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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



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FORM 10-K



|[X] | ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|--- | ------------------------------------------------------------------------------------
|   
|    | For the Fiscal Year Ended June 30, 2002                                             

OR



|[   ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|----- | ----------------------------------------------------------------------------------------
|     
|      | Commission File Number 0-11250                                                          

DIONEX CORPORATION

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(Exact name of registrant as specified in its charter)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 94-2647429                          
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)
|                                                              
|1228 Titan Way, Sunnyvale, California                          |  | 94085                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

Registrants telephone number, including area code (408) 737-0700

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $.001 per share

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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the
best of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]

The aggregate market value of the Registrants Common Stock held by
nonaffiliates on August 23, 2002 (based upon the closing price of such stock as
of such date) was $544,103,323.





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As of August 23, 2002, 21,130,031 shares of the Registrants Common Stock were
outstanding.

Portions of the Registrants definitive Proxy Statement for the Annual Meeting
of Stockholders to be held on October 25, 2002 are incorporated by reference in
Part III of this Report.

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TABLE OF CONTENTS



|              |                                                                                               |  |  |  |  |  |  | 
|------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I       
|              | Item 1. BUSINESS                                                                             
|              | Item 2. PROPERTIES                                                                           
|              | Item 3. LEGAL PROCEEDINGS                                                                    
|              | Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|              | Item 5. MARKET FOR THE REGISTRANTS COMMON STOCK AND RELATED STOCKHOLDER MATTERS             
|PART II      
|              | Item 6. SELECTED CONSOLIDATED FINANCIAL DATA                                                 
|              | Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|              | Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                          
|              | Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                          
|              | Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 
|PART III     
|              | Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                  
|              | Item 11. EXECUTIVE COMPENSATION                                                              
|              | Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                      
|              | Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                      
|PART IV      
|              | Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K                     
|EXHIBIT INDEX
|SIGNATURES   
|EXHIBIT 3.2  
|EXHIBIT 21.1 
|EXHIBIT 23.1 
|EXHIBIT 99.1 
|EXHIBIT 99.2 



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TABLE OF CONTENTS

|              |  |                                                                                       |  |   
|------------- |  | ------------------------------------------------------------------------------------- |  | --
|PART I       
|             
|Item 1.       |  | Business                                                                              |  | 4 
|Item 2.       |  | Properties                                                                            |  | 20
|Item 3.       |  | Legal Proceedings                                                                     |  | 20
|Item 4.       |  | Submission of Matters to a Vote of Security Holders                                   |  | 20
|Item 5.       |  | Market for the Registrants Common Stock and Related Stockholder
Matters              |  | 20
|             
|PART II      
|             
|Item 6.       |  | Selected Consolidated Financial Data                                                  |  | 21
|Item 7.       |  | Managements Discussion and Analysis of Financial
Condition and Results of Operations |  | 22
|Item 7A       |  | Quantitative and Qualitative Disclosures About
Market Risk                            |  | 29
|Item 8.       |  | Financial Statements and Supplementary Data                                           |  | 31
|Item 9.       |  | Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure  |  | 51
|             
|PART III      |  |                                                                                      
|             
|Item 10.      |  | Directors and Executive Officers of the Registrant                                    |  | 51
|Item 11.      |  | Executive Compensation                                                                |  | 51
|Item 12.      |  | Security Ownership of Certain Beneficial Owners and
Management                        |  | 51
|Item 13.      |  | Certain Relationships and Related Transactions                                        |  | 51
|             
|PART IV      
|             
|Item 14.      |  | Exhibits, Financial Statement Schedules, and
Reports on Form 8-K                      |  | 52
|             
|Exhibit Index |  | 53                                                                                   
|             
|Signatures    |  | 56                                                                                   

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements set forth or incorporated by reference in this Form 10-K, as
well as in our Annual Report to Stockholders for the year ended June 30, 2002,
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Words such as believes,
anticipates, expects, intends, estimates and similar expressions are
intended to identify forward-looking statements, but are not the exclusive
means of identifying such statements. These statements involve risks,
uncertainties and other factors that may cause our actual results, performance
or achievements, or industry results, to be materially different from any
future results, performance or achievements, or industry results, expressed or
implied by such forward-looking statements. Such factors include, among others:
the continuation or spread of the current economic downturn; risks related to
international operations, including foreign currency fluctuations; the
importance of meeting customer demand for new products; competition in the
analytical instrumentation market; our ability to maintain inventories; the
importance of attracting and retaining key personnel; and our ability to
protect our proprietary information and other risk factors set forth under
Risks and Uncertainties and elsewhere in this Form 10-K. We expressly
disclaim any obligation to update or publicly release any revision to these
forward-looking statements after the date of this Form 10-K.




PART I




Item 1. BUSINESS

OVERVIEW

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 1, 2000, there have been
no material changes in the mode of conducting the business of the Company.

INDUSTRY SEGMENT INFORMATION

The Company operates in a single industry segment consisting of analytical
instruments and related services.



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|* |  | Unless the context otherwise requires, the terms Dionex and the Company as
used herein include Dionex Corporation, a Delaware corporation, and its
subsidiaries. Dionex was initially incorporated in California in 1980. In
1986, the Company reincorporated in Delaware.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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PRODUCTS

Dionex designs, manufactures, markets and services a range of liquid
chromatography systems, sample preparation devices and related products that
are used by chemists to separate and quantify the individual components of
complex chemical mixtures in many major industrial, research and laboratory
markets. Typically, the Companys chromatography systems consist of several
components including a specially designed liquid pumping and flow system, a
sample injection system, a separator column, a suppressor or other post-column
device, a detector and a data collection and analysis system. These components
are designed to be modular so that systems can be configured to meet the
particular analytical requirements of individual customers. Moreover,
individual components may be sold separately to existing customers that wish to
expand their systems.

The Companys chromatography systems are currently focused in several product
areas: ion chromatography (IC), high performance liquid chromatography (HPLC)
and capillary-/nano-HPLC. The Company also provides a mass spectrometer
coupled with an IC or HPLC system. For sample preparation, the Company
provides solvent extraction systems. In addition, the Company develops and
manufactures columns, detectors, data collection and analysis systems and other
products to be used in these product areas. Each of these product areas is
described below.

Ion Chromatography- Ion Chromatography is a form of chromatography that
separates ionic (charged) molecules, usually found in water-based solutions,
and typically separates and detects them based on their electrical
conductivity. The sale of Dionex IC systems and related columns, suppressors,
detectors, automation and other products accounts for the majority of the
Companys revenues.

Dionex IC products are used in a wide range of applications, including
environmental monitoring, quality control of pharmaceuticals, corrosion
monitoring, evaluation of raw materials, quality control of industrial
processes and products, research and development, and regulation of the
chemical composition of food, beverage and cosmetic products. Major customers
include environmental testing laboratories, life science and food companies,
chemical and petrochemical firms, power generating facilities, electronics
manufacturers, government agencies and academic institutions.

The Company offers a variety of products for IC:

ICS-90 IC System  In fiscal 2002, the Company introduced the ICS-90, a
routine, integrated IC system. The ICS-90 was designed for routine isocratic
ion analysis and provides rapid start up times and stable performance.

DX-120 IC System  The DX-120 is a cost-effective IC system for customers who
need simple, dedicated instrumentation for routine ion analysis. The DX-120
was designed for improved reliability and automation, allowing for quick
set-up, simple operation, and high quality isocratic performance and
communication links for data handling.

DX-320 IC System  The DX-320 is a high-performance, dedicated IC system with
more versatility than the DX-120. The DX-320 runs isocratic applications and
gradient applications in conjunction with the EG40 Eluent Generator.

