UNITED STATES SECURITIES AND EXCHANGE COMMISSION |
| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the quarterly period ended September 30, 2001 |
OR |
| [_] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| Commission File Number 0-11250 |
DIONEX CORPORATION |
| Delaware | 94-2647429 |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer 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 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 October 31, 2001: |
| CLASS | NUMBER OF SHARES |
| Common Stock | 21,993,989 |
Page 1 of 17 |
DIONEX CORPORATION |
| ITEM 1. | FINANCIAL STATEMENTS | Page |
| CONDENSED CONSOLIDATED BALANCE SHEETS as of September 30, 2001 and June 30, 2001 | 3 |
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME for the Three Months Ended September 30, 2001 and 2000 | 4 |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS for the Three Months Ended September 30, 2001 and 2000 | 5 |
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | 6-11 |
| ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 12-14 |
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS | 15 |
PART II. OTHER INFORMATION |
| ITEM 6. | EXHIBITS AND REPORTS ON FORM 8-K | 16 |
| SIGNATURES | 17 |
2 |
DIONEX CORPORATION |
| September 30, 2001 (unaudited) | June 30, 2001 | |||||||
|---|---|---|---|---|---|---|---|---|
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and equivalents (including invested cash of $10,334 at | ||||||||
| September 30, 2001 and $7,853 at June 30, 2001) | $ | 21,179 | $ | 17,311 | ||||
| Marketable equity securities | 4,756 | 5,858 | ||||||
| Accounts receivable (net of allowance for doubtful accounts | ||||||||
| of $1,023 at September 30, 2001 and $890 at June 30, | ||||||||
| 2001) | 43,047 | 45,142 | ||||||
| Inventories | 25,523 | 25,017 | ||||||
| Deferred tax assets | 8,776 | 8,619 | ||||||
| Prepaid expenses and other | 2,345 | 2,810 | ||||||
| Total current assets | 105,626 | 104,757 | ||||||
| Property, plant and equipment, net | 43,968 | 42,327 | ||||||
| Goodwill, net | 14,671 | 13,233 | ||||||
| Intangible assets, net | 6,250 | 6,423 | ||||||
| Other assets | 7,231 | 6,942 | ||||||
| $ | 177,746 | $ | 173,682 | |||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Notes payable to banks | $ | 3,356 | $ | 2,495 | ||||
| Accounts payable | 5,041 | 6,250 | ||||||
| Accrued liabilities | 20,156 | 21,533 | ||||||
| Income taxes payable | 6,140 | 3,425 | ||||||
| Accrued product warranty | 2,944 | 2,983 | ||||||
| Total current liabilities | 37,637 | 36,686 | ||||||
| Deferred taxes and other liabilities | 6,828 | 6,172 | ||||||
| Long-term debt | 1,384 | 966 | ||||||
| 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: 22,001,489 shares at | ||||||||
| September 30, 2001 and 22,177,005 shares at June 30, | ||||||||
| 2001) | 67,877 | 67,282 | ||||||
| Retained earnings | 69,794 | 70,204 | ||||||
| Accumulated other comprehensive income/(loss) | (5,774 | ) | (7,628 | ) | ||||
| Total stockholders' equity | 131,897 | 129,858 | ||||||
| $ | 177,746 | $ | 173,682 | |||||
See notes to condensed consolidated financial statements. 3 |
DIONEX CORPORATION |
| September 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2001 | 2000 | |||||||
| (unaudited) | ||||||||
| Net sales | $ | 42,067 | $ | 42,675 | ||||
| Cost of sales | 15,316 | 14,533 | ||||||
| Gross profit | 26,751 | 28,142 | ||||||
| Operating expenses: | ||||||||
| Selling, general and administrative | 15,571 | 14,369 | ||||||
| Research and product development | 3,945 | 3,579 | ||||||
| Total operating expenses | 19,516 | 17,948 | ||||||
| Operating income | 7,235 | 10,194 | ||||||
| Interest income | 155 | 202 | ||||||
| Interest expense | (52 | ) | (87 | ) | ||||
| Other income | 599 | — | ||||||
| Income before taxes | 7,937 | 10,309 | ||||||
| Taxes on income | 2,580 | 3,350 | ||||||
| Income before cumulative effect of change in accounting principle | 5,357 | 6,959 | ||||||
| Cumulative effect of change in accounting principle | — | (359 | ) | |||||
| Net income | $ | 5,357 | $ | 6,600 | ||||
| Basic earnings per share: | ||||||||
| Income before cumulative effect of change in accounting principle | $ | 0.24 | $ | 0.32 | ||||
