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Dionex Corp. Reports Operating Results (10-Q)

November 06, 2009 | About:
10qk

10qk

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Dionex Corp. (DNEX) filed Quarterly Report for the period ended 2009-09-30.

Dionex Corporation designs manufactures markets and services analytical instrumentation and related accessories and chemicals. The company's products are used to analyze chemical substances in the environment and in a broad range of industrial and scientific applications. Since July of 1998 there have been no material changes in the mode of conducting the business of the company. Dionex Corp. has a market cap of $1.2 billion; its shares were traded at around $67.92 with a P/E ratio of 22.9 and P/S ratio of 3.2. Dionex Corp. had an annual average earning growth of 8% over the past 10 years. GuruFocus rated Dionex Corp. the business predictability rank of 2.5-star.

Highlight of Business Operations:

Net sales for the first quarter of fiscal 2010 were $90.7 million, compared with $93.4 million reported for the same period in the prior year, reflecting a decrease of 3%. Operating income for the quarter was $16.5 million, a decrease of 15.4% over operating income for the first quarter of fiscal 2009 of $19.5 million. Cash flow from operating activities during the quarter was $22.9 million compared with $8.7 million for the first quarter of fiscal 2009, reflecting an increase of 162%. Our gross profit margin for the quarter was 65.8%, a decrease compared to 67.1% for the same period last year. Selling, general and administrative expenses were 39.7% of net sales during the quarter, compared to 38.7% reported in the same period last year. Research and product development expenses for the quarter were 7.9% of net sales, up slightly from the 7.5% reported in the same period last year. Diluted earnings per share decreased 10.9% to $0.57 for the first quarter, compared to $0.64 reported in the same period last year.

Net sales for the first quarter of fiscal 2010 were $90.7 million, compared with $93.4 million reported for the same period in the prior year, reflecting a decrease of 3%, including a $1.9 million adverse currency effect. Net sales in North America decreased by 0.4% in the first quarter of fiscal 2010 to $25.0 million, compared to $25.1 million during the same period in the prior year primarily due to

lower demand from our environmental and food and beverage customers. However, this performance showed stabilization in demand compared with the previous two quarters. Net sales in Europe decreased by 12% to $35.1 million in the first quarter of fiscal 2010, compared to $39.9 million during the same period in the prior year due to the challenging economic environment and adverse currency fluctuations of $2.2 million. Excluding the impact of currency fluctuations, net sales in Europe decreased by 7% to $37.3 million in the first quarter of fiscal 2010 due to weaknesses in all of our markets except life sciences which continue to grow. The Asia/Pacific region continued its strong performance as it grew 8% in reported dollars and 6% in local currency for the first quarter compared to the first quarter of fiscal 2009. Sales growth was driven by a strong performance in China. We saw weaker sales results in Japan and Korea compared to previous quarters, though order flows improved in the last month of the quarter.

At September 30, 2009, we had cash and equivalents and short-term investments of $78.7 million. Our working capital was $117.2 million, an increase of $21.2 million from $96.0 million reported at September 30, 2008.

Cash provided by financing activities was $7.3 million in the three months of fiscal 2010. The cash generated was primarily attributable to the repurchase of 188,253 shares of our common stock for $11.2 million, offset by $3.3 million in proceeds from issuance of common stock, and $15.1 million in proceeds from increased borrowing related to the acquisition of the assets and liabilities of the LST and Laboratory Services business of ESA Biosciences Inc.

Foreign Currency Exchange. Revenues generated from international operations are generally denominated in foreign currencies. We have entered into forward foreign exchange contracts to hedge against fluctuations of intercompany account balances. Market value gains and losses on these hedge contracts are substantially offset by fluctuations in the underlying balances being hedged, and the net financial impact is not expected to be material in future periods. At September 30, 2009, we had forward exchange contracts to sell foreign currencies totaling $18.1million (including approximately $11.2 million in Euros, $5.2 million in Japanese yen, $0.9 million in Australian dollars and $0.8 million in Canadian dollars). At June 30, 2009, we had forward exchange contracts to sell foreign currencies totaling $15.2 million (including approximately $9.8 million in Euros, $3.9 million in Japanese yen, $0.9 million in Australian dollars and $0.6 million in Canadian dollars). The foreign exchange contracts outstanding at the end of the period mature within one month. Consequently, contract values and fair market values are the same. At September 30, 2009 and June 30, 2009, we have $372,000 and $57,000, respectively, in other current liabilities in the condensed consolidated balance sheets related to the foreign currency exchange contracts. For the three months ended September 30, 2009, we recorded realized pre-tax losses of $661,000 related to the closed foreign exchange forward contracts. For the three months ended September 30, 2008, we recorded realized pre-tax gains of $979,000 related to the closed foreign exchange forward contracts.

Read the The complete ReportDNEX is in the portfolios of Richard Aster Jr of Meridian Fund, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.

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