Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K/A
Securities and Exchange Commission
Washington, D.C. 20549
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): October 20, 1998
Dionex Corporation
(Exact name of Registrant as specified in its charter)
California 94-2647429
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1228 Titan Way, Sunnyvale, CA 94086
(Address of principal executive offices) (Zip code)
(408) 737-0700
(Registrant's telephone number, including area code)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 20, 1998, pursuant to a Stock Purchase Agreement
dated as of October 20, 1998 by and among Dionex Corporation (Dionex
or the Registrant), Zeus Vierunddreissigste Beteiligungsgesellschaft
mbH, a limited liability company organized under the laws of Germany
and a wholly owned subsidiary of the Registrant (Acquisition Sub),
and each of the shareholders of Softron GmbH (the Shareholders), a
limited liability company organized under the laws of Germany
(Softron), the Registrant through Acquisition Sub purchased all of
the issued and outstanding shares of Softron from the Shareholders
for a purchase price of DM 34,000,000 (approximately $20.7 million
in cash and common stock on the closing date) (the Acquisition). In
addition, the Shareholders 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 purchase price paid at closing was paid
from the Registrant's cash and equivalents, temporary cash
investments and borrowings under the Registrant's bank line of
credit with Bank of America NTSA. The earn-out payment, if any, is
intended to be paid from cash generated from operations. The total
purchase price was determined through arms' length negotiations
between the Registrant and the Shareholders. The Acquisition will
be treated by the Registrant as a purchase for accounting purposes.
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. The Registrant currently
intends to maintain Softron as a wholly-owned subsidiary of
Acquisition Sub and to have Softron continue to conduct its business
as historically conducted.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Audited financial statements of Softron as of December 31,
1997 and June 30, 1998 and for the year ended December 31,
1997 and the six months ended June 30, 1998 are attached
hereto and filed herewith.
(b) Pro Forma Financial Information.
The attached unaudited pro forma condensed combining
financial statements for the year ended June 30, 1998 give
effect to the Acquisition. The acquired assets and
liabilities were recorded at their estimated fair market
value at the date of acquisition. The pro forma financial
information does not include the potential consideration
available under the earn-out provision because required
business thresholds have not been achieved as of the date
of this filing. The pro forma condensed combining
statement of operations assumes that the Acquisition took
place at the beginning of the period presented and
combines Dionex's and Softron's results of operations for
the year ended June 30, 1998. The unaudited pro forma
condensed combining balance sheet combines Dionex's
balance sheet as of June 30, 1998 with the Softron balance
sheet as of June 30, 1998 giving effect to the acquisition
as if it had occurred on June 30, 1998.
The pro forma condensed combining financial information is
presented for illustrative purposes only and is not
necessarily indicative of the operating results or
financial position that would have occurred had the
acquisition been consummated at the beginning of the
periods presented, nor is it necessarily indicative of
future operating results or financial position.
The pro forma condensed combining financial information
should be read in conjunction with the audited historical
consolidated financial statements and the related notes
thereto of Dionex previously filed in the Registrant's
Form 10-K for June 30, 1998 and the historical financial
statements and related notes thereto of Softron included
herein.
The following financial statements are attached hereto and
filed herewith:
Audited financial statements of Softron as of December 31,
1997 and June 30, 1998 and for the year ended December 31,
1997 and the six months ended June 30, 1998.
Unaudited pro forma condensed combining financial
statements of Dionex as of June 30, 1998 and for the year
ended June 30, 1998.
(c) Exhibits.
2.1* Stock Purchase Agreement, dated October 20,
1998, among the Registrant, Zeus
Vierrunddreissigste Beteiligungsgesellschaft
mbH and the shareholders of Softron GmbH (the
Disclosure Schedule has been omitted as
permitted pursuant to the rules and regulations
of the Securities and Exchange Commission
(SEC), but will be furnished supplementally to
the SEC upon request).
20.2*Press release of Dionex Corporation dated
October 20, 1998.