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DX-600 IC System and PeakNet 6.4  The DX-600 IC system is the Companys most
powerful and flexible ion chromatography system. The system is modular,
offering both gradient and isocratic pumps, a number of chromatography
enclosures or chromatography ovens, advanced autosampler options and a variety
of detection methods, including conductivity, electrochemical and absorbance
(including photodiode array (PDA)). The advanced electronics and modularity of
the system provide enough versatility to cover any combination of demanding IC
applications. The DX-600 is automated and its data are collected and managed
by the PeakNet chromatography software. PeakNets data query, electronic
signatures/approvals and system wellness provisions allow greater power and
simplicity in running IC applications, in compliance with 21 CFR Part 11.

Process Instrumentation  In fiscal 1998, the Company began shipping the
DX-800, the next generation continuous on-line monitoring system. The DX-800
uses industry standard PC-based automation, similar to that used in laboratory
chromatography. Major applications for the Companys DX-800 are in the power
industry for the continuous monitoring of corrosive contaminants in boiler
water, the semiconductor industry for continuous monitoring of contaminants in
high purity water, and the pharmaceutical and chemical industries for
continuous monitoring of biological and chemical synthesis processes.

The Companys IC systems and related accessories and software are marketed and
sold worldwide.

High Performance Liquid Chromatography HPLC is a form of chromatography that
separates molecules such as proteins, carbohydrates, amino acids,
pharmaceuticals and chemicals and identifies them by measuring the amount of
light that the molecules absorb or emit when exposed to a light source. The
Companys HPLC customers include life sciences companies active in biological
research, biotechnology, pharmaceutical drug discovery and development, and
other industrial companies.

The Company offers the following products for HPLC:

Summit HPLC System and CHROMELEON 6.4 Software  The Summit HPLC System
includes the new P680 pump, introduced in fiscal 2002, which comes in both
isocratic and gradient versions, an absorbance detector (including PDA), and an
autosampler with optional thermal cooling. The CHROMELEON software offers PDA
control, multi-instrument control (including control of other companies
equipment), validation provisions as required by 21 CFR Part 11 and many other
powerful features. The Summit HPLC System and CHROMELEON are marketed and sold
worldwide, except in Japan.

BioLC System  The BioLC features an inert, metal-free, polyetheretherketone
(PEEK) flow path to preserve chemically unstable biomolecules. The BioLC
provides third-generation pumps and detectors, including the GS50 gradient
pump, the premier pump for BioLC, and a choice of electrochemical, absorbance
and photodiode array detectors. These options allow for a wide range of
applications so that analysts using the BioLC can quantify carbohydrates, amino
acids, proteins and peptides, nucleic acids and small biomolecules. The
instrument ships with PeakNet chromatography software and is marketed and sold
worldwide.

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Capillary-/nano-HPLC Capillary-/nano-HPLC is a form of HPLC that uses low
flow rates for analyzing sample volumes that are much smaller than those of
traditional HPLC.

The Company offers the following products for capillary-/nano-HPLC:

UltiMate Capillary-/Nano-LC System  The acquisition of LC Packings in fiscal
2001 expanded the Companys product offerings to include capillary-/nano-LC
products. The UltiMate system, a dedicated microseparation system, consists of
a high-precision pump that is coupled with a proprietary method of flow
splitting to provide accurate, reproducible isocratic and gradient separations
from 40 μl/min. to 100 nL/min. The UltiMate also has a specially developed UV
detector. This detector coupled with our proprietary capillary flow cells
allows the most sensitive UV detection in microcolumn separations. Accessories
for the UltiMate system include the FAMOS autosampler and the Switchos module
for use with large volume samples.

In fiscal 2002, the Company expanded its offerings in the micro-analysis market
by acquiring the right to manufacture and distribute the Probot microfraction
collector. The Probot allows collection or dispensation of micro samples. The
Probot also is used for precision spotting of MALDI-TOF mass spectrometer
targets.

Mass Spectrometry In fiscal 2000, the Company signed an agreement with Thermo
Electron to sell its Finnigan AQA mass spectrometer (MS) with Dionex Summit
HPLC, BioLC and DX-600 IC systems. In fiscal 2002, Thermo Electron introduced
the MSQ Mass Spectrometer. The agreement with Thermo Electron allows Dionex to
market LC/MS and IC/MS system to existing and new customers worldwide,
particularly in the pharmaceutical market, but also for environmental testing,
drug, beverage and food testing and many other applications. The MSQ mass
spectrometer is a compact, benchtop, single quadrupole mass detector for
HPLC/MS and IC/MS. The standard system is supplied with both Electrospray
(ESI) and Atmospheric Pressure Chemical Ionization (APCI) for maximum
analytical flexibility. The agreement with Thermo Electron enables Dionex to
reach chemists desiring MS capabilities who previously were not among the
Companys potential customers.

Sample Preparation The Company offers Accelerated Solvent Extraction (ASE)
for automated sample preparation. The ASE 300 is an automated sample
extraction instrument for large samples up to 100 mL and the ASE 200 is for
samples less than 34 mL. Both ASE systems extract solid samples using common
solvents at elevated temperatures and pressures. The ASE systems extract solid
samples in an automated fashion using the same solvents used in traditional
soxhlet techniques. Competitive techniques include soxhlet, sonication,
microwave extraction and supercritical fluid extraction. The ASE 200 and 300
systems offer several advantages over other solvent based extraction techniques
including lower solvent consumption, reduced extraction time, higher throughput
through automation and ease of use. ASE 200 and 300 systems are used
worldwide for a number of environmental, industrial and food and beverage
applications. The Company offers the Solvent Controller Module, which
automates the delivery of multiple solvents to the ASE systems, and AutoASE, an
add-on software feature which allows control of up to eight ASE systems from
one location, as well as methods storage and documentation.

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In fiscal 2002, the Company introduced the ASE 100, a semi-automatic extraction
system which handles one extraction at a time. The ASE 100 uses the same
technology as the ASE 200 and 300 systems. These systems are marketed
worldwide.

Automation Products- As part of its efforts to make chemical analyses simpler,
faster and more reliable, Dionex offers a family of products that automate
sample handling, system operation and data analysis for chromatography systems.
These products include PeakNet, PeakNet PA for Process Analysis and
CHROMELEON. In addition, several automated sample injection modules are
available for IC and HPLC applications.

Software  PeakNet 6.4, introduced in fiscal 2002, is the Companys latest
release of Windows-based applications for IC and BioLC. PeakNet makes possible
the use of multi-featured, high performance computer systems to automate
control, data acquisition, analysis and reporting of the Companys IC systems.
Significant features include multi-vendor support, provisions for electronic
signature and sign-off, SQL-based data management/retrieval, security features,
system wellness and validation measures in compliance with 21 CFR
Part 11.

The Company introduced in fiscal 2002, as part of the Summit HPLC system, the
CHROMELEON 6.4 data management system. Like PeakNet, CHROMELEON is a 32-bit
application designed to run on Windows 95, 98 and Windows NT and even mixed
platforms. CHROMELEON operates most liquid and gas chromatography systems from
a single user interface. It is an easy-to-use, flexible data management system
with a built-in SQL database and client/server architecture.

The Company offers the universal interface (UI20) module that allows PeakNet
workstations to accept data from other Dionex instruments, as well as
instruments manufactured by other vendors.

In addition, the Company offers the universal chromatography interface
(UCI-100) module that allows Chromeleon workstations to accept data from a wide
variety of instruments produced by third party vendors.

