6
DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
------------------
4. Cumulative Effect of Change in Accounting Principle
During the three months ended September 30, 2000, the Company
adopted Staff Accounting Bulletin No. 101, "Revenue
Recognition in Financial Statements", ("SAB 101"). SAB 101
outlines the basic criteria that must be met to recognize
revenue and provides guidance for disclosures related to
revenue recognition policies.
The Company's previous policy was to recognize product
installation revenue upon shipment and to accrue product
installation costs at the time revenue was recognized. Under
the current method, the Company defers installation revenue
until installation has been completed and recognition
installation costs as incurred.
The cumulative effect of the change, totaling $359,000, is
shown as a one-time charge to income in this quarter's income
statement. If SAB 101 had been adopted at the beginning of
fiscal 2000, the effect on the results of operations for the
first quarter last year would not have been material.
5. 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 in the Condensed Consolidated Balance
Sheets represents cumulative foreign currency translation
adjustments and unrealized gain on equity securities available
for sale. Comprehensive income was $11,078,000 and $7,120,000
for the three months ended September 30, 2000 and 1999,
respectively.
7
DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
------------------
6. 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 using the treasury stock method. The
difference between the number of shares outstanding for basic
and diluted earnings per share is due to stock options
outstanding during the periods presented.
7. Common Stock Repurchases
During the first three months of fiscal 2001, the Company
repurchased 117,100 shares of its common stock on the open
market, compared with 253,100 shares repurchased in the
first three months of the previous fiscal year. During all
of fiscal 2000, the Company repurchased 935,850 shares.
8. Derivative Instruments
In the first quarter of fiscal 2001, the Company adopted SFAS
No. 133, "Accounting for Derivative Instruments and Hedging
Activities." 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.
8
DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
------------------
The Company enters into foreign exchange forward contracts
with high quality financial institutions to manage its
exposure to the impact of fluctuations in foreign currency
exchange rates on its intercompany receivables balances.
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 has not designated
these contracts as hedging instruments. The contracts are
recorded at fair value on the Balance Sheet. Changes in the
fair values of these derivative instruments are recognized in
earnings in the period they occur. Adoption of SFAS No. 133
did not have a significant impact on results for the first
quarter.
9. Subsequent Event
On October 17, 2000, the Company purchased all of the issued
and outstanding shares of LC Packings Nederland B.V. and LC
Packings (U.S.A.), Inc. (collectively referred to as "LC
Packings") for a purchase price of $12 million. In addition
the shareholders of LC Packings have the right to receive an
earn-out, to be paid in varying amounts at the end of calendar
years 2000 through 2004, in the event LC Packings achieves
certain business goals. If the entire earn-out is achieved,
the shareholders of LC Packings will be paid an additional
amount not to exceed $13 million. The Company expects to
record an after-tax charge of between $1 million and $2
million in the second quarter of fiscal 2001 primarily related
to in-process research and development. The Company utilized
its bank line of credit to fund the acquisition of LC
Packings. The acquisition of LC Packings will be treated by
the Company as a purchase for accounting purposes.
9
DIONEX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations - Three Months Ended September 30, 2000
and 1999
Net sales for the first quarter of fiscal 2001 were $42.7 million,
an increase of 2% from the $41.8 million reported for the same
period last year. Sales increased over the prior year period in
our North American market. Sales increased in Europe in local
currency but declined slightly in reported dollars. Sales in Japan
declined moderately in the first quarter compared with the same
period last year. Had currency rates been the same as in last
year's first quarter, sales growth would have been 7%.
Gross margin for the first quarter of fiscal 2001 was 65.9%, down
from the 67.5% reported for the same period last year. Gross
margin was lower due to the unfavorable effect of currency
fluctuations, higher costs for certain electronic components and
higher costs to remedy part shortages.
Operating expenses of $17.9 million for the first quarter of fiscal
2001 were up $534,000, or 3%, from the $17.4 million reported in
the same quarter last year. As a percentage of sales, operating
expenses were 42%, unchanged from the 42% reported for the first
quarter last year. Selling, general and administrative (SG&A)
expenses increased $626,000, or 5%, to $14.4 million in the first
quarter of fiscal 2001. The increase was due to higher selling
costs, primarily personnel and related costs, partially offset by
the favorable effect of currency fluctuations on international
selling expenses.
Research and development (R&D) costs of $3.6 million were virtually
unchanged from the $3.7 million reported in the same period last
year. 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.
The effective tax rate for the first quarter of fiscal 2001 was
32.5%, unchanged from 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
Cumulative effect of change in accounting principle reflects the
adoption of Staff Accounting Bulletin No. 101, "Revenue Recognition
in Financial Statements", ("SAB 101") in the first quarter of
fiscal 2001. SAB 101 outlines the basic criteria that must be met
to recognize revenue and provides guidance for disclosures related
to revenue recognition policies. The cumulative effect of the
change, totaling $359,000, is shown as a one-time charge to income
in this quarter's income statement. If SAB 101 had been adopted at
the beginning of fiscal 2000, the effect on the results of
operations for the first quarter last year would not have been
material.
Net income in the first quarter of fiscal 2001 was $6.6 million,
compared with $7.4 million reported for the same period last year.
Diluted earnings per share before the cumulative effect of change
in accounting principle were unchanged at $.31. After the effect
of the change, diluted earnings per share were $.29 compared with
$.31 in 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 2001. At September 30,
2000, the Company had cash and cash investments of $10.7 million.
During the first quarter of fiscal 2001, the Company repurchased
117,100 shares of its common stock, compared with 253,100 shares
repurchased in the first three months of last year. During all of
fiscal 2000, the Company repurchased 935,850 shares.
At September 30, 2000, the Company has utilized $1.6 million of the
Company's $38.3 million in committed bank lines of credit. The
Company is in the final stages of construction of a building in
Osaka, Japan 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 $38.3 million bank lines of
credit will be adequate to meet its cash requirements for fiscal
2001 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, 2000.
11
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, competition
from other products, 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 for the year ended June 30, 2000.
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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISKS
The Company is exposed to financial market risks, including changes
in foreign currency rates, interest rates and marketable equity
securities.
For a detailed analysis of these market risks see the discussion in
the Company's Annual Report to Stockholders for the year ended June
30, 2000 and the Company's Form 10-K for the year ended June 30,
2000 filed with the Securities and Exchange Commission.
12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule for the period ended
September 30, 2000.
(b) The Company did not file any reports on Form 8-K
during the quarter ended September 30, 2000.
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, 2000 By:
A. Blaine Bowman
President, Chief Executive
Officer
By:
Craig A. McCollam
Vice President, Finance and
Administration
(Principal Financial and
Accounting Officer)
13
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule for the period ended
September 30, 2000.
(b) The Company did not file any reports on Form 8-K
during the quarter ended September 30, 2000.
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, 2000 By: /s/ A. Blaine Bowman
A. Blaine Bowman
President, Chief Executive
Officer
By: /s/ Craig A. McCollam
Craig A. McCollam
Vice President, Finance and
Administration
(Principal Financial and
Accounting Officer)
13
