This document consists of 15
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FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- -------------------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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 May 11, 2000:
CLASS NUMBER OF SHARES
Common Stock 22,100,213
DIONEX CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS Page
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 2000 and June 30, 1999.................. 3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31, 2000 and 1999........ 4
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Nine Months Ended March 31, 2000 and 1999......... 5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended March 31, 2000 and 1999......... 6-7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS........................................ 8-9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................. 10-14
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.................... 15
SIGNATURES................................................... 15
2
DIONEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
- -----------------
March 31, June 30,
ASSETS 2000 1999
(unaudited)
Current assets:
Cash and equivalents (including invested cash
of $4,985 at March 31, 2000 and $5,987
at June 30, 1999)............................ $ 9,231 $ 11,336
Accounts receivable (net of allowance for
doubtful accounts of $888 at March 31,2000
and $812 at June 30, 1999)................... 44,428 39,996
Inventories.................................... 14,970 12,702
Deferred tax benefits.......................... 10,942 10,361
Prepaid expenses and other..................... 1,869 1,800
Total current assets.................... 81,440 76,195
Property, plant and equipment, net............... 40,293 39,306
Intangible assets................................ 8,648 9,924
Marketable equity securities..................... 29,754 14,452
Other assets .................................... 6,605 6,797
$166,740 $146,674
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks......................... $ 5,315 $ 796
Accounts payable............................... 5,125 6,049
Accrued liabilities............................ 19,589 21,361
Income taxes payable........................... 4,360 8,533
Accrued product warranty....................... 4,810 4,701
Total current liabilities............... 39,199 41,440
Deferred taxes and other......................... 13,770 8,506
Long-term debt................................... - 990
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; outstanding:
22,014,291 shares at March 31, 2000 and
22,314,442 shares at June 30, 1999).......... 55,883 46,445
Retained earnings.............................. 46,477 46,677
Accumulated other comprehensive income ........ 11,411 2,616
Total stockholders' equity.............. 113,771 95,738
$166,740 $146,674
See notes to condensed consolidated financial statements.
3
DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(In thousands, except per share amounts)
- ------------------
2000 1999
(unaudited)
Net sales...................................... $47,336 $47,072
Cost of sales.................................. 14,489 15,378
Gross profit................................... 32,847 31,694
Operating expenses:
Selling, general and administrative.......... 14,761 13,986
Research and product development............. 3,928 4,086
Total operating expenses.................. 18,689 18,072
Operating income............................... 14,158 13,622
Interest income................................ 271 178
Interest expense............................... (114) (91)
Income before taxes on income.................. 14,315 13,709
Taxes on income................................ 4,653 4,592
Net income..................................... $ 9,662 $ 9,117
Basic earnings per share....................... $ .44 $ .41
Diluted earnings per share..................... $ .42 $ .38
Shares used in computing per share amounts:
Basic..................................... 22,101 22,313
Diluted................................... 23,159 23,780
See notes to condensed consolidated financial statements.
4
DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED MARCH 31, 2000 AND 1999
(In thousands, except per share amounts)
- ------------------
2000 1999
(unaudited)
Net sales..................................... $137,186 $126,422
Cost of sales................................. 43,083 40,749
Revaluation of acquired inventory............. - 1,952
Gross profit.................................. 94,103 83,721
Operating expenses:
Selling, general and administrative......... 43,541 39,146
Research and product development............ 11,435 11,113
Write-off of in-process research and development - 4,991
Total operating expenses................. 54,976 55,250
Operating income.............................. 39,127 28,471
Interest income............................... 728 633
Interest expense.............................. (354) (234)
Income before taxes on income................. 39,501 28,870
Taxes on income............................... 12,838 9,671
Net income.................................... $ 26,663 $ 19,199
Basic earnings per share...................... $ 1.20 $ .86
Diluted earnings per share.................... $ 1.14 $ .81
Shares used in computing per share amounts:
Basic....................................... 22,199 22,266
Diluted..................................... 23,451 23,569
See notes to condensed consolidated financial statements.