23.1 Independent Auditors' Consent
*Previously filed with Form 8-K on November 4, 1998
ITEM 9. SALE OF EQUITY SECURITIES PURSUANT TO REGULATION S
In connection with the Acquisition, the Registrant allowed
electing Shareholders to direct an aggregate of $1,388,002
of their cash proceeds to the purchase of an aggregate of
63,091 shares of common stock of the Registrant (the
Shares) pursuant to the Share Purchase Agreement, dated as
of October 20, 1998, by and between the Registrant and
each of the electing Shareholders. The $22.00 per share
price reflects the average closing price of such stock on
the Nasdaq Stock Market for the 20 trading days ending two
trading days before October 20, 1998. The Shares were sold
in reliance on the exemption from the registration
requirements of the Securities Act of 1933, as amended
(the Securities Act), set forth in Regulation S
promulgated thereunder. The Shares are subject to
restrictions on transfer under the applicable provisions
of Regulation S and carry a legend reflecting such
restrictions. The Registrant has advised the electing
Shareholders that the Shares are subject to restrictions
on transfer for a minimum of one year from the date of
acquisition and, absent registration, may be transferred
only pursuant to an exemption from the registration
requirements of the Securities Act or pursuant to an
effective registration statement under the Securities Act.
The Registrant obtained representations from the electing
Shareholders to the effect that each such Shareholder was
not a U.S. Person within the meaning of Regulation S and
was acquiring the Shares for his own account for
investment only, and not with a view towards their
distribution. The offer of the Shares was made directly
by the Registrant in an offshore transaction, and neither
the Registrant, any of its affiliates, nor any person
acting on behalf of any of the foregoing made any directed
selling efforts with respect to the Shares in the United
States.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
DIONEX CORPORATION
(Registrant)
Date: November 11, 1998 By: /s/ Michael W. Pope
Michael W. Pope
Vice President, Finance and
Administration and
Chief Financial Officer (Principal
Financial and Accounting Officer)
Index to Financial Statements
Softron GmbH
Independent Auditors' Report ................... F-2
Consolidated Balance Sheets at December 31, 1997
and June 30, 1998 ............................ F-3
Consolidated Statements of Income and Retained
Earnings for the Year Ended December 31, 1997
and the Six Months ended June 30, 1998........ F-4
Consolidated Statements of Cash Flows for the Year
Ended December 31, 1997 and the Six Months Ended
June 30, 1998 ................................. F-5
Notes to Consolidated Financial Statements...... F-6 to F-11
Dionex Corporation
Pro Forma Condensed Combining Balance Sheet
as of June 30, 1998.......................... F-12
Pro Forma Condensed Combining Statement of Income
for the Year Ended June 30, 1998 ............ F-13
Notes to Pro Forma Condensed Combining Financial
Statements................................... F-14 to F-16
F-1
INDEPENDENT AUDITORS' REPORT
Softron GmbH:
We have audited the accompanying consolidated balance sheets of
Softron GmbH and its subsidiaries as of December 31, 1997 and June
30, 1998 and the related consolidated statements of income and
retained earnings and of cash flows for the year ended December 31,
1997 and the six months ended June 30, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of Softron
GmbH and its subsidiaries at December 31, 1997 and at June 30, 1998,
and the results of their operations and their cash flows for the
year ended December 31, 1997 and the six months ended June 30, 1998
in conformity with accounting principles generally accepted in the
United States of America.
October 5, 1998
Deloitte &
Touche GmbH
Wirtschaftspruefungsgesellschaft
F-2
Softron GmbH
Consolidated Balance Sheets
December 31, 1997 and June 30, 1998
(Dollars in thousands)
1998 1997
ASSETS
Current Assets:
Cash $ 562 $1,307
Accounts receivable (net of allowance
for doubtful accounts of $ 30 in 1998
and $ 56 in 1997) 1,498 1,556
Inventories 2,233 1,770
Prepaid expenses and other 423 363
Total current assets 4,716 4,996
Property, plant and equipment, net 4,171 4,099
Other assets 376 342
$9,263 $9,437
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 762 $ 209
Accounts payable 505 254
Accrued liabilities 1,580 2,310
Income taxes payable 473 275
Accrued product warranty 74 194
Total current liabilities 3,394 3,242
Long-term debt 1,248 1,356
Stockholders' equity:
Registered capital 75 75
Additional paid-in capital 2,236 2,236
Retained earnings 2,885 3,101
Accumulated translation adjustments (575) (573)
Total stockholders' equity 4,621 4,839
$ 9,263 $9,437
See notes to consolidated financial statements.