Autosamplers  The Company offers a number of autosamplers that address a
variety of customer needs.

The AS40 Automated Sample Injection module (AS40) is a low-cost, metal-free,
rugged automated sample loading device designed especially for ion
chromatography applications. The AS40 can be used with the Companys IC
systems.

For more complex needs, the Company offers the AS50 Auto-Select Autosampler
(AS50). The AS50 is a high-performance, random vial access autosampler with
automated sample preparation which is used with BioLC, DX-320 and DX-600
systems.

For HPLC applications, the Company offers the ASI-100 Autosampler (ASI-100)
with optional thermal control for temperature-sensitive samples. The ASI-100
provides speed, simplicity, reliability and precision with an innovative
in-line split-loop injection technology. The removable carousels and
programmable needle depth allows the ASI-100 to accommodate a variety of sample
vials and sizes. The ASI-100 is marketed with our Summit product line.

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For capillary-/nano-HPLC, the Company offers the FAMOS Micro Autosampler. The
FAMOS is a fully automated micro autosampler for sample injections from 96 or
386 well plates, PCR tubes or conventional 1.5 mil vials. The unique design
allows for automated injection of volumes ranging from 50 nanoliters to up to 5
microliters. FAMOS has a proprietary injection technique that guarantees high
performance and virtually no sample dispersion. The FAMOS is marketed with the
UltiMate Systems.

Columns and Suppressors- The Company offers a wide variety of columns for use
in IC, HPLC and capillary-/nano-HPLC applications. A liquid chromatography
column generally consists of a hollow cylinder packed under high pressure with
a chemical resin. The columns function is to separate various chemical
components in a sample. The Company develops and manufactures its own resins
using proprietary processes. Dionex currently manufactures and markets a broad
range of column types designed for particular applications in the liquid
chromatography market.

The Company introduced several consumable products in fiscal 2002, including
the IonPac Cryptand A1 Anion Exchange Column, IonPac CS16 Cation Exchange
Column, IonPac CS12A-MS Cation Exchange Column, SC-CSRS Salt Converter-Cation
Self-Regenerating Suppressor, and the ATC-HC Trap Column.

These products follow a steady stream of columns and chemistries introduced in
the previous two years.

For HPLC applications, the Company offers its Acclaim line of silica-based
reversed-phase columns for small molecule applications. Introduced in fiscal
2002, these columns are manufactured by Dionex and were developed to expand our
product offerings in the HPLC market. The columns come in two particle sizes
and two different chemistries, with 28 configurations. Dionex plans to
introduce additional silica-based columns in fiscal 2003.

For capillary-/nano-HPLC applications, the Company offers a wide variety of
micro, capillary and nano-HPLC columns. The columns range in size from 75
microns to 1 millimeter internal diameter and are packed with a variety of
stationary phase materials.

In addition to columns, Dionex manufactures suppressors that are used to
enhance detection in ion chromatography. The Company has proprietary positions
in the technology of suppression used in ion chromatography as well as in the
application of suppression techniques. The Companys suppressors lower
background conductivity while allowing separations using higher capacity
columns and more concentrated eluents (liquids used to carry a sample through a
liquid chromatography system). In fiscal 1993, Dionex enhanced its suppression
technology with the introduction of the Self-Regenerating Suppressor (SRS).
This product enhanced IC performance while operating with low maintenance
requirements. The SRS product has been enhanced and modified, and the
SRS-Ultra product is the latest in the SRS line of suppressors. The SRS-Ultra
provides superior performance for trace level ion chromatography using
hydroxide eluents and is used in the DX-600 and DX-320 IC systems.

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In fiscal 2001, the Company introduced the Atlas Suppressor. The Atlas
Suppressor provides improved sensitivity, lower noise and faster start-up over
our previous, industry leading AutoSuppression technology, raising the bar even
higher in the technology of electrolytic suppression for IC. The Atlas
suppressor is ideal for most IC applications requiring carbonate eluents. The
Atlas works with our DX-600 and DX-320 systems, and can be extended to the
DX-120 system through the use of an external power supply.

In fiscal 2001, the Company introduced the new MMS III MicroMembrane Suppressor
(MMS III) for ion chromatography with the new displacement chemical
regeneration mode of operation. The MMS III can be used with all Dionex ion
exchange columns and is recommended for the anion and cation separations using
eluents containing solvents.

Detectors- Detectors are used to measure the quantity of various sample
components after they have been separated in a chromatography column. Dionex
currently offers several detector products based on conductivity,
electrochemistry, absorbance (including the PDA-100 photodiode array detector),
fluorescence and refractive index absorbance. This range of detectors is
designed to meet customer requirements for analysis of organics, inorganics,
metals, amino acids, biological compounds and pharmaceuticals.

Service and Other- The Company also generates revenue from its Customer
Service organization through maintenance contracts, spare part sales, customer
training and sales of other products and valued-added services. (See Technical
Support, Installation and Service below.)

MARKETING AND CUSTOMERS

The Companys marketing strategy is twofold. First, in those applications
where Dionex technology is well established, the Company works to increase
demand for its chromatography systems through direct mailings, advertising in
trade publications, seminars and workshops, conferences and expositions, and
direct sales calls. Growth in these markets results from identifying new
customers in existing sales regions, extending geographic penetration and
increasing demand for the Companys products and technical support capabilities
among existing customers.

The second component of the Companys marketing strategy is to work closely
with existing and potential customers to develop new applications. Technical
support staff assist such customers in problem definition, development of new
applications needed to solve problems and providing user training and ongoing
user support. By combining this support function with direct sales efforts,
the Company works to increase the range of applications and the potential
market for its products.

The Company currently markets and distributes its products and services through
its own sales force in the United Kingdom, Germany, Italy, France, the
Netherlands, Belgium, Switzerland, Austria, Denmark, Japan, China, Canada and
the United States. In each of these countries, the Company maintains one or
more local sales offices in order to service customers in regional markets. In
other international locations where it does not have a direct sales force, the
Company has developed a network of distributors and sales agents.

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The Companys products are used extensively in environmental analysis and by
the pharmaceutical, life science, biotechnology, chemical, petrochemical, power
generation, food and beverage and electronics industries. Its customers
include a number of the largest industrial companies worldwide, as well as
government agencies, research institutions and universities. Geographically,
sales to customers outside of North America accounted for 61% of consolidated
sales in fiscal 2002, 60% of consolidated sales in fiscal 2001 and 58% of
consolidated sales in fiscal 2000. No single customer accounted for 10% or
more of the Companys sales in fiscal 2002, 2001 or 2000.

Demand for the Companys products is dependent upon the size of the markets for
its chromatography systems, the level of capital expenditures of the Companys
customers, the rate of economic growth in its major markets and competitive
considerations. There can be no assurances that the Companys results of
operations will not be adversely impacted by a change in any of these factors.
The Company believes that demand for its products does not exhibit any
significant seasonal pattern.

Dionex manufactures its products based upon its forecast of customer demand and
maintains inventories of completed modules in advance of receipt of firm orders
from its customers. Orders are generally placed by the customer on an
as-needed basis, and products are usually shipped within four to six weeks
after receipt of an order. Dionex does not maintain a substantial backlog, and
backlog as of any particular date may not be indicative of the Companys actual
sales in any succeeding period. The level of backlog at June 30, 2002 was
$28.4 million and at June 30, 2001 was $21.6 million.

