This document consists of 19
pages, of which this page
is number 1.
FORM 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
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 12, 1999:
CLASS NUMBER OF SHARES
Common Stock 22,349,767
DIONEX CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS Page
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 1999 and June 30, 1998.................. 3
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31, 1999 and 1998........ 4
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Nine Months Ended March 31, 1999 and 1998......... 5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended March 31, 1999 and 1998......... 6-7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS........................................ 8-12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS............. 13-18
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................ 19
SIGNATURES............................................... 19
2
DIONEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
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March 31, June 30,
ASSETS 1999 1998
(unaudited)
Current assets:
Cash and equivalents (including invested cash
of $1,085 at March 31, 1999 and $5,364
at June 30, 1998)............................ $ 3,961 $ 13,184
Temporary cash investments..................... - 5,850
Accounts receivable (net of allowance for
doubtful accounts of $699 at March 31,1999
and $606 at June 30, 1998)................... 39,864 31,350
Inventories.................................... 12,464 9,921
Deferred tax benefits.......................... 10,443 7,965
Prepaid expenses and other..................... 2,264 1,089
Total current assets.................... 68,996 69,359
Property, plant and equipment, net............... 39,890 30,070
Intangible assets................................ 11,042 -
Other assets .................................... 17,319 7,830
$137,247 $107,259
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks......................... $ 4,578 $ -
Accounts payable............................... 6,044 5,681
Accrued liabilities............................ 19,873 17,394
Income taxes payable........................... 6,211 6,526
Accrued product warranty....................... 4,425 4,013
Total current liabilities............... 41,131 33,614
Deferred taxes................................... 7,117 2,956
Long-term debt................................... 1,140 -
Stockholders' equity:
Preferred stock (par value $.001 per share;
1,000,000 shares authorized; none
outstanding)................................. - -
Common stock (par value $.001 per share;
40,000,000 shares authorized; outstanding:
22,320,517 shares at March 31, 1999 and
22,315,990 shares at June 30, 1998).......... 45,941 38,926
Retained earnings.............................. 40,523 32,106
Accumulated other comprehensive income (loss).. 1,395 (343)
Total stockholders' equity.............. 87,859 70,689
$137,247 $107,259
See notes to condensed consolidated financial statements.
3
DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(In thousands, except per share amounts)
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1999 1998
(unaudited)
Net sales...................................... $47,072 $38,404
Cost of sales.................................. 15,378 12,134
Gross profit................................... 31,694 26,270
Operating expenses:
Selling, general and administrative.......... 13,986 11,706
Research and product development............. 4,086 3,471
Total operating expenses.................. 18,072 15,177
Operating income............................... 13,622 11,093
Interest income................................ 178 325
Interest expense............................... (91) (27)
Income before taxes on income.................. 13,709 11,391
Taxes on income................................ 4,592 3,873
Net income..................................... $ 9,117 $ 7,518
Basic earnings per share....................... $ .41 $ .33
Diluted earnings per share..................... $ .38 $ .31
Shares used in computing per share amounts:
Basic..................................... 22,313 22,805
Diluted................................... 23,780 24,179
See notes to condensed consolidated financial statements.
4
DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED MARCH 31, 1999 AND 1998
(In thousands, except per share amounts)
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1999 1998
(unaudited)
Net sales..................................... $126,422 $111,757
Cost of sales................................. 40,749 35,254
Revaluation of acquired inventory............. 1,952 -
Gross profit.................................. 83,721 76,503
Operating expenses:
Selling, general and administrative......... 39,146 35,617
Research and product development............ 11,113 9,896
Write-off of in-process research and development 4,991 -
Total operating expenses................. 55,250 45,513
Operating income.............................. 28,471 30,990
Interest income............................... 633 1,065
Interest expense.............................. (234) (81)
Income before taxes on income................. 28,870 31,974
Taxes on income............................... 9,671 10,871
Net income.................................... $ 19,199 $ 21,103
Basic earnings per share...................... $ .86 $ .91
Diluted earnings per share.................... $ .81 $ .86
Shares used in computing per share amounts:
Basic....................................... 22,266 23,120
Diluted..................................... 23,569 24,490
See notes to condensed consolidated financial statements.