F-3
Softron GmbH
Consolidated Statements of Income and
Retained Earnings
Year ended December 31, 1997 and Six Months
ended June 30, 1998
(Dollars in thousands)
1998 1997
Net sales $4,580 $10,233
Cost of sales 1,656 3,775
Gross profit 2,924 6,458
Operating expenses:
Selling, general and administrative 2,087 4,045
Research and product development 573 1,606
Total operating expenses 2,660 5,651
Operating income 264 807
Other income 5 -
Interest income 28 77
Interest expense (48) (159)
Income before taxes on income 249 725
Taxes on income 209 461
Net income 40 264
Retained earnings beginning of period 3,101 3,170
Dividends paid (256) (333)
Retained earnings end of period $2,885 $3,101
See notes to consolidated financial statements.
F-4
Softron GmbH
Consolidated Statements of Cash Flows
Year ended December 31, 1997 and Six Months ended
June 30, 1998
(Dollars in thousands)
1998 1997
Cash provided by (used for):
Cash flows from operating activities:
Net income $ 40 $ 264
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 203 357
Changes in assets and liabilities:
Accounts receivable 45 718
Inventories (473) (416)
Prepaid expenses and other assets (82) 327
Accounts payable 251 (190)
Accrued liabilities (717) (40)
Income taxes payable 212 218
Accrued product warranty (119) (46)
Net cash provided by (used for)
operating activities (640) 1,192
Cash flows from investing activities:
Purchase of property, plant and equipment (333) (323)
Other (6) 39
Net cash used for investing activities (339) (284)
Cash flows from financing activities:
Net change in notes payable 556 109
Payment of long-term debt (108) (218)
Dividends paid (256) (333)
Net cash provided by (used for) financing
activities 192 (442)
Effect of exchange rate changes on cash 42 (210)
Net increase (decrease) in cash (745) 256
Cash beginning of period 1,307 1,051
Cash end of period $ 562 $1,307
See notes to consolidated financial statements.
F-5
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION. Softron GmbH (the "Company") is a manufacturer and
marketer of high-performance liquid chromatography ("HPLC") systems.
The Company's HPLC systems are used by a variety of industries to
detect, identify, monitor and measure the chemical, physical and
biological composition of materials.
BASIS OF ACCOUNTING. The Company's consolidated financial statements
have been prepared in accordance with accounting principles
generally accepted in the United States of America ("US GAAP").
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements
include the Company and its subsidiaries. All significant
intercompany transactions and accounts are eliminated in
consolidation.
INVENTORIES. Inventories are stated at the lower of cost (which
approximates first-in, first-out basis) or market.
PROPERTY, PLANT AND EQUIPMENT. Property, plant and equipment are
stated at cost. Depreciation is computed using the straight-line
method based on estimated useful lives of 3 to 30 years. Leasehold
improvements are amortized over the lesser of the useful life or the
remaining term of the lease.
REVENUE RECOGNITION. Revenue related to systems is recognized upon
shipment. Service contract revenue is deferred and recognized on a
pro rata basis over the contractual period. Installation and product
warranty costs are accrued at the time revenue is recognized.
TAXES ON INCOME. The Company accounts for income taxes using the
asset and liability approach to account for deferred income taxes.
EARNINGS PER SHARE. Earnings per share is not calculated or
disclosed because the Company has a limited number of owners with
varying ownership shares.
TRANSLATION OF FOREIGN CURRENCY. The reporting currency of the
financial statements is the U.S. dollar. The Company's operations in
Germany and in foreign locations are measured using local currencies
as the functional currency. Assets and liabilities are translated
into U.S. dollars at year-end rates of exchange, and results of
operations are translated at average rates for the year. The Company
does not enter into foreign exchange forward contracts to hedge its
exposure to fluctuations in foreign currency exchange rates.