COMPETITION

Competition in the Companys business segment is based upon the performance
capabilities of the analytical instrument, technical support and after-market
service, the manufacturers reputation as a technological leader and the
selling price. Management believes that performance capabilities are the most
important of these criteria. Customers measure system performance in terms of
sensitivity (the ability to discern minute quantities of a particular sample
component), selectivity (the ability to distinguish between similar
components), speed of analysis and the breadth of samples that the system can
effectively analyze. Management believes that Dionex enjoys a favorable
reputation in terms of performance capabilities, technical support and service.

Companies competing with Dionex in the analytical instruments market include
Agilent Technologies, Inc., Perkin-Elmer, Inc., Shimadzu Corporation, Thermo
Instruments, Varian, Inc. and Waters Corporation. The Company believes no
single competitor has a dominant position in the analytical instruments market.

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The Company believes it has a major position in IC, one of many different
analytical techniques. Dionex IC systems generally compete with a number of
analytical techniques used in identifying and quantifying ionic and polar
compounds. The primary sources of competition for IC are conventional manual
and automated wet chemistry procedures and certain modified liquid
chromatography systems and liquid chromatography systems using single column
ion chromatography (SCIC) method that does not use a suppressor device. The
Companys competitors also offer products to compete in ion analysis and
chromatography using suppression technology similar to that offered by the
Company in earlier generation modules during the 1980s. Companies competing
with Dionex in IC included such vendors as Alltech Associates, Lachat, Metrohm
Ltd, Shimadzu Corporation, Waters Corporation and other smaller companies.

The Company believes it has a small but growing share in HPLC, one of many
different analytical techniques. The Companys Summit HPLC system competes
directly with other manufacturers HPLC systems in traditional HPLC
applications. Dionex believes that the Summit HPLC system has certain benefits
over competing systems, including advanced pump technology and a high
performance autosampler. In addition, the Company believes that its
CHROMELEON, software package provides competitive advantages over its
competitors software offerings.

The Companys BioLC system also competes directly with other manufacturers
HPLC systems in certain traditional HPLC applications. Dionex is a relatively
new entrant in the highly competitive HPLC and biological separations markets.
Nonetheless, management believes that its BioLC system has certain benefits
over competing systems, including a non-metallic flow path and the capability
of performing gradient ion chromatography, as well as HPLC, on a single
analytical system.

Competitors of the Company in HPLC include such vendors as Agilent
Technologies, Inc., Shimadzu Corporation, Thermo Electron, Varian, Inc., Waters
Corporation and various smaller companies.

The Companys ASE 100, 200 and 300 systems compete directly with standard
soxhlet, sonication, supercritical fluid extraction and microwave extraction
techniques provided by other companies. Management believes that the ASE 200
and 300 systems have certain benefits compared to competing techniques,
including faster extraction time, reduced solvent usage and built-in
automation.

The Company believes that competition in the
analytical instruments market will
continue to increase in the future. Many of the companies whose products
compete with those of the Company have substantially greater financial
resources and large technical staffs and sales forces at their disposal. There
can be no assurances that the Companys marketing and sales efforts will
compete successfully against such other companies in the future.

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PATENTS AND LICENSES

The Company has an extensive patent portfolio covering certain of the Companys
products. The primary benefits of patents are presently limited to the United
States and certain other foreign countries where patents have been issued.

As a matter of Company policy, the Company vigorously protects its intellectual
property rights and seeks patent coverage on all developments that it regards
as material and patentable. However, there can be no assurances that any
patents held by the Company will not be challenged, invalidated or circumvented
or that the rights granted thereunder will provide competitive advantages to
the Company. The Companys patents, including those licensed from others,
expire on various dates through 2019. The Company believes that, while its
patent portfolio has value, no single patent or patent application is in itself
essential and that the invalidity or expiration of any single patent would not
have a material adverse effect on its business.

The Company regards its PeakNet and CHROMELEON software as proprietary and
relies on a combination of copyrights, trademarks, trade secret laws and other
proprietary rights, laws, license agreements and other restrictions on
disclosure, copying and transferring title to protect its rights to its
software products. The Company has no patents covering its software, and
existing copyright laws afford only limited practical protection. In addition,
the laws of some foreign countries do not protect the Companys proprietary
rights to the same extent as do the laws of the United States.

INTERNATIONAL OPERATIONS

Financial information about foreign and domestic operations and export sales is
provided in Note 13 of the Notes to Consolidated Financial Statements.

The Company has subsidiaries in the United Kingdom, Germany, Italy, France, the
Netherlands, Belgium, Switzerland, Austria, Denmark, Japan, China and Canada.
The Companys foreign sales are affected by fluctuations in currency exchange
rates and by regulations adopted by foreign governments. Export sales are
subject to certain controls and restrictions, but the Company has not
experienced any material difficulties related to these limitations. There can
be no assurances that the Companys results of operation will not be adversely
impacted by fluctuations in currency exchange rates in the future.

The Companys business is dependent upon customer demand in the countries that
it sells its products. Any fluctuations in demand for analytical
instrumentation can affect the Companys results of operations.

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MANUFACTURING AND SUPPLIERS

The Company produces chemicals and resins and assembles systems and components
in its California manufacturing facilities. The Company assembles the systems
and components for its Summit HPLC system in its German manufacturing facility.
The Company assembles the systems and components for its UltiMate system in
its Dutch manufacturing facility. Dionex has developed proprietary processes
for the manufacture of polystyrene-based resins and for packing columns with
these resins. The Company believes that its resins, columns and suppressor
manufacturing know-how are critical to the performance and reliability of its
chromatography systems. The Company requires each employee to sign a
nondisclosure agreement to protect its proprietary processes. However, there
can be no assurances that these agreements will provide meaningful protection
or adequate remedies for the Companys proprietary processes in the event of
unauthorized use or disclosure.

The Company has emphasized a modular design for the principal subsystems of its
pumping and flow systems, sample injection systems, chromatography modules,
detectors, and control and data analysis systems. The Company believes that
this modular approach has enabled it to meet the wide range of system
configurations required by its customers while effectively managing inventory
levels.

Many components used in the Companys products, including proprietary analog
and digital circuitry, are manufactured by Dionex. Other components, including
packaging materials, integrated circuits, microprocessors, microcomputers and
certain detector and data analysis modules, are purchased from other
manufacturers. Most of the raw materials, components and supplies purchased by
the Company are available from a number of different suppliers, although a
number of items are purchased from limited or single sources of supply.

TECHNICAL SUPPORT, INSTALLATION AND SERVICE

Users of the Companys chromatography systems may require technical support
before and after the system sale to ensure that analysis problems are resolved.
Services provided before the sale are recorded in operating expenses as
incurred. Costs incurred after the sale are accrued for at the time of the
system sale. The Company offers training courses and periodically sends its
customers information on applications development. Chromatography systems sold
by the Company generally include a one-year warranty. Installation and certain
basic user training are provided to the customer, with revenue for these
services recognized at that time the services are provided. Maintenance
contracts may be purchased by customers to cover equipment no longer under
warranty. Maintenance work not performed under warranty or maintenance
contracts is performed on a time and materials basis. The Company installs and
services its products through its own field service organization in the United
Kingdom, Germany, Italy, France, the Netherlands, Belgium, Switzerland,
Austria, Denmark, Japan, China, Canada and the United States. Installation and
service in other foreign countries are typically provided by the Companys
distributors or agents.

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RESEARCH AND PRODUCT DEVELOPMENT

The Companys research and product development efforts are focused on increasing the
performance of its chromatography and other products and expanding the number
of chemical compounds that can be analyzed efficiently with its products.
Research and product development expenditures were $15.1 million, $14.7 million
and $14.9 million in fiscal 2002, 2001 and 2000, respectively. The Company
pursues active development programs in the areas of system hardware,
applications, computer software, suppressors, resin and column technologies.
There can be no assurances that the Companys product development efforts will
be successful or that the products developed will be accepted by the
marketplace.