| Cumulative effect of change in accounting principle, net of tax | — | (0.02 | ) | |||||
| Net income | $ | 0.24 | $ | 0.30 | ||||
| Diluted earnings per share: | ||||||||
| Income before cumulative effect of change in accounting principle | $ | 0.24 | $ | 0.31 | ||||
| Cumulative effect of change in accounting principle, net of tax | — | (0.02 | ) | |||||
| Net income | $ | 0.24 | $ | 0.29 | ||||
| Shares used in computing per share amounts: | ||||||||
| Basic | 22,138 | 22,065 | ||||||
| Diluted | 22,704 | 22,795 | ||||||
See notes to condensed consolidated financial statements. 4 |
DIONEX CORPORATION |
| September 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2001 | 2000 | |||||||
| (unaudited) | ||||||||
| Cash and equivalents provided by (used for): | ||||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 5,357 | $ | 6,600 | ||||
| Adjustments to reconcile net income to net cash provided by | ||||||||
| operating activities: | ||||||||
| Depreciation and amortization | 1,954 | 1,201 | ||||||
| Gain on sale of marketable securities | (599 | ) | — | |||||
| Tax benefit related to stock option plans | 274 | 47 | ||||||
| Deferred taxes | (480 | ) | (244 | ) | ||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | 3,725 | (3,054 | ) | |||||
| Inventories | 285 | (3,052 | ) | |||||
| �� Prepaid expenses and other assets | 307 | (61 | ) | |||||
| Accounts payable | (1,329 | ) | 308 | |||||
| Accrued liabilities | (1,542 | ) | (833 | ) | ||||
| Income taxes payable | 2,047 | 2,602 | ||||||
| Accrued product warranty | (120 | ) | (500 | ) | ||||
| Net cash provided by operating activities | 9,879 | 3,014 | ||||||
| Cash flows from investing activities: | ||||||||
| Proceeds from sale of marketable securities | 890 | — | ||||||
| Purchase of property, plant and equipment | (2,401 | ) | (2,216 | ) | ||||
| Other | — | (240 | ) | |||||
| Net cash used for investing activities | (1,511 | ) | (2,456 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Net change in notes payable to banks | 1,219 | 2,405 | ||||||
| Principal payments on long-term debt | (123 | ) | — | |||||
| Sale of common stock | 998 | 819 | ||||||
| Repurchase of common stock | (6,444 | ) | (3,197 | ) | ||||
| Other | 1 | 145 | ||||||
| Net cash provided by (used for)financing activities | (4,349 | ) | 172 | |||||
| Effect of exchange rate changes on cash | (151 | ) | 615 | |||||
| Net increase in cash and equivalents | 3,868 | 1,345 | ||||||
| Cash and equivalents, beginning of period | 17,311 | 9,386 | ||||||
| Cash and equivalents, end of period | $ | 21,179 | $ | 10,731 | ||||
| Supplemental disclosures of cash flow information: | ||||||||
| Income taxes paid | $ | 376 | $ | 933 | ||||
| Interest paid | $ | 55 | $ | 93 | ||||
See notes to condensed consolidated financial statements. 5 |
DIONEX CORPORATION |
| Three Months Ended September 30, 2000 (unaudited) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Net sales | $ | 44,320 | |||||||||
| Income from continuing operations | $ | 10,760 | |||||||||
| Net income | $ | 6,928 | |||||||||
| Basic earnings per share | $ | 0.31 | |||||||||
| Diluted earnings per share | $ | 0.30 | |||||||||
LC Packings, which markets its products primarily in the United States and Europe, specializes in micro, capillary and nano liquid chromatography used by proteomics and genomics researchers in pharmaceutical, biotechnology and scientific laboratories to analyze and separate proteins, glycoproteins and other complex compounds. 3. New Accounting Pronouncements In June 2001, the FASB issued SFAS No. 141, Business Combinations, which eliminates the pooling method of accounting for all business combinations initiated after June 30, 2001 and addresses the initial recognition and measurement of goodwill and other intangible assets acquired in a business combination. The Company will adopt this accounting standard for business combinations initiated after June 30, 2001. As of July 1, 2001, the Company adopted SFAS No. 142, Goodwill and Other Intangible Assets, which addresses the financial accounting and reporting standards for the acquisition of intangible assets outside of a business combination and for goodwill and other intangible assets subsequent to their acquisition. This accounting standard requires that goodwill be separately disclosed from other intangible assets in the statement of financial position, and no longer be amortized but tested for impairment on a periodic basis. 7 |
