-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CDgXe9O5pxh3gkF5KBE4e7ni6zAiO2vHYzsrNd1hVryfIJGvlj6g6hqPlUEJkNjz JL1soCQ2OHZoK5nn7CIA3g== 0000708850-98-000016.txt : 19981113 0000708850-98-000016.hdr.sgml : 19981113 ACCESSION NUMBER: 0000708850-98-000016 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981020 ITEM INFORMATION: FILED AS OF DATE: 19981112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIONEX CORP /DE CENTRAL INDEX KEY: 0000708850 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 942647429 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-11250 FILM NUMBER: 98745258 BUSINESS ADDRESS: STREET 1: 1228 TITAN WAY STREET 2: P O BOX 3603 CITY: SUNNYVALE STATE: CA ZIP: 94086-3603 BUSINESS PHONE: 4087370700 MAIL ADDRESS: STREET 1: 1228 TITAN WAY STREET 2: 1228 TITAN WAY CITY: SUNNYVALE STATE: CA ZIP: 94088-3603 8-K/A 1 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. F-14 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. F-15 (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 EX-23 2 Exhibit 23.1 INDEPENDENT AUDITORS' CONSENT Dear Sirs, We consent to the incorporation by reference in Registration Statement Nos. 33-12399, 33-40796, 33-78584, 33-65081 and 333-39319 of Dionex Corporation on Form S-8 of our report dated October 5, 1998 (relating to the financial statements of Softron GmbH as of and for the periods ended December 31, 1997 and June 30, 1998) appearing in the form 8-K/A of Dionex Corporation dated October 20, 1998. Deloitte & Touche GmbH Wirtschaftspruefungsgesellschaftt Munich, Germany November 11, 1998 -----END PRIVACY-ENHANCED MESSAGE-----