ENVIRONMENTAL LAWS AND REGULATIONS

Compliance by the Company with federal, state and local environmental laws
during fiscal 2002 had no material effect upon capital expenditures, earnings
or its competitive position.

EMPLOYEES

Dionex had 906 employees at June 30, 2002, compared with 912 employees at June
30, 2001. The Company believes that its future success depends in large part
upon its continued ability to attract and retain highly skilled employees.

RISKS AND UNCERTAINTIES

The continuation or spread of the current economic downturn in key markets
would likely harm our operating results.

We sell our products in many geographical regions throughout the world. If
economic conditions in any of these regions decline or continue to decline, the
demand for our products is likely to be reduced. For example, in fiscal 2002,
sales of our products in North America and Japan declined due to weak economic
conditions. A continuation of the economic downturn in these major markets or
the spread of this downturn to other markets would likely harm our results of
operations.

Foreign currency fluctuations and other risks related to international
operations adversely affect our operating results.

We derive approximately 61% of our net sales from outside North America. As a
result, the U.S. dollar value of our net sales varies with currency rate
fluctuations. Significant increases in the value of the U.S. dollar relative
to certain foreign currencies could have a material adverse effect on our
results of operations. International sales may also be negatively impacted by
tariffs and other trade barriers, difficulties in staffing and managing foreign
operations, changes in political environments, interruptions in overseas
shipments and changes in tax laws.

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Fluctuation in worldwide demand for analytical instrumentation could affect our
operating results.

The demand for analytical instrumentation products can fluctuate depending upon
capital expenditure cycles. Our instrumentation products are considered
capital equipment by most companies and our customers may be unable to secure
the necessary capital expenditure approvals due to general economic or customer
specific conditions. Significant fluctuations in demand could harm our results
of operations.

Fluctuations in our quarterly operating results may cause our stock price to
decline.

A high proportion of our costs are fixed due in part to our significant sales,
research and product development and manufacturing costs. Small declines in
revenue caused by fluctuations in currency rates, worldwide demand for
analytical instrumentation or other factors could disproportionately affect our
quarterly operating results, which may in turn cause our stock price to
decline.

If we do not timely introduce new products that are attractive to our
customers, our products may become obsolete.

Our products are highly technical in nature. As a result, many of our products
must be developed months or even years in advance of the potential need by a
customer. If we fail to introduce new products and enhancements as demand
arises or in advance of our competition, our products are likely to become
obsolete over time, which would harm our operating results. Also, if the
market is not receptive to our newly developed products, we will be unable to
recover our costs of research and product development and marketing, and we may
fail to achieve material components of our business plan.

Our revenues depend on successfully competing for market share.

The analytical instrumentation market is highly competitive and we compete with
many competitors, on a local and international level, that are significantly
larger than Dionex and have greater resources, including larger sales forces
and technical staff. Competitors may introduce more effective and less costly
products and in doing so make it difficult to acquire and retain customers. If
this occurs, our market share may decline and our operating results could
suffer.

Our ability to maintain inventories and meet customer demand for our products
is critical to our operating results.

Most of the raw materials, components and supplies that we purchase are
available from a number of suppliers. However, certain items are purchased
from limited or sole source suppliers and a disruption of these sources could
adversely affect our ability to ship products as needed. A prolonged inability
to obtain certain materials or components would likely reduce product
inventory, hinder sales and harm our reputation with customers.

We manufacture our products in three sites in Germany, the Netherlands and the
United States. Any prolonged disruption to the operations at these facilities,
whether due to labor unrest, supplier issues, damage to the physical plants or
equipments or other reasons, could also adversely affect our results of
operations.

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##### Table of Contents



Our executive officers and other key employees are critical to our business,
they may not remain with us in the future and finding talented replacements
would be difficult.

The operations of Dionex require managerial and technical expertise. None of
our executive officers and key employees has an employment contract with us and
they may not remain with us in the future. In addition, our headquarters are
located in Sunnyvale, California, where the demand for qualified personnel is
extremely high and is likely to remain so for the foreseeable future. As a
result, competition for personnel is intense and the turnover rate for
qualified personnel is high. The loss of any of our executive officers or key
employees could cause us to incur increased operating expenses and divert
senior management resources in searching for replacements. An inability to
hire, train and retain sufficient numbers of qualified employees would
seriously affect our ability to conduct our business.

The success of our business is dependent in part on protection of our
proprietary information and inventions, but obtaining and enforcing legal
protection of our proprietary products, processes and technologies can be
difficult and expensive.

Patent and trade secret protection is important to us because developing new
technologies and products is time-consuming and expensive. We own many U.S.
and foreign patents and intend to apply for additional patents to cover our
technology and products. We may be unable to obtain issued patents from any
pending or future patent applications that we own. The claims allowed under
any issued patents may not be sufficiently broad to protect our technology.
Third parties may seek to challenge, circumvent or invalidate issued patents
that we own.

In addition to our patents, we have a vast number of unpatented proprietary
products and know-how. The measures we employ to protect this technology, such
as maintaining the confidentiality of our proprietary information and relying
on trade secret laws, may be inadequate.

We may incur significant expense in any legal proceedings to protect our
proprietary rights.

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##### Table of Contents



EXECUTIVE OFFICERS OF THE REGISTRANT

The following table lists the names and positions of all current executive
officers of the Company, and their ages as of August 23, 2002. Except as noted
below, there are no other family relationships between any director or
executive officer and any other director or executive officer of the
Registrant. Executive officers serve at the discretion of the Board of
Directors.

|                        |  |     |    |           |  |                                           |  | 
|----------------------- |  | --- | -- | --------- |  | ----------------------------------------- |  | 
|Name                    |  | Age |    | Positions
|                        |  |     |    |          
|                       
|A. Blaine Bowman(1)     |  |     | 56 |           |  | Chairman of the Board                    
|                       
|Lukas Braunschweiler(2) |  |     | 46 |           |  | President and Chief                      
|                        |  |     |    |           |  | Executive Officer                        
|                       
|Barton Evans, Jr.       |  |     | 54 |           |  | Executive Vice President                 
|                        |  |     |    |           |  | and Chief Operating Officer              
|                       
|Nebojsa Avdalovic       |  |     | 67 |           |  | Vice President                           
|                       
|Der-Min Fan             |  |     | 52 |           |  | Vice President                           
|                       
|Peter Jochum            |  |     | 51 |           |  | Vice President                           
|                       
|Craig A. McCollam       |  |     | 42 |           |  | Vice President
andChief Financial Officer
|                       
|Brent J. Middleton(1)   |  |     | 45 |           |  | Vice President                           
|                       
|Christopher Pohl        |  |     | 51 |           |  | Vice President                           
|                       
|Jeffrey Thompson        |  |     | 46 |           |  | Vice President                           



---

|(1) |  | Mr. Bowman and Mr. Middleton are cousins.                                                      
|--- |  | -----------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Mr. Braunschweiler was elected President and Chief Executive
Officer, effective August 5, 2002.

Mr. Bowman has served as the Chairman of the Board since August 5, 2002. Prior
to that, he served as the Companys President and Chief Executive Officer and
as a director since the Company began operations in 1980. Mr. Bowman is also a
director of Molecular Devices Corporation.

Dr. Braunschweiler has served as President and Chief Executive Officer
since August 5, 2002. Prior to that, he served as Group Vice-President and
Head of Laboratory and Packaging Division of Mettler-Toledo and in a variety of
management positions at Mettler-Toledo since 1995.