5
DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED MARCH 31, 2000 AND 1999
(In thousands)
- ------------------
2000 1999
(unaudited)
Cash and equivalents provided by (used for):
Cash flows from operating activities:
Net income............................................ $26,663 $19,199
Adjustments to reconcile net income to net cash
provided by operating activities:
Writeoff of in-process research and development..... - 4,991
Depreciation and amortization....................... 3,382 2,621
Deferred taxes...................................... (1,130) (2,632)
Changes in assets and liabilities:
Accounts receivable............................... (3,869) (4,512)
Inventories....................................... (2,350) 1,444
Prepaid expenses and other assets................. (119) (939)
Accounts payable.................................. (942) (338)
Accrued liabilities............................... (1,729) 1,362
Income taxes payable.............................. (4,110) (521)
Accrued product warranty.......................... 119 250
Net cash provided by operating activities............. 15,915 20,925
Cash flows from investing activities:
Purchase of temporary cash investments.............. - (3,500)
Proceeds from maturities of temporary
cash investments................................. - 9,350
Purchase of property, plant and equipment........... (3,544) (6,744)
Acquisition of Softron, net of cash acquired........ - (23,206)
Other............................................... (71) 418
Net cash used for investing activities................ (3,615) (23,682)
Cash flows from financing activities:
Net change in notes payable to banks................ 3,678 3,727
Sale of common stock................................ 11,174 6,415
Repurchase of common stock.......................... (28,600) (11,570)
Prepaid licensing fees.............................. 394 (3,250)
Other............................................... (357) (456)
Net cash used for investing activities................ (13,711) (5,134)
Effect of exchange rate changes on cash............... (694) (1,332)
Net decrease in cash and equivalents.................. (2,105) (9,223)
Cash and equivalents, beginning of period............. 11,336 13,184
Cash and equivalents, end of period................... $ 9,231 $ 3,961
(continued)
6
DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED MARCH 31, 2000 AND 1999
(In thousands)
- ------------------
2000 1999
(unaudited)
(continued)
Supplemental disclosures of cash flow information:
Income taxes paid................................. $11,236 $ 9,267
Interest paid..................................... $ 400 $ 232
Noncash investing activities:
Common stock issued in connection with acquisition
of Softron GmbH.................................... $ - $ 1,388
See notes to condensed consolidated financial statements.
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, 1999.
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, 2000.
2. Inventories
Inventories consist of (in thousands):
March 31, June 30,
2000 1999
Finished goods $ 5,677 $ 5,035
Work in process 3,177 2,426
Raw materials and subassemblies 6,116 5,241
$14,970 $12,702
3. Income Taxes
The effective income tax rate for the first nine months of
fiscal 2000 was 32.5%, compared to 33.5% reported in the
same period of fiscal 1999.
8
DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- ------------------
4. Comprehensive Income
Components of comprehensive income as reported in
accumulated comprehensive income in the condensed
consolidated balance sheet include net income, foreign
currency translation adjustments and unrealized gain on
equity securities available for sale. Comprehensive income
was $13,863,000 and $7,770,000 for the three months ended
March 31, 2000 and 1999, respectively, and $35,458,000 and
$20,937,000 for the nine months ended March 31, 2000 and
1999, respectively.
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 third quarter of fiscal 2000, the Company
repurchased 307,750 shares of its common stock on the open
market, bringing the cumulative number of shares repurchased
during the first nine months of the year to 761,550 shares
compared with 423,000 shares repurchased in the same period
of the previous fiscal year. During all of fiscal 1999, the
Company repurchased 501,500 shares.
DIONEX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations - Three Months Ended March 31, 2000 and 1999
Net sales for the third quarter of fiscal 2000 were $47.3 million,
an increase of 1% from the $47.1 million reported for the same
period last year. However, after taking into consideration the
effects of unfavorable currency fluctuations and sales related to a
large nonrecurring order in Japan last year, sales for the third
quarter increased 14% compared with the same period last year. The
effect of the Japan order on last year's reported revenues was
approximately $4.7 million in the third quarter and $2.6 million in
the fourth quarter. North America and Japan continued the strong
growth from last quarter, reporting double digit growth, excluding
the nonrecurring Japanese order. Business in Europe grew in the
high single digits in local currency, but reported sales were down
slightly after the effect of currency fluctuations.
Gross margin for the third quarter of fiscal 2000 was 69.4%
compared to 67.3% for the third quarter last year. The higher
gross margin was attributable to lower manufacturing product costs
and product mix. There were no significant selling price changes
between these periods.
Operating expenses of $18.7 million for the third quarter of fiscal
2000 were up $617,000 from the third quarter of last year. As a
percentage of sales, operating expenses were 39% of sales, up
slightly from the 38% reported in the same period last year. The
increase was due to higher Selling, General and Administrative
(SG&A) expenses. SG&A expenses of $14.8 million increased
$775,000, or 6%, compared with $14.0 million reported in the same
period last year. The increase in SG&A expenses was primarily due
to higher selling related expenses.
Research and Development (R&D) costs of $3.9 million decreased
$158,000, or 4%, from the $4.1 million reported in the same period
last year. The level of R&D spending varies from period to period
depending on both the breadth of the Company's R&D efforts and the
stage of specific product development.
Interest income was $271,000 for the third quarter of fiscal 2000,
$93,000 higher than the $178,000 reported in the third quarter last
year. The increase in interest income was due to higher average
cash balances.
Interest expense was $114,000, an increase of $23,000 compared with
$91,000 reported in the third quarter last year. The increase was
due to additional short-term borrowings.
10
The effective tax rate for the third quarter of fiscal 2000 was
32.5%, compared with 33.5% 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.
Net income in the third quarter of fiscal 2000 was $9.7 million
compared with the $9.1 million reported in the third quarter last
year. Basic and diluted earnings per share were $.44 and $.42
respectively, compared with $.41 and $.38 reported for the same
period last year.