5
DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED MARCH 31, 1999 AND 1998
(In thousands)
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1999 1998
(unaudited)
Cash and equivalents provided by (used for):
Cash flows from operating activities:
Net income............................................ $19,199 $21,103
Adjustments to reconcile net income to net cash
provided by operating activities:
Writeoff of in-process research and development..... 4,991
Depreciation and amortization....................... 2,621 1,892
Deferred taxes...................................... (2,632) (516)
Changes in assets and liabilities:
Accounts receivable............................... (4,512) (3,800)
Inventories....................................... 1,444 (736)
Prepaid expenses and other assets................. (939) 758
Accounts payable.................................. (338) 222
Accrued liabilities............................... 1,362 (1,680)
Income taxes payable.............................. (521) 817
Accrued product warranty.......................... 250 259
Net cash provided by operating activities............. 20,925 16,803
Cash flows from investing activities:
Purchase of temporary cash investments.............. (3,500) (11,000)
Proceeds from maturities of temporary
cash investments................................. 9,350 14,402
Purchase of property, plant and equipment........... (6,744) (1,266)
Acquisition of Softron, net of cash acquired........ (23,206) -
Other............................................... (2,832) (81)
Net cash provided by (used for) investing activities.. (26,932) 2,055
Cash flows from financing activities:
Net change in notes payable to banks................ 3,727 750
Sale of common stock................................ 6,415 4,900
Repurchase of common stock.......................... (11,570) (31,203)
Other............................................... (456) 19
Net cash used for financing activities................ (1,884) (25,534)
Effect of exchange rate changes on cash............... (1,332) 1,056
Net decrease in cash and equivalents.................. (9,223) (5,620)
Cash and equivalents, beginning of period............. 13,184 24,624
Cash and equivalents, end of period................... $ 3,961 $19,004
(continued)
6
DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED MARCH 31, 1999 AND 1998
(In thousands)
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1999 1998
(unaudited)
(continued)
Supplemental disclosures of cash flow information:
Income taxes paid................................. $ 9,267 $ 8,610
Interest paid..................................... $ 232 $ 79
Noncash investing activities:
Common stock issued in connection with acquisition
of Softron GmbH.................................... $ 1,388 $ -
See notes to condensed consolidated financial statements.
7
DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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1. Basis of Presentation
The condensed consolidated financial statements included
herein have been prepared by the Company, without audit,
pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote
disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such
rules and regulations, although the Company believes the
disclosures which are made are adequate to make the
information presented not misleading. It is suggested that
these condensed consolidated financial statements be read
in conjunction with the consolidated financial statements
and the notes thereto included in the Company's Annual
Report to Stockholders for the fiscal year ended
June 30, 1998.
The unaudited condensed consolidated financial statements
included herein reflect all adjustments (which include only
normal, recurring adjustments) which are, in the opinion of
management, necessary to state fairly the results for the
periods presented. The results for such periods are not
necessarily indicative of the results to be expected for
the entire fiscal year ending June 30, 1999.
2. Acquisition Event
On October 20, 1998, the Company, through a wholly owned
subsidiary, purchased all of the issued and outstanding
shares of Softron GmbH, a limited liability company organized
under the laws of Germany (Softron), for total consideration,
including acquisition costs, of approximately $25.0 million
comprised of cash and 63,091 shares of Dionex common stock
valued at $22 per share.
The acquisition of Softron was accounted for by the purchase
method and its results of operations have been included in
the Company's results of operations since the date of
acquisition.
8
DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- ------------------
Purchase price allocation:
Tangible assets $12,776
Deferred tax asset 3,240
Intangible assets:
Developed and core technology 4,415
Assembled workforce 830
Goodwill 7,402
In-process research and development 4,991
Liabilities assumed (5,376)
Deferred tax liabilities (3,240)
$25,038
In connection with the acquisition the Company recorded a
nonrecurring charge of $5.0 million for the write-off of
in-process research and development acquired. In addition,
cost of sales included $2.0 million in the quarter ended
December 31, 1998 related to the sale of inventory acquired
which had been written up as part of the purchase accounting.
The Company initially expected to record a charge of between
$10 million and $12 million for in-process research and
development acquired in connection with the Softron
acquisition. However, in the latter part of calendar 1998,
the Securities and Exchange Commission issued new guidance
concerning the methods for determining in-process research
and development charges. In light of this new guidance, the
Company reported charges related to in-process research and
development substantially lower than originally anticipated.
The valuation of intangibles was based upon management's
estimates of after tax net cash flow. The valuation gave
consideration to the following: (i) comprehensive due
diligence concerning all potential intangibles; (ii) the
value of developed and core technology, ensuring that the
relative allocation to core technology and in-process
research and development were consistent with the
contribution of each to the final product; (iii) the
allocation to in-process research and development was based
upon a calculation that only considered the efforts completed
as of the date of the transaction, and only the cash flows
associated with one generation of products currently
in-process; and (iv) it was performed by an independent
valuation group and was deemed reasonable in light of all the
quantitative and qualitative information available.
