Dionex Corp. has a market cap of $1.17 billion; its shares were traded at around $66.01 with a P/E ratio of 22.2 and P/S ratio of 3. Dionex Corp. had an annual average earning growth of 8% over the past 10 years. GuruFocus rated Dionex Corp. the business predictability rank of 4-star.DNEX is in the portfolios of Richard Aster Jr of Meridian Fund, Chuck Royce of ROYCE & ASSOCIATES, Chuck Royce of ROYCE & ASSOCIATES, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.
Highlight of Business Operations:Net sales for the second quarter of fiscal 2010 were $109.2 million, compared with $103.0 million reported for the same period in the prior year, reflecting an increase of 6.0%. Operating income for the quarter was $24.0 million, a decrease of 7.3% over operating income for the second quarter of fiscal 2009 of $25.9 million. Cash flow from operating activities for the six months ended December 31, 2009 was $37.6 million compared with $32.1 million for the second quarter of fiscal 2009, reflecting an increase of 17.1%. Our gross profit margin for the quarter was 66.1%, a decrease of 1.4% compared to 67.5% for the same period last year. Selling, general and administrative expenses were 37.1% of net sales during the quarter, compared to 35.1% reported in the same period last year. Research and product development expenses for the quarter were 7.0% of net sales, down slightly from the 7.2% reported in the same period last year. Diluted earnings per share decreased 1.1% to $0.92 for the second quarter, compared to $0.93 reported in the same period last year.
Net sales in North America increased by 5.5% in the second quarter of fiscal 2010 to $28.5 million, compared to $27.0 million during the same period in the prior year primarily due to the sales contribution of ESA products. Net sales in North America increased by 2.7% in the six months ended December 31, 2009 to $53.5 million compared to $52.1 million during the six months ended December 31, 2008 due to the continuing weak customer demand offset by sales from ESA products. Net sales in Europe increased by 3.9% to $45.1 million in the second quarter of fiscal 2010, compared to $43.4 million during the same period in the prior year due to the challenging economic environment offset by favorable currency fluctuations. Excluding the impact of currency fluctuations, net sales in Europe decreased by 7.9% in the second quarter of fiscal 2010 compared to the same period in the prior year due to weaknesses in all of our markets except life sciences which continue to grow. Net sales decreased 3.8% in the six months ended December 31, 2009 to $80.1 million compared to $83.4 million during the six months ended December 31, 2008, driven by continued weakness in all markets for the region partially offset by a favorable currency impact. The Asia/Pacific region continued its solid performance as it grew 9.0% in reported dollars and 2.3% in local currency for the second quarter compared to the second quarter of fiscal 2009. Sales growth was driven by strong performance in Japan, Korea and India, specifically. Demand from our environmental and food and beverage customer was up for the quarter, partially offset by continued weakness in chemical/petrochemical and power markets demand. Net sales increased 8.5% in the six months ended December 31, 2008 to $66.2 million compared to $61.0 million in the six months ended December 31, 2008 as a result of strong sales growth in China, Japan, Korea and India.
Operating expenses of $48.2 million for the second quarter of fiscal 2010 increased by $4.5 million, or 10.3%, from the $43.7 million reported in the same quarter last year. As a percentage of net sales, operating expenses were 44.1% for the second quarter of fiscal 2010, an increase from the 42.4% of sales reported in the second quarter of fiscal 2009. The effects of foreign currency fluctuations increased total operating expenses by $2.2 million, or 5.2%, for the quarter ended December 31, 2009, compared to a decrease of 3.3% during the same period in the prior year. The $2.3 million increase in operating expenses, excluding currency effects, was attributable primarily to $1.6 million of additional cost in Europe primarily associated with the implementation of our European shared service center (SSC) and the Oracle Enterprise Resource Planning (ERP) system and the additional operating expenses related to our ESA business of $1.8 million partially offset by lower spending for sales and marketing and research and development. Operating expenses for the six months ended December 31, 2009 were $91.3 million, representing a 5.1% increase over the corresponding period during the prior year of $86.9 million mainly due to the SSC implementation efforts.
Selling, general and administrative (SG&A) expenses were $40.5 million for the second quarter of fiscal 2010, compared with $36.2 million for the same quarter of fiscal 2009. As a percentage of net sales, SG&A expenses were 37.1% in the second quarter of fiscal 2010, compared to 35.1% the same period in fiscal 2009. Effects of foreign currency fluctuations increased SG&A expenses by $2.3 million, or 6.4%, in the second quarter of fiscal 2010. SG&A expenses, excluding currency effects, grew by $2.0 million, or 5.5%, compared to the second quarter of fiscal 2009, due to our implementation of the European SSC and ERP roll-out and ESA operating expenses. SG&A expenses for the six month period ended December 31, 2010 increased to $76.5 million compared to $72.4 million in the same period of fiscal 2009. The increase was due to currency fluctuations, the implementation of Oracle and the operating expenses of our ESA business.
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 December 31, 2009, we had forward exchange contracts to sell foreign currencies totaling $17.1 million (including approximately $8.6 million in Euros, $6.5 million in Japanese yen, $1.0 million in Australian dollars and $1.0 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.
In March 2007, we entered into a $10.0 million cross-currency swap arrangement for Japanese Yen that was originally scheduled to mature in March 2010. The arrangement was extended to March 2012 in December 2009. Starting January 2008, we determined that this cross-currency swap qualified as a net investment hedge. This derivative instrument did not qualify for net investment hedge accounting and was deemed to be an ineffective hedge instrument because, at the inception of the hedge transaction, there was no formal documentation of the hedging relationship and our risk management objective and strategy for undertaking the hedge. In January 2008, we completed our formal documentation of the hedging relationship and determined that the cross-currency swap qualified as a net investment hedge. As a result, during the three and six months ended December 31, 2009, we marked to market an increase in value of $359,000 and a decrease of $542,000, respectively, in accumulated other comprehensive income as part of the foreign currency translation adjustment. During the three and six months ended December 31, 2008, we marked to market a decrease in value of $1.8 million and $1.9 million, respectively, which is reported in accumulated other comprehensive income as part of the foreign currency translation adjustment.
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