11
Results of Operations - Nine months ended March 31, 2000 and 1999
Net sales for the nine months ended March 31, 2000 were $137.2
million, an increase of 9%, compared with the $126.4 million
reported for the same period last year. The Company experienced
strong sales growth in North America and Japan, excluding the
non-recurring Japanese order last year. Sales in Europe were up
on a local currency basis, but they were flat on a reported basis
after the effect of foreign currency fluctuations. Currency
fluctuations had no significant impact on overall sales growth
during the first three quarters of fiscal 2000.
Gross margin for the first nine months of fiscal 2000 was 68.6%
compared with 66.2% reported for the same period last year. Most
of this increase was due to a nonrecurring charge in the second
quarter of fiscal 1999 related to the sale of inventory acquired,
which had been written up as part of the purchase accounting for
the acquisition of Softron. Excluding this nonrecurring charge,
gross margin for the first nine months of fiscal 1999 would have
been 67.8%.
Operating expenses for the nine months ended March 31, 2000 were
$55.0 million, a decrease of $274,000 compared with $55.3 million
reported for the same period last year. Excluding a nonrecurring
write-off of in-process research and development related to the
Softron acquisition, operating expenses increased $4.7 million,
or 9%. As a percentage of sales, operating expenses in fiscal
2000 were unchanged from the 40% reported in the prior year,
excluding the non-recurring charge. SG&A expenses were $43.5
million, an increase of $4.4 million or 11%, compared with $39.1
million reported for the same period last year. The increase in
SG&A expenses was attributable to the inclusion of Softron for
the full nine months and increased selling related costs.
R&D expenses for the nine months ended March 31, 2000 were $11.4
million, or 8% of sales. Excluding the nonrecurring charge in
the second quarter of last year, expenses increased by $322,000,
or 3% this year. The increase was attributable to the inclusion
of Softron and an increase in personnel related costs. The level
of R&D spending varies from period to period depending on both
the breadth of the Company's R&D efforts and the stage of
specific product development.
Interest income for the nine months ended March 31, 2000 was
$728,000, up $95,000 from the $633,000 reported for the same
period last year. The increase was due to higher average cash
balances in the current year.
Interest expense of $354,000 was $120,000 higher than the
$234,000 reported for the first nine months of fiscal 1999. The
interest expense increase was due to additional short-term
borrowings.
12
The effective tax rate for the first nine months of fiscal 2000
was 32.5%, compared with the 33.5% for the same period in fiscal
1999. Variations in the tax rate reflect changes in the mix of
taxable income among the various tax jurisdictions in which the
Company does business.
Net income in the first three quarters of fiscal 2000 was $26.7
million compared with $19.2 million reported in the same period
last year. Basic and diluted earnings per share were $1.20 and
$1.14 respectively, compared with $.86 and $.81 per share in the
same period of last year. The nonrecurring acquisition related
charges reduced basic and diluted earnings per share by $.21 and
$.20, respectively during the first nine months of fiscal 1999.
Basic and diluted earnings per share were favorably affected by
the Company's stock repurchase program.
Liquidity and Capital Resources
At March 31, 2000, the Company had cash and cash investments of
$9.2 million. The Company's working capital was $42.2 million at
March 31, 2000, an increase of $7.4 million from the $34.8
million reported at June 30, 1999. Cash generated by operating
activities for the nine months ended March 31, 2000 was $15.9
million compared with $20.9 million for the same period last
year. The decrease in operating cash flow was due to an increase
in inventory and a decrease in income taxes payable and accrued
liabilities. During the first nine months of fiscal 2000 the
Company repurchased 761,550 shares of its common stock for $28.6
million.
Capital expenditures during the first nine months of fiscal 2000
were $3.5 million. The largest component of capital expenditures
relates to progress payments amounting to $1.4 million for
construction of a building in Japan.
At March 31, 2000, the Company had outstanding borrowings of $5.3
million. At March 31, 2000, the Company had bank lines of credit
totaling $38.2 million. The Company believes its cash flow from
operations, its existing cash and cash investments and its bank
lines of credit will be sufficient to meet its forseeable
liquidity needs.
The impact of inflation on Dionex Corporation's financial
position and results of operations was not significant during the
nine months ended March 31, 2000.
13
Forward-looking statements
Except for historical information contained herein, the above
discussion 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 risks and
uncertainties include: general economic conditions, foreign currency
fluctuations, new product development, including market
receptiveness, fluctuation in worldwide demand for analytical
instrumentation, competition from other products, existing product
obsolescence, 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, 1999. 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.
14
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule for the period ended
March 31, 2000.
(b) Reports on Form 8-K.
The Company did not file any reports on Form 8-K
during the quarter ended March 31, 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: May 11, 2000 By:
A. Blaine Bowman
President, Chief Executive
Officer
By:
Craig A. McCollam
Vice President, Finance and
and Administration
(Principal Financial and
Accounting Officer)
15
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<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 March 31, 2000 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
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