The write-off of in-process research and development related
to three projects that were in development, had not reached
technological feasibility, had no alternative future use and
for which successful development was uncertain.
9
DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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Two of the in-process projects were to design and build new
liquid chromatography modules. At the date of acquisition,
the estimated cost to complete these projects was
approximately $900,000. The third project is a new
generation of software. At the time of the acquisition, the
estimated cost to complete was approximately $750,000. The
projects are scheduled to be completed mid to late 1999.
Costs incurred by the Company through March 31, 1999 were
approximately $750,000.
There can be no assurances that the Company will be able to
complete the development of the products on a timely basis.
Failure to complete these projects could have an adverse
impact on the Company's financial condition or results of
operations.
The write-up of the value of land and building and goodwill
and other intangibles will be amortized over periods of up to
30 years using the straight line method of amortization.
The following unaudited pro forma results of operations for
the nine months ended March 31, 1999 and 1998 give effect to
the acquisition as if it had occurred at the beginning of
fiscal 1998. The pro forma results of operations exclude the
nonrecurring charges that were recorded in conjunction with
the acquisition.
Pro Forma Results of Operations
(In thousands, except per share amounts)
Nine Months Ended
Ended March 31,
1999 1998
Net sales............................ $130,198 $117,413
Income from continuing operations.... $34,945 $31,845
Net income........................... $23,241 $21,018
Basic earnings per share............. $1.04 $.91
Diluted earnings per share........... $.98 $.86
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.
10
DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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3. Inventories
Inventories consist of (in thousands):
March 31, June 30,
1999 1998
Finished goods $ 7,241 $3,459
Work in process 1,921 3,548
Raw materials and subassemblies 3,302 2,914
$12,464 $9,921
4. Income Taxes
The effective income tax rate for the first nine months of
1999 was 33.5%, compared to 34.0% reported in the same
period of fiscal 1998.
5. Comprehensive Income
In the first quarter of fiscal 1999, the Company adopted
Statement of Financial Accounting Standards ("SFAS") No.
130, "Reporting Comprehensive Income". SFAS No. 130
establishes standards for the reporting and display of
comprehensive income. Components of comprehensive income
include net income, foreign currency translation adjustments
and unrealized gain on equity securities available for sale.
As such, Accumulated Other Comprehensive Income (Loss) in
the Condensed Consolidated Balance Sheets represents
cumulative foreign currency translation adjustments and
unrealized gain on equity securities available for sale.
Comprehensive income was $7,770,000 and $6,743,000 for the
three months ended March 31, 1999 and 1998, respectively,
and $20,937,000 and $20,313,000 for the nine months ended
March 31, 1999 and 1998, respectively. The adoption of SFAS
No. 130 required additional disclosure but did not impact
the Company's consolidated financial position, results of
operations or cash flows.
11
DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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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. The difference between
the number of shares outstanding for basic and diluted
earnings per share is due to stock options outstanding
during the period.
7. Common Stock Repurchases
During the third quarter of fiscal 1999, the Company
repurchased 155,400 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 423,000 shares
compared with 1,266,450 shares repurchased in the same
period of the previous fiscal year. During all of fiscal
1998, the Company repurchased 1,851,460 shares.
8. New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board
issued SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which is effective for all fiscal
quarters of fiscal years beginning after June 15, 1999.
Earlier application is permitted. The statement establishes
accounting and reporting standards for derivative
instruments, including certain derivative instruments
embedded in other contracts and for hedging activities. It
requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position
and measure those instruments at fair value. Management has
not determined the impact of this new standard on the
Company's results of operations and financial position.
12
DIONEX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Acquisition of Softron GmbH
On October 20, 1998, the Company, through a wholly owned
subsidiary, purchased all of the issued and outstanding shares of
Softron GmbH (Softron), a limited liability company organized
under the laws of Germany for total consideration, including
acquisition costs, of approximately $25.0 million comprised of
cash and 63,091 shares of Dionex stock valued at $22 per share.
The acquisition of Softron was accounted for by the purchase
method and its results of operations have been included in the
Company's results of operations since the date of acquisition.
In connection with the acquisition, the Company recorded a
nonrecurring charge of $5.0 million for the write-off of in-
process research and development acquired. In addition, cost of
sales included $2.0 million in the quarter ended December 31,
1998 related to the sale of inventory acquired which had been
written up as a part of the purchase accounting.
The Company initially expected to record a charge of between $10
million and $12 million for in-process research and development
acquired in connection with the Softron acquisition. However, in
the latter part of calendar 1998 the Securities and Exchange
Commission issued new guidance concerning the methods for
determining in-process research and development charges. In
light of this new guidance, the Company reported charges related
to in-process research and development substantially lower than
originally anticipated.