NEW ACCOUNTING PRONOUNCEMENTS. In June 1997, the Financial
Accounting Standards Board ("FASB") issued Statement on Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income", and SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information". In February 1998, the FASB
issued SFAS No. 132, "Employers' Disclosures about Pensions and
other Postretirement Benefits". The adoption of these standards is
F-6
required for fiscal years beginning after December 15, 1997. Under
SFAS 130, the Company is required to report comprehensive income in
the financial statements, in addition to net income. For the
Company, the primary differences between net income andcomprehensive
income will be from foreign currency translation. SFAS 131 does not
apply to the Company, which is a nonpublic business enterprise. SFAS
132 revises employers' disclosures about pension and other
postretirement benefit plans. Adoption of SFAS 132 will not impact
the Company's consolidated financial position, results of operations
or cash flows.
In June 1998, the FASB issued SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities". The adoption of this standard
is required for fiscal years beginning after June 15, 1999. SFAS 133
requires that an entity recognize all derivative instruments as
either assets or liabilities and measure those instruments at fair
value. The Company did not have any derivative instruments during
the year ended December 31, 1997 or the six months ended June 30,
1998.
FAIR VALUE OF FINANCIAL INSTRUMENTS. The Company's financial
statements include cash, accounts receivable, accounts payable, and
liabilities to banks. The carrying amounts of the financial
instruments approximate their fair value because of short-term
maturities and because the interest rate on liabilities to banks
approximates market interest rates.
CERTAIN RISKS AND UNCERTAINTIES. The preparation of financial
statements in conformity with US GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates. Financial instruments which
potentially subject the Company to concentrations of credit risk
consist principally of trade receivables. The Company sells its
products primarily to large organizations in diversified industries
worldwide. Credit risk is further mitigated by the Company's credit
evaluation process and the reasonably short collection terms. The
Company does not require collateral or other security to support
accounts receivable. While the Company does maintain allowances for
potential credit losses, actual bad debt losses have not been
significant.
The Company is subject to certain risks and uncertainties and
believes that changes in any of the following areas could have a
material adverse affect on the Company's future financial position
or results of operations: general economic conditions; foreign
currency fluctuations; new product development, including market
receptiveness; competition from other products; worldwide demand for
analytical instrumentation; existing product obsolescence; the
ability to manufacture products on an efficient and timely basis and
at reasonable cost and in sufficient volume; the ability to attract
and retain talented employees and other risks.
F-7
NOTE 2: INVENTORIES
Inventories at December 31, 1997 and June 30, 1998 consist of:
1998 1997
(Dollars in thousands)
Finished goods $ 1,084 $ 752
Raw materials 1,149 1,018
$ 2,233 $ 1,770
NOTE 3: PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at December 31, 1997 and June 30, 1998
consist of:
1998 1997
(Dollars in thousands)
Land $ 1,441 $ 1,445
Building 2,089 2,096
Machinery and equipment 510 426
Office equipment 820 773
Cars 642 489
5,502 5,229
Accumulated depreciation (1,331) (1,130)
Net property, plant and equipment $ 4,171 $ 4,099
NOTE 4: FINANCING ARRANGEMENTS
The Company has a long term credit facility from a German bank
totaling approximately $ 2,218,000 (DM 4 million) which was used
primarily to finance the purchase of the Company's land and
building. This facility matures on June 30, 2005 and bears interest
at a rate of 5.75% per annum. The balance outstanding at June 30,
1998 and December 31, 1997 was $ 1,456,000 (DM 2,625,000) and
$1,565,000 (DM 2,812,900), respectively. The loan is secured by a
mortgage on the Company's land and building.
In addition, at June 30, 1998, the Company has two unsecured short-
term loans totaling approximately $ 554,000 (DM 1 million) with
German banks that mature on November 8, 1998. The loans bear
interest at a rate of 4.65% per annum with interest payable at
maturity. The average interest rate on borrowings at June 30, 1998
was 5.4%.
F-8
The scheduled payments under the long term loan for the next five
years and thereafter are as follows: $ 104,000 in the remainder of
1998, $ 208,000 in 1999, $ 208,000 in 2000, $ 208,000 in 2001,
$208,000 in 2002 and $520,000 thereafter.