DIONEX CORPORATION |
| Three Months Ended September 30, | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2001 | 2000 | |||||||||||||
| (in millions, except per share amounts | ||||||||||||||
| Reported net income | $ | 5,357 | $ | 6,600 | ||||||||||
| Add: Goodwill amortization, net of tax | — | 57 | ||||||||||||
| Adjusted net income | $ | 5,357 | $ | 6,657 | ||||||||||
| Diluted earnings per common share | ||||||||||||||
| Reported net income | $ | 0.24 | $ | 0.29 | ||||||||||
| Goodwill amortization, net of tax | — | — | ||||||||||||
| Adjusted net income | $ | 0.24 | $ | 0.29 | ||||||||||
In October 2001, the Financial Accounting Standards Board issued SFAS No. 144, Impairment on Disposal of Long-Lived Assets, effective for fiscal years beginning after December 31, 2001. Under the new rules, the criteria required for classifying an asset as held-for-sale have been significantly changed. Assets held-for-sale are stated at the lower of their fair values or carrying amounts, and depreciation is no longer recognized. In addition, the expected future operating losses from discontinued operations will be displayed in discontinued operations in the period in which the losses are incurred rather than as of the measurement date. More dispositions will qualify for discontinued operations treatment in the income statement under the new rules. The Company is currently evaluating the impact of SFAS No. 144 to its consolidated financial statements. 8 |
DIONEX CORPORATION |
| September 30, 2001 | June 30, 2001 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Finished goods | $ | 11,013 | $ | 9,342 | ||||||||||
| Work in process | 3,735 | 4,469 | ||||||||||||
| Raw materials | 10,775 | 11,206 | ||||||||||||
| $ | 25,523 | $ | 25,017 | |||||||||||
5. Income Taxes The effective income tax rate for the first three months of fiscal 2002 was 32.5%, unchanged from the same period in fiscal 2001. 6. 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 $7,211,000 and $11,078,000 for the three months ended September 30, 2001 and 2000, respectively. 7. 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. 9 |
DIONEX CORPORATION |
| Total | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance as of July 1, 2001 | $ | 13,233 | |||||||||
| Goodwill acquired during the Period | 1,106 | ||||||||||
| Translation adjustments and other | 332 | ||||||||||
| Balance as of September 30, 2001 | $ | 14,671 | |||||||||
In connection with the adoption of SFAS No. 142, “Note 3", the Company will perform and report the results of the transitional impairment tests in the Company’s December 31, 2001 financial statements. Information regarding the Company’s other intangible assets follow: |
| As of September 30, 2001 | As of June 30,2001 | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Carrying Amount | Accumulated Amortization | Net | Carrying Amount | Accumulated Amortization | Net | |||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Patents and Trademarks | $ | 376 | $ | (375 | ) | $ | 1 | $ | 375 | $ | (375 | ) | $ | — | ||||||
| Developed Technology | 5,526 | (1,732 | ) | 3,794 | 5,295 | (1,428 | ) | 3,867 | ||||||||||||
| Core Technology | 2,844 | (389 | ) | 2,455 | 2,844 | (288 | ) | 2,556 | ||||||||||||
| Total | $ | 6,746 | $ | (2,496 | ) | $ | 6,250 | $ | 8,514 | $ | (2,091 | ) | $ | 6,423 | ||||||
10 |
DIONEX CORPORATION |
| Year Ended June 30, | Amortization Expense | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2002 | $1,180 | ||||||||||
| 2003 | 1,180 | ||||||||||
| 2004 | 1,180 | ||||||||||
| 2005 | 1,180 | ||||||||||
| 2006 | 1,180 | ||||||||||
| Total | $5,900 | ||||||||||
11 |
DIONEX CORPORATION |
| ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Results of Operations - Three months Ended September 30, 2001 and 2000 Net sales for the first quarter of fiscal 2002 were $42.1 million, a decrease of 1% from the $42.7 million reported for the same period last year. Sales decreased over the prior year period in our North American and Japanese markets. Sales increased in Europe in both local currency and reported dollars. Had currency rates been the same as in last year’s first quarter, sales growth would have been up slightly. LC Packings also had a favorable impact on the current year’s quarterly sales. Gross margin for the first quarter of fiscal 2002 was 63.6%, down from the 65.9% reported for the same period last year. Gross margin was lower primarily due to the unfavorable effect of currency fluctuations and higher manufacturing costs. Operating expenses of $19.5 million for the first quarter of fiscal 2002 were up $1.6 million, or 9%, from the $17.9 million reported in the same quarter last year. As a percentage of sales, operating expenses were 46%, higher than the 42% reported for the first quarter last year. Selling, general and administrative (SG&A) expenses increased $1.2 million, or 8%, to $15.6 million in the first quarter of fiscal 2002. The increase was due to the addition of LC Packings and two new subsidiaries in China and Denmark. Research and development (R&D) costs of $3.9 million were slightly higher than the $3.6 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. Other income was $0.6 million in the first quarter of fiscal 2002. Other income resulted from the sale of marketable equity securities during the quarter. The effective tax rate for the first quarter of fiscal 2002 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. 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 the first quarter of fiscal 2001‘s income statement. 12 |
Net income in the first quarter of fiscal 2002 was $5.4 million, compared with $6.6 million reported for the same period last year. After the effect of the change in accounting principle in the prior year, diluted earnings per share were $.24 compared with $.29 in the same period last year. Liquidity and Capital Resources At September 30, 2001, the Company had cash and cash investments of $21.2 million. The Company’s working capital was $68.0 million, essentially the same as the $68.1 million reported at June 30, 2001. Cash generated by operating activities for the three months ended September 30, 2001 was $9.9 million compared with $3.0 million for the same period last year. The increase in operating cash flow was primarily due to a decrease in accounts receivable. Capital expenditures during the first three months of fiscal 2002 were $2.4 million. This includes $1.1 million related to an expansion of a manufacturing site in Germering, Germany. At September 30, 2001, the Company has utilized $5.2 million of the Company’s $35.4 million in committed bank lines of credit, mainly due to borrowings related to the Company’s operations. The Company believes that its cash flow from operations, current cash and cash investments and the remainder of its $30.2 million bank lines of credit will be adequate to meet its cash requirements for fiscal 2002 and the foreseeable future. During the three months of fiscal 2002, the Company repurchased 226,200 shares of its common stock for $6.4 million. The impact of inflation on Dionex Corporation’s financial position and results of operations was not significant during the three months ended September 30, 2001. 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, 2001. Readers are cautioned not to place undue reliance on these forward-looking statements which reflect 13 |
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 |
| 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, 2001 and the Company’s Form 10-K for the year ended June 30, 2001 filed with the Securities and Exchange Commission. There have been no material changes to these financial market risks since June 30, 2001. 15 |
| PART II. | OTHER INFORMATION |
Item 6. Exhibits and Reports on Form 8-K |
| (a) Exhibits |
| (b) Reports on Form 8-K. |
| The Company did not file any reports on Form 8-K during the quarter ended September 30, 2001. |
16 |
SIGNATURESPURSUANT 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. |
Date: November 9, 2001 | DIONEX CORPORATION (Registrant) By: —————————————— A. Blaine Bowman President, Chief Executive Officer |
| By: —————————————— Craig A. McCollam Vice President, Finance and Administration (Principal Financial and Accounting Officer) |
17 |