Results of Operations - Three Months Ended March 31, 1999 and
1998
Net sales for the third quarter of fiscal 1999 were $47.1
million, an increase of 23% from the $38.4 million reported for
the same period last year. The Company experienced strong sales
growth in Japan and Europe, while sales growth in North America
was lower than previous quarters. The inclusion of Softron also
increased sales during the third quarter. Had currency rates
been the same as in last year's third quarter, sales growth would
have been 19%.
Gross margin for the third quarter of fiscal 1999 was 67.3%
compared to 68.4% for the same period last year. The lower gross
margin was attributable to the inclusion of Softron, whose
products have a lower gross margin than Dionex's historical
product margins. There were no significant selling price changes
between these periods.
13
Operating expenses of $18.1 million for the third quarter of
fiscal 1999 were up $2.9 million compared to the third quarter of
fiscal 1998. The increase was due to the inclusion of Softron
and the effect of currency fluctuations. As a percentage of
sales, operating expenses were 38% of sales compared with 40% in
the same period last year. Selling, general and administrative
expenses (SG&A) increased $2.3 million, or 19%, compared with
$11.7 million reported in the same period last year. The
increase in SG&A expenses was primarily due to the inclusion of
Softron and the effect of currency fluctuations on international
selling expenses.
Research and development (R&D) costs of $4.1 million increased
$615,000, or 18%, from the $3.5 million reported in the same
period last year. The increase was attributable to the inclusion
of Softron. The level of R&D spending varies depending on both
the breadth of the Company's R&D efforts and the stage of
specific product development.
Interest income was $178,000 for the third quarter of fiscal
1999, $147,000 lower than the $325,000 reported in the third
quarter last year. The decrease in interest income was due to
lower average cash balances resulting from the acquisition of
Softron.
Interest expense was $91,000, an increase of $64,000 compared
with $27,000 reported in the third quarter last year. The
increase was due to borrowings related to the acquisition of
Softron.
The effective tax rate for the third quarter of fiscal 1999 was
33.5%, compared with 34.0% 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 1999 was $9.1 million
compared with the $7.5 million reported in the third quarter last
year. Basic and diluted earnings per share were $.41 and $.38
respectively, compared with $.33 and $.31 reported for the same
period last year.
14
Results of Operations - Nine months ended March 31, 1999 and 1998
Net sales for the nine months ended March 31, 1999 were $126.4
million, an increase of 13%, compared with the $111.8 million
reported for the same period last year. The Company experienced
strong sales growth in Europe and Japan, while growth in North
America was lower. The inclusion of Softron since the date of
acquisition also increased sales. Had currency remained the same
as the first nine months last year, sales growth would have been
12%.
Gross margin for the first nine months of fiscal 1999 was 66.2%
compared with 68.5% reported for the same period last year.
Excluding a nonrecurring charge related to the sale of inventory
acquired which had been written up as part of the purchase
accounting, gross margin was 67.8%. The lower gross margin was
attributable to the inclusion of Softron, whose products have a
lower gross margin than Dionex's historical product margins.
There were no significant selling price changes between these
periods.
Operating expenses for the nine months ended March 31, 1999 were
$55.2 million, an increase of $9.7 million compared with $45.5
million reported for the same period last year. Excluding the
nonrecurring write-off of in-process research and development,
operating expenses increased $4.7 million, or 10%, and as a
percentage of sales, operating expenses were 40%, down one
percentage point from the same period last year. SG&A expenses
were $39.1 million, an increase of $3.5 million or 10%, compared
with $35.6 million reported for the same period last year. The
increase in SG&A expenses was attributable to the inclusion of
Softron.
R&D expenses for the nine months ended March 31, 1999 were $11.1
million, an increase of $1.2 million, or 12%, from the $9.9
million reported in the same nine-month period last year. The
increase was attributable to the inclusion of Softron and an
increase in personnel related costs. The level of R&D spending
varies depending on both the breadth of the Company's R&D efforts
and the stage of specific product development.
Write-off of in-process research and development represents a
nonrecurring charge of $5.0 million associated with the
acquisition of Softron completed in October 1998 for technology
which had not reached technological feasibility and had no
alternative future use.
15
The valuation of intangibles was based upon management's
estimates of after tax net cash flow. The valuation gave
consideration to the following: (i) comprehensive due diligence
concerning all potential intangibles; (ii) the value of developed
and core technology, ensuring that the relative allocation to
core technology and in-process research and development were
consistent with the contribution of each to the final product;
(iii) the allocation to in-process research and development was
based upon a calculation that only considered the efforts
completed as of the date of the transaction, and only the cash
flows associated with one generation of products currently in-
process; and (iv) it was performed by an independent valuation
group and was deemed reasonable in light of all the quantitative
and qualitative information available.