Total interest paid was $ 51,000 in the six months ended June 30,
1998 and $ 116,000 in the year ended December 31, 1997.
NOTE 5: ACCRUED LIABILITIES
Accrued liabilities at December 31, 1997 and June 30, 1998 consist
of:
1998 1997
(Dollars in thousands)
Pension $ 628 $ 591
Accrued payroll and related expenses 585 1,087
Other accrued liabilities 367 632
$ 1,580 $ 2,310
NOTE 6: PENSION BENEFITS
The Company maintains a noncontributory pension plan covering the
managing directors of the Company and providing for old age
annuities, disability and widows' benefits. The plan is considered a
defined benefit pension plan for accounting purposes and is
unfunded. The Company has entered into a contract with an insurance
company for purposes of reinsuring the pension liability. The cash
surrender value of the insurance contracts at June 30, 1998 and
December 31, 1997 was $ 314,000 and $ 278,000, respectively, and has
been included in other assets.
The components of net periodic pension cost for the pension plan are
as follows:
1998 1997
(Dollars in thousands)
Service cost of benefits earned during
the period $ 18 $ 35
Interest cost of projected benefit
obligation 19 33
Total pension cost $ 37 $ 68
F-9
Assumptions used in the accounting for the pension plan were:
1998 1997
Discount rate used in determining
present value 6.5% 6.5%
Annual increase in future compensation 2.5% 2.5%
The projected benefit obligation, the accumulated benefit obligation
and the vested benefit obligation are the same. The values at
December 31, 1997 and June 30, 1998 were $591,000 and $628,000,
respectively.
NOTE 7: TAXES ON INCOME
The provision for taxes on income for the year ended December 31,
1997 and for the six months ended June 30, 1998 consists of:
1998 1997
(Dollars in thousands)
Current:
German (federal and municipal
taxes on income) $ 181 $ 461
Non-German 28 -
$ 209 $ 461
Domestic and foreign income before taxes on income for the year
ended December 31, 1997 and for the six months ended June 30, 1998
is as follows:
1998 1997
(Dollars in thousands)
German $ 368 $ 897
Non-German (119) (172)
$ 249 $ 725
Total income tax expense differs from the amount computed by
applying the combined statutory rate for German federal and
municipal trade taxes on income for the year ended December 31, 1997
and the six months ended June 30, 1998 as follows:
1998 1997
Combined statutory rate for federal and
municipal trade taxes
(including surcharge) 55.0% 56.0%
Net operating losses not utilized 46.0 21.1
Foreign taxes at differing rates (8.8) -
Other (8.2) (13.5)
84.0% 63.6%
F-10
The Company has recorded a full valuation allowance for the deferred
tax asset arising from tax loss carryforwards in foreign countries.
Income taxes paid were $ 58,000 for the six months ended June 30,
1998 and $ 243,000 in 1997.
The Company has not provided for German income taxes on
approximately $ 62,000 of undistributed earnings of foreign
subsidiaries, which have been permanently reinvested in subsidiary
operations. If these earnings were distributed to the Company, they
would be substantially tax free on the level of the receiving
Company.
NOTE 8: COMMITMENTS
Certain facilities and equipment are leased under noncancelable
operating leases. The Company generally pays taxes, insurance and
maintenance costs on leased facilities and equipment. Minimum annual
rental commitments under these noncancelable operating leases are as
follows (Dollars in thousands):
July 1, 1998-June 30, 1999 $ 85
July 1, 1999-June 30, 2000 $ 39
July 1, 2000-June 30, 2001 $ 39
July 1, 2001-June 30, 2002 $ 27
July 1, 2002-June 30, 2003 $ 22
Thereafter $ 68
Total rental expense for all operating leases was $ 71,000 for the
six months period ended June 30, 1998 and $ 111,000 for the year
ended December 31, 1997.
NOTE 9: STOCKHOLDERS' EQUITY
Registered capital of $ 75,000 (DM 125,000) reflects the amount
stated in the amended articles of association dated June 28, 1990
and registered by the commercial court on June 25, 1991. The capital
has been fully paid in and is held at June 30, 1998 and December 31,
1997 by eight individuals with capital amounts ranging from $ 2,200
(DM 3,700; 2.96%) up to $ 18,000 (DM 30,000; 24%).