Mr. Evans has served as Executive Vice President and Chief Operating Officer
for the Company since January 2001. Prior to that, he served as Vice
President, Operations and in various other capacities for the Company since it
began operations in 1980.

Dr. Avdalovic has served as Vice President and Chief Technology Officer for the
Company since June 2001. Prior to that, he served as Vice President, Research
and Development for the Company since August 1990.

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Ms. Fan has served as Vice President, Software Engineering for the Company
since April 2000. Prior to that, she served as Director of Software
Engineering and in various other capacities since joining the Company in 1983.

Dr. Jochum has served as Vice President, Life Sciences Business since October
2000. Prior to that, he served as Managing Director of Dionex Softron since
joining the Company in October 1998. Prior to joining the Company, he served
as Managing Director of Softron GmbH.

Mr. McCollam has served as Vice President and Chief Financial Officer since
October 1999. Prior to that, he served as Director of Finance and Corporate
Controller since joining the Company in 1993.

Mr. Middleton has served as Vice President, Sales, Service and Corporate
Marketing for the Company since July 1997. Prior to that, he served as
Director of North American Sales and Service and in various other capacities
since joining the Company in 1985.

Mr. Pohl rejoined the Company as Vice President, Research and Development in
June 2001. From March 2000 to June 2001, Mr. Pohl served as Vice President,
Research and Development of Ciphergen Biosystems, Inc. Prior to that, he
served as Vice President, Consumables and in various other capacities for the
Company since joining the Company in 1981.

Mr. Thompson has served as Vice President, Hardware Engineering for the Company
since May 2001. Prior to that, he served as Director of Instrument Engineering
and in various other capacities since joining the Company in 1981.

19



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##### Table of Contents






Item 2. PROPERTIES

The Company owns nine buildings in Sunnyvale, California, providing 252,000
square feet of space utilized for administration, marketing, sales, service,
research and product development and manufacturing. The Company also owns a
20,000 square foot building utilized for sales, service and administration in
Idstein, Germany and a 45,000 square foot building for manufacturing and
administration in Germering, Germany. The Company also owns a 32,000 square
foot building in Osaka, Japan for sales, service and administration.

The Company leases sales and service offices in: Atlanta, Georgia; Houston,
Texas; Westmont, Illinois; Marlton, New Jersey; and in the United Kingdom,
France, Italy, the Netherlands, Belgium, Switzerland, Austria, Denmark, Japan,
China and Canada. In addition, the Company leases marketing and research and
product development offices in Salt Lake City, Utah. The Company also leases
manufacturing, marketing and research and product development offices in
Amsterdam, the Netherlands. The Companys facilities are well maintained,
adequate to conduct the Companys current business and substantially utilized
by the Company.




Item 3. LEGAL PROCEEDINGS

None.




Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the quarter
ended June 30, 2002.




Item 5. MARKET FOR THE REGISTRANTS COMMON STOCK AND RELATED STOCKHOLDER MATTERS

MARKET PRICE OF COMMON STOCK

The Companys common stock is traded in the over-the-counter market through the
Nasdaq National Market under the symbol DNEX. The following table sets forth,
for the periods indicated, the high and low sales prices as reported by Nasdaq.

|        |  |             |       |             |  |      |       |     |  |   |       |  |  |   |       | 
|------- |  | ----------- | ----- | ----------- |  | ---- | ----- | --- |  | - | ----- |  |  | - | ----- | 
|        |  | Fiscal 2002 |       | Fiscal 2001
|        |  |             |       |            
|Quarter |  | High        |       | Low         |  | High |       | Low
|        |  |             |       |             |  |      |       |    
|First   |  | $           | 30.69 |             |  | $    | 24.00 |     |  | $ | 30.38 |  |  | $ | 25.00 | 
|Second  |  | $           | 27.06 |             |  | $    | 23.10 |     |  | $ | 37.50 |  |  | $ | 26.38 | 
|Third   |  | $           | 27.23 |             |  | $    | 24.00 |     |  | $ | 36.56 |  |  | $ | 29.50 | 
|Fourth  |  | $           | 26.79 |             |  | $    | 23.26 |     |  | $ | 35.08 |  |  | $ | 27.40 | 

As of August 19, 2002 there were 1,135 holders of record of the Companys
common stock as shown on the records of its transfer agent.

DIVIDENDS

The Company has paid no cash dividends on its common stock and anticipates that
for the foreseeable future it will continue to retain its earnings for use in
its business.

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##### Table of Contents






PART II




Item 6. SELECTED CONSOLIDATED FINANCIAL DATA

Operating Information:

|                                                                                      |                                                  |                          |         |        |        |      |         |        |        |      |         |        |        |   |         |        |        |   |         |        |        | 
|------------------------------------------------------------------------------------- | ------------------------------------------------ | ------------------------ | ------- | ------ | ------ | ---- | ------- | ------ | ------ | ---- | ------- | ------ | ------ | - | ------- | ------ | ------ | - | ------- | ------ | ------ | 
|Years ended June 30                                                                   |                                                  | 2002                     |         | 2001   |        | 2000 |         | 1999   |        | 1998
|                                                                                      |                                                  |                          |         |        |        |      |         |        |        |      |         |       
|(In thousands, except per share amounts)                                              |                                                  |                          |         |        |        |      |         |        |        |      |         |        |        |   |         |        |        |   |         |       
|Net sales                                                                             |                                                  | $                        | 182,434 |        |        | $    | 186,757 |        |        | $    | 179,529 |        |        | $ | 172,940 |        |        | $ | 150,513 |       
|Cost of sales                                                                         |                                                  |                          | 63,740  |        |        |      | 64,071  |        |        |      | 56,462  |        |        |   | 55,216  |        |        |   | 47,390  |       
|Revaluation of acquired inventory                                                     |                                                  |                          |        |        |        |      | 121     |        |        |      |        |        |        |   | 1,952   |        |        |   |        |       
|                                                                                      |                                                  |                          |         |        |        |      |         |        |        |      |         |        |        |   |         |        |        |   |         |       
|Gross profit                                                                          |                                                  |                          | 118,694 |        |        |      | 122,565 |        |        |      | 123,067 |        |        |   | 115,772 |        |        |   | 103,123 |       
|Operating expenses:                                                                   |                                                  |                          |         |        |        |      |         |        |        |      |         |        |        |   |         |        |        |   |         |       
|                                                                                      | Selling, general and administrative              |                          |         | 65,126 |        |      |         | 63,443 |        |      |         | 58,196 |        |   |         | 53,974 |        |   |         | 47,689 |       
|                                                                                      | Research and product development                 |                          |         | 15,094 |        |      |         | 14,742 |        |      |         | 14,850 |        |   |         | 14,812 |        |   |         | 13,284 |       
|                                                                                      | Write-off of in-process research
and development |                          |         |       |        |      |         | 865    |        |      |         |       |        |   |         | 4,991  |        |   |         |       |       
|                                                                                      |                                                  |                          |         |        |        |      |         |        |        |      |         |        |        |   |         |        |        |   |         |       
|                                                                                      |                                                  | Total operating expenses |         |        | 80,220 |      |         |        | 79,050 |      |         |        | 73,046 |   |         |        | 73,777 |   |         |        | 60,973 | 
|                                                                                      |                                                  |                          |         |        |        |      |         |        |        |      |         |        |        |   |         |        |        |   |         |       
|Operating income                                                                      |                                                  |                          | 38,474  |        |        |      | 43,515  |        |        |      | 50,021  |        |        |   | 41,995  |        |        |   | 42,150  |       
|Other income                                                                          |                                                  |                          | 2,101   |        |        |      | 3,048   |        |        |      |        |        |        |   |        |        |        |   |        |       
|Interest income                                                                       |                                                  |                          | 528     |        |        |      | 850     |        |        |      | 844     |        |        |   | 917     |        |        |   | 1,374   |       
|Interest expense                                                                      |                                                  |                          | (203    | )      |        |      | (353    | )      |        |      | (431    | )      |        |   | (301    | )      |        |   | (115    | )     
|                                                                                      |                                                  |                          |         |        |        |      |         |        |        |      |         |        |        |   |         |        |        |   |         |       
|Income before taxes on income and
cumulative effect of change in
accounting principle |                                                  |                          | 40,900  |        |        |      | 47,060  |        |        |      | 50,434  |        |        |   | 42,611  |        |        |   | 43,409  |       
|Taxes on income                                                                       |                                                  |                          | 13,292  |        |        |      | 15,295  |        |        |      | 16,391  |        |        |   | 14,137  |        |        |   | 14,759  |       
|                                                                                      |                                                  |                          |         |        |        |      |         |        |        |      |         |        |        |   |         |        |        |   |         |       
|Net income before effect of
change in accounting principle                            |                                                  |                          | 27,608  |        |        |      | 31,765  |        |        |      | 34,043  |        |        |   | 28,474  |        |        |   | 28,650  |       
|Cumulative effect of change in
accounting principle, net of tax                       |                                                  |                          |        |        |        |      | 359     |        |        |      |        |        |        |   |        |        |        |   |        |       
|                                                                                      |                                                  |                          |         |        |        |      |         |        |        |      |         |        |        |   |         |        |        |   |         |       
|Net income                                                                            |                                                  | $                        | 27,608  |        |        | $    | 31,406  |        |        | $    | 34,043  |        |        | $ | 28,474  |        |        | $ | 28,650  |       
|                                                                                      |                                                  |                          |         |        |        |      |         |        |        |      |         |        |        |   |         |        |        |   |         |       
|Basic earnings per share                                                              |                                                  | $                        | 1.27    |        |        | $    | 1.42    |        |        | $    | 1.54    |        |        | $ | 1.28    |        |        | $ | 1.25    |       
|Diluted earnings per share                                                            |                                                  | $                        | 1.24    |        |        | $    | 1.37    |        |        | $    | 1.46    |        |        | $ | 1.20    |        |        | $ | 1.18    |       
|Shares used in computing earnings per
share amounts:                                  |                                                  |                          |         |        |        |      |         |        |        |      |         |        |        |   |         |        |        |   |         |       
|                                                                                      | Basic                                            |                          |         | 21,705 |        |      |         | 22,137 |        |      |         | 22,174 |        |   |         | 22,287 |        |   |         | 22,978 |       
|                                                                                      | Diluted                                          |                          |         | 22,184 |        |      |         | 22,895 |        |      |         | 23,364 |        |   |         | 23,640 |        |   |         | 24,316 |       

All share and per share amounts have been restated to reflect the two-for-one
split of the Companys common stock effective June 5, 1998. The Company has
paid no cash dividends.

Balance sheet information:

|                     |  |      |         |      |  |      |         |      |  |      |         |  |  |   |         |  |  |   |         | 
|-------------------- |  | ---- | ------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- |  |  | - | ------- |  |  | - | ------- | 
|At June 30           |  | 2002 |         | 2001 |  | 2000 |         | 1999 |  | 1998
|                     |  |      |         |      |  |      |         |      |  |     
|(In thousands)       |  |      |         |      |  |      |         |      |  |      |         |  |  |   |         |  |  |   |         | 
|Working capital      |  | $    | 62,075  |      |  | $    | 68,071  |      |  | $    | 48,390  |  |  | $ | 34,755  |  |  | $ | 35,745  | 
|Total assets         |  |      | 180,718 |      |  |      | 173,682 |      |  |      | 163,153 |  |  |   | 146,674 |  |  |   | 107,259 | 
|Long-term debt       |  |      | 1,002   |      |  |      | 966     |      |  |      |        |  |  |   | 990     |  |  |   |        | 
|Stockholders' equity |  |      | 131,707 |      |  |      | 129,858 |      |  |      | 118,442 |  |  |   | 95,738  |  |  |   | 70,689  | 

21



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Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

The following table summarizes the consolidated statement of income items as a
percentage of sales.

|                                                                            |                                                  |                          |       |      |      |      |       |      |      |  |       |      |      | 
|--------------------------------------------------------------------------- | ------------------------------------------------ | ------------------------ | ----- | ---- | ---- | ---- | ----- | ---- | ---- |  | ----- | ---- | ---- | 
|Years ended June 30                                                         |                                                  | 2002                     |       | 2001 |      | 2000
|                                                                            |                                                  |                          |       |      |      |      |       |     
|Net sales                                                                   |                                                  |                          | 100.0 | %    |      |      | 100.0 | %    |      |  | 100.0 | %   
|Cost of sales                                                               |                                                  |                          | 34.9  |      |      |      | 34.3  |      |      |  | 31.4  |     
|Revaluation of acquired inventory                                           |                                                  |                          |      |      |      |      | 0.1   |      |      |  |      |     
|                                                                            |                                                  |                          |       |      |      |      |       |      |      |  |       |     
|Gross profit                                                                |                                                  |                          | 65.1  |      |      |      | 65.6  |      |      |  | 68.6  |     
|Operating expenses:                                                         |                                                  |                          |       |      |      |      |       |      |      |  |       |     
|                                                                            | Selling, general and administrative              |                          |       | 35.7 |      |      |       | 34.0 |      |  |       | 32.4 |     
|                                                                            | Research and product development                 |                          |       | 8.3  |      |      |       | 7.9  |      |  |       | 8.3  |     
|                                                                            | Write-off of in-process research
and development |                          |       |     |      |      |       | 0.4  |      |  |       |     |     
|                                                                            |                                                  |                          |       |      |      |      |       |      |      |  |       |     
|                                                                            |                                                  | Total operating expenses |       |      | 44.0 |      |       |      | 42.3 |  |       |      | 40.7 | 
|                                                                            |                                                  |                          |       |      |      |      |       |      |      |  |       |     
|Operating income                                                            |                                                  |                          | 21.1  |      |      |      | 23.3  |      |      |  | 27.9  |     
|Other income                                                                |                                                  |                          | 1.1   |      |      |      | 1.6   |      |      |  |      |     
|Interest income, net                                                        |                                                  |                          | 0.2   |      |      |      | 0.3   |      |      |  | 0.2   |     
|                                                                            |                                                  |                          |       |      |      |      |       |      |      |  |       |     
|Income before taxes and cumulative
effect of change in accounting principle |                                                  |                          | 22.4  |      |      |      | 25.2  |      |      |  | 28.1  |     
|Taxes on income                                                             |                                                  |                          | 7.3   |      |      |      | 8.2   |      |      |  | 9.1   |     
|                                                                            |                                                  |                          |       |      |      |      |       |      |      |  |       |     
|Net income before cumulative effect of
change in accounting principle       |                                                  |                          | 15.1  |      |      |      | 17.0  |      |      |  | 19.0  |     
|Cumulative effect of change in
accounting principle                         |                                                  |                          |      |      |      |      | 0.2   |      |      |  |      |     
|                                                                            |                                                  |                          |       |      |      |      |       |      |      |  |       |     
|Net income                                                                  |                                                  |                          | 15.1  | %    |      |      | 16.8  | %    |      |  | 19.0  | %   
|                                                                            |                                                  |                          |       |      |      |      |       |      |      |  |       |     

Net Sales and Gross Profit In fiscal 2002, Dionex reported sales of $182.4
million, a decrease of 2% compared with $186.8 million reported in fiscal 2001.
Sales in fiscal 2000 were $179.5 million. The Company is subject to the
effects of foreign currency fluctuations that can have a significant impact on
reported sales and gross profits. Currency fluctuations decreased reported
sales by 1% in fiscal 2002 and 5% in fiscal 2001.