The write-off of in-process research and development related to
three projects that were in development, had not reached
technological feasibility, had no alternative future use and for
which successful development was uncertain.
Two of the in-process projects were to design and build new
liquid chromatography modules. At the date of acquisition, the
estimated cost to complete these projects was approximately
$900,000. The third project is a new generation of software. At
the time of the acquisition, the estimated cost to complete was
approximately $750,000. The projects are scheduled to be
completed mid to late 1999. Costs incurred by the company
through March 31, 1999 were approximately $750,000.
There can be no assurances that the Company will be able to
complete the development of the products on a timely basis.
Failure to complete these projects could have an adverse impact
on the Company's financial condition or results of operations.
Interest income was $633,000 for the first nine months of fiscal
1999, $432,000 lower than the $1.1 million reported in the third
quarter last year. The decrease in interest income was due to
lower average cash balances resulting from the acquisition of
Softron.
Interest expense was $234,000, an increase of $153,000 compared
with $81,000 reported in the first nine months last year. The
increase was due to borrowings related to the acquisition of
Softron.
16
The effect tax rate for the first nine months of fiscal 1999 was
33.5%, compared with the 34.0% in the nine months of fiscal 1998.
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 nine months of fiscal 1999 was $19.2
million compared with $21.1 million reported in the same period
last year. Basic and diluted earnings per share were $.86 and
$.81 respectively, compared with $.91 and $.86 per share in 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, 1999, the Company had cash and cash investments of
$4.0 million. During the third quarter of fiscal 1999, the
Company repurchased 155,400 shares of its common stock, bringing
the total shares repurchased for the first nine months of fiscal
1999 to 423,000. During fiscal 1998, the Company repurchased a
total of 1,851,460 shares of its common stock.
At March 31, 1999, the Company had outstanding borrowings of $5.7
million. At March 31, 1999, the Company had bank lines of credit
totaling $31.0 million. The Company believes its cash flow from
operations, its existing cash and cash investments and its bank
lines of credit will be adequate to meet its cash requirements
for the remainder of the fiscal year.
The impact of inflation on Dionex Corporation's financial
position and results of operations was not significant during the
nine months ended March 31, 1999.
17
Year 2000 Compliance
Many older computer software programs refer to years in terms of
their final two digits only. Such programs may interpret the year
2000 to mean the year 1900 instead. If not corrected, those
programs could cause date-related transaction failures. Beginning
in fiscal 1997, the Company started a process to review its internal
systems for year 2000 compliance. Testing of the internal systems
was substantially completed during fiscal 1998 and the Company
believes its current internal systems are compliant. Dionex
believes the products it is currently shipping are year 2000
compliant as well. The Company has no obligation to upgrade
previously shipped products which are not year 2000 compliant but
may make available for sale to customers fixes for certain products.
Additionally, the Company has contacted numerous vendors and
customers to assess their progress in addressing the year 2000
issue. Based upon our assessments, testing and the plans in
progress, the Company does not believe that the year 2000 issue will
have a material adverse effect on the Company's financial position,
results of operation or cash flows. However, the Company does not
have control over whether its vendors or customers will make any
appropriate modifications on a timely basis. If such modifications
are not made in a timely manner, the financial position and results
of operations could be materially adversely affected. To date, the
Company has not incurred any significant costs related to this
issue, and does not expect significant costs directly related to
year 2000 compliance issues in the future. However, should the need
arise, the Company has adequate resources and would use them to
resolve significant year 2000 issues in a timely manner.
Forward-looking statements
Except for historical information contained herein, the above
discussion and the letter to shareholders contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, Section 21E of the Securities and Exchange Act
of 1934, as amended and the Private Securities Litigation Reform Act
of 1995, and are made under the safe harbor provisions thereof.
Such statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those discussed
here. Such 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, year 2000 compliance issues, the ability to
attract and retain talented employees and other risks as described
in more detail in the Company's Form 10-K for the year ended June
30, 1998. Readers are cautioned not to place undue reliance on
these forward-looking statements which reflect management's analysis
only as of the date hereof. The Company undertakes no obligation to
publicly release the results of any revision to these forward-
looking statements which may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
18
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, 1999.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the
current quarter.
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 12, 1999 By:/s/ A. Blaine Bowman
A. Blaine Bowman
President, Chief Executive
Officer
By:/s/ Michael W. Pope
Michael W. Pope
Vice President, Finance and
and Administration
(Principal Financial and
Accounting Officer)
19