F-11
Dionex Corporation
Pro Forma Condensed Combining Balance Sheet
June 30, 1998
(Unaudited)
(Dollars in thousands)
Dionex Softron Pro forma Pro forma
Corporation GmbH Adjustments Combined
Current Assets
Cash and equivalents $ 13,184 $ 562 $(4,210) (1) $ 9,536
Temporary cash investments 5,850 - (5,850) (1) -
Accounts receivables, net 31,350 1,498 32,848
Inventories 9,921 2,233 1,000 (2) 13,154
Deferred taxes 7,965 - 4,000 (4) 11,965
Prepaid expenses and
Other 1,089 423 1,512
Total current assets 69,359 4,716 (5,060) 69,015
Property, plant &
Equipment, net 30,070 4,171 701 (2) 34,942
Intangible assets - - 14,926 (2) 4,926
(10,000) (4)
Other assets 7,830 376 8,206
Total Assets $107,259 $9,263 $ 567 $117,089
Liabilities
Notes payable $ - $ 762 $ 9,800 (1) $ 10,562
Accounts payable 5,681 505 6,186
Accrued liabilities 17,394 1,580 18,974
Income taxes payable 6,526 473 6,999
Accrued product warranty 4,013 74 4,087
Total Current Liabilities 33,614 3,394 9,800 46,808
Long-term debt - 1,248 1,248
Deferred taxes and other 2,956 - 2,956
Shareholders' Equity
Common stock 38,926 75 1,388 (1) 40,314
(75)(3)
Additional paid-in capital - 2,236 (2,236)(3) -
Retained earnings 32,106 2,885 (2,885)(3) 26,106
(6,000)(4)
Accumulated translation
adjustments (2,242) (575) 575 (3) (2,242)
Unrealized gain on
securities 1,899 - 1,899
Total Stockholders' Equity 70,689 4,621 (9,233) 66,077
Total Liabilities & Equity $107,259 $9,263 $ 567 $117,089
See notes to pro forma condensed combining financial statements.
F-12
Dionex Corporation
Pro Forma Condensed Combining Statement of Income
Twelve Months Ended June 30, 1998
(Unaudited)
(In thousands, except per share amounts)
Proforma Pro forma
Dionex Softron Adjustments Combined
Sales $150,513 $10,247 $ - $160,760
Cost of sales 47,390 3,246 1,000 (5) 51,636
Gross profit 103,123 7,001 (1,000) 109,124
Operating expenses:
Selling, general and
administrative 47,689 3,918 1,202 (6) 52,809
Research and product
development 13,284 1,515 14,799
Total operating expenses 60,973 5,433 1,202 67,608
Operating income 42,150 1,568 (2,202) 41,516
Interest income 1,374 62 (377)(7) 1,059
Interest expense (115) (149) (572)(8) (836)
Income before taxes
on income 43,409 1,481 (3,151) 41,739
Taxes on income 14,759 451 (1,110)(9) 14,100
Net income $28,650 $ 1,030 $(2,041) $27,639
Basic earnings per share $1.25 $ 1.20
Diluted earnings per share $1.18 $ 1.13
Shares used in computing
earnings per share amounts:
Basic 22,978 63 (10) 23,041
Diluted 24,316 63 (10) 24,379
See notes to pro forma condensed combining financial statements.
F-13
DIONEX CORPORATION
NOTES TO PRO FORMA CONDENSED COMBINING FINANCIAL STATEMENTS
(Unaudited)
1. ACQUISITION
SOFTRON GmbH - On October 20, 1998, the Registrant, through a
wholly-owned German subsidiary (Acquisition Sub), acquired the
outstanding stock of Softron GmbH (Softron), a limited liability
company organized under the laws of Germany. The acquisition was
accomplished pursuant to a Stock Purchase Agreement dated October
20, 1998, among the Registrant, Acquisition Sub and the
shareholders of Softron. Pursuant to the Stock Purchase
Agreement, the Registrant paid total consideration of
approximately $20.7 million, consisting of cash and 63,091 shares
of the Registrant's common stock valued at $22 per share. The
source of the funds paid by the Registrant under the Stock
Purchase Agreement was from the Registrant's cash and
equivalents, temporary cash investments and borrowings under the
Registrant's bank line of credit. The acquisition will be
treated by the Registrant as a purchase for accounting purposes.
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. The Registrant
currently intends to maintain Softron as a wholly-owned
subsidiary of Acquisition Sub and to have Softron continue to
conduct its business as historically conducted.
2. PRO FORMA ADJUSTMENTS
The accompanying pro forma financial statements are presented in
accordance with Article 11 of Regulation S-X.
The unaudited pro forma condensed combining balance sheet has
been prepared as if the acquisition, which was accounted for as a
purchase, was completed as of June 30, 1998. The aggregate
purchase price of $20.7 million and approximately $500,000 of
costs directly attributable to the completion of the acquisition
have been allocated to the assets and liabilities acquired. The
allocation of the purchase price among the identifiable
intangible assets was based on estimates of the fair market value
of those assets. As a result, $10.0 million was allocated to
purchased in-process research and development, which has not yet
reached technological feasibility and does not have alternative
future uses. For purposes of preparing the unaudited pro forma
condensed combining balance sheet, this amount was charged to the
company's operations in accordance with generally accepted
accounting principles as of June 30, 1998.
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To prepare the pro forma unaudited condensed combining statement
of operations, the Dionex statement of income for the year ended
June 30, 1998 has been combined with the statement of operations
of Softron for the year ended June 30, 1998. This method of
combining the companies is only for the presentation of the pro
forma unaudited condensed combining financial statements. Actual
statements of operations of the companies will be combined from
the effective date of the acquisition, with no retroactive
restatement.
The unaudited condensed consolidated statement of operations for
Softron for the twelve months ended June 30, 1998 was derived by
combining the consolidated statement of operations for the twelve
months ended December 31, 1997 and the consolidated statement of
operations for the six months ended June 30, 1998. These
combined figures were reduced by the unaudited consolidated
results of operations of Softron for the six months ended June
30, 1997.
The unaudited pro forma condensed combining statement of
operations does not include the one-time $10.0 million charge for
the purchased in-process technology arising from this
acquisition, as it is a material nonrecurring charge. This charge
will be included in the actual consolidated statement of
operations of Dionex Corporation in the second quarter of fiscal
1999.
The Shareholders can receive an earn-out equal to DM 2 for each
DM that consolidated orders for calendar 1998 exceed DM 19
million. The aggregate amount of the earn-out cannot exceed DM 6
million. If paid, the earn-out will increase goodwill by
approximately $3.7 million (based upon an exchange rate on
October 20, 1998 of 1.64 marks to the dollar). The impact of the
earn-out would be to reduce future income from operations by
approximately $123,000 per year.
The unaudited pro forma condensed combining financial statements
should be read in conjunction with the historical financial
statements of Dionex and Softron.
The following pro forma adjustments have been made to the pro forma
combining financial statements.
(1) Reflects cash paid of approximately $19.8 million,
including acquisition costs, and common stock issued of
$1,388,000. The source of the funds for the acquisition
was the Company's cash and equivalents ($4,210,000),
temporary cash investments ($5,850,000)and borrowings
under its bank line of credit ($9,800,000).
(2) Reflects allocation of purchase price to the tangible
and intangible assets identified in the purchase price
allocation.
(3) Reflects the elimination of Softron's stockholders'
equity.
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(4) Reflects the one-time charge of $10.0 million for
purchased in-process technology identified in the
purchase price allocation, net of related taxes at
statutory rates.
(5) Reflects recognition of inventory write-up in cost of
sales.
(6) Reflects pro forma amortization of the purchased
intangibles and additional depreciation on fixed assets
over the estimated useful life ranging from three to
thirty years.
(7) Reflects loss of interest income on cash and
equivalents and temporary cash investments
utilized in connection with the acquisition, assuming
investment in tax exempt municipal securities.
(8) Reflects interest expense that would be incurred on
borrowings, assuming no repayment of debt.
(9) Reflects the tax effect of pro forma adjustments at
statutory rates.
(10)Reflects the number of common shares issued in
connection with the acquisition.
F-16