Sales in fiscal 2002 grew in our European and distributor markets but declined
in North America and Japan due to weak economic conditions. Sales growth in
fiscal 2001 was attributable to growth in our European and distributor markets.
In fiscal 2001, sales in North America and Japan were flat. Sales growth in
local currency was strong in both our European and Japanese markets in fiscal
2001. However, a strong U.S. dollar reduced the reported growth in both
regions.

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Sales outside North America accounted for 61% of net sales in fiscal 2002, 60%
in fiscal 2001 and 58% in fiscal 2000. The Company sells directly through its
sales forces in the United Kingdom, Germany, Italy, France, the Netherlands,
Belgium, Switzerland, Austria, Denmark, Japan, China, Canada and the United
States. Direct sales accounted for 90% of consolidated net sales in fiscal
2002, compared with 88% in fiscal 2001, and 91% in fiscal 2000. International
distributors and representatives in Europe, Asia and other international
markets accounted for the balance of the consolidated net sales. There were no
significant price changes during the three-year period.

Gross profit in fiscal 2002 was 65.1% compared with 65.6% in fiscal 2001 and
68.6% in fiscal 2000. Gross profit in fiscal 2002 was lower due to the effects
of foreign currency fluctuations and product mix. Gross profit in fiscal 2001
was lower due to foreign currency fluctuations, higher manufacturing costs and
product mix.

Operating Expenses  Selling, general and administrative (SG&A) expenses as a
percentage of net sales were 35.7% in fiscal 2002, compared with 34.0% in
fiscal 2001 and 32.4% in fiscal 2000. SG&A expenses increased to $65.1 million
in fiscal 2002, an increase of 3% from $63.4 million in fiscal 2001. The
increase in SG&A expenses in fiscal 2002 was attributable to the inclusion of
costs, for the entire year, of LC Packings Nederlands B.V. and LC Packings
(U.S.A.), Inc. (collectively referred to as LC Packings), acquired in fiscal
2001 and Denmark and China subsidiaries. In fiscal 2001, the increase was
attributable to the inclusion of LC Packings costs since the acquisition and
additional costs related to two new subsidiaries started in January 2001. The
Company anticipates that SG&A expenses will be in the range of 33% to 36% of
sales in the near term.

Research and product development expenses were 8.3% of net sales in fiscal 2002
compared with 7.9% in fiscal 2001 and 8.3% in fiscal 2000. Research and
product development expenses in fiscal 2002 of $15.1 million were up $400,000
compared with $14.7 million in fiscal 2001. Research and product development
expenses in fiscal 2001 were virtually unchanged from the $14.9 million in
fiscal 2000. Research and product development spending depends on both the
breadth of the Companys research and product development efforts and the stage
of specific product development projects. The Companys anticipates that the
level of research and product development expenses will remain in the range of
7% to 10% of sales in the near term.

Write-off of In-process Research and Development Acquired Write-off of
in-process research and development acquired represents nonrecurring charges of
$865,000, associated with the acquisitions of LC Packings in October 2000 for
technology that had not reached technological feasibility and had no
alternative future use.

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The valuation of intangibles related to the acquisitions were based upon
managements estimates of after-tax net cash flow using a 25% discount rate.
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; and (iii) the allocation to in-process research and
development 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. The valuations were performed by
an independent valuation group and were deemed reasonable in light of all the
quantitative and qualitative information available.

The write-off of in-process research and development related to projects that
were in development, had not reached technological feasibility, had no
alternative future use and for which successful development was uncertain.

For LC Packings, three of the in-process projects were to design and build new
liquid chromatography modules. Two projects were to design and build new
columns. The sixth project was a new generation of software. The columns and
software projects were completed in fiscal 2002. The three hardware projects
are scheduled to be completed in fiscal 2003. At the time of the acquisition,
the estimated cost to complete these products was $1.3 million. Costs incurred
by the Company through June 30, 2002 were approximately $650,000.

There can be no assurances that the Company will be able to complete the
development of these 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.

Other Income Other income in fiscal 2002 and 2001 of $2.1 million and $3.0
million, respectively, primarily consisted of the gain on sale of marketable
equity securities.

Interest Income Interest income in fiscal 2002 of $528,000 was lower than the
$850,000 reported for fiscal 2001 due to lower interest rates despite higher
average cash balances. In fiscal 2001, interest income of $850,000 was
virtually unchanged from the $844,000 reported in fiscal 2000.

Interest Expense Interest expense in fiscal 2002 of $203,000 was lower than
the $353,000 reported in fiscal 2001 due to lower average borrowings. In
fiscal 2001, interest expense was $353,000 due to borrowings related to the
acquisition of LC Packings. In fiscal 2001, the Company capitalized $221,000
of interest related to the construction of a building in Japan.

Taxes on Income The Companys effective tax rate was 32.5% for fiscal 2002,
2001 and 2000. The Companys effective tax rate is affected by the mix of
taxable income among the various tax jurisdictions in which the Company does
business. The Company anticipates that its effective tax rate will be in the
range of 32% to 35% in the near term.

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Cumulative Effect of Change in Accounting
Principle  Effective July 1, 2000,
the Company adopted Staff Accounting Bulletin No. 101, Revenue Recognition in
Financial Statements (SAB 101). SAB 101 outlines the basic criteria that must
be met to recognize revenue and provides guidance for disclosures related to
revenue recognition policies.

The Companys previous policy was to recognize product installation revenue
upon shipment and to accrue product installation costs at the time revenue was
recognized. Upon adoption of SAB 101, the Company defers installation revenue
until installation has been completed and recognizes installation costs as
incurred.

The cumulative effect of the change, totaling $359,000, is shown as a one-time
charge to income in the consolidated statement of income for fiscal 2001. If
SAB 101 had been adopted at the beginning of fiscal 2000, the effect on the
results of operations for fiscal 2000 would not have been material.

Earnings per Share Diluted earnings per share were $1.24 for fiscal 2002
compared with $1.42 for fiscal 2001 excluding nonrecurring acquisition-related
charges, consisting of revaluation of acquired inventory, write-off of in-process research
and development, the related income tax effect of both of these items and the
cumulative effect of change in accounting principle. Earnings per share in
fiscal 2000 were $1.46. The number of shares used in computing diluted and
basic earnings per share are affected by the Companys stock repurchase
program.

Liquidity and Capital Resources  At June 30, 2002, the Company had cash and
cash equivalents of $22.2 million. The Companys working capital was $62.1
million at June 30, 2002, compared with $68.1 million at June 30, 2001.
Working capital decreased in fiscal 2002 due to the decrease in marketable
equity securities and inventory and an increase in accrued liabilities. In
addition, the Company repurchased 1,333,870 shares of its common stock for
$34.5 million in fiscal 2002 under its stock repurchase program. The Company
repurchased 361,000 shares for $10.5 million in fiscal 2001 and 935,850 shares
for $34.6 million in fiscal 2000.

Cash generated by operating activities was $41.8 million in fiscal 2002,
compared with $27.3 million in fiscal 2001 and $30.6 million in fiscal 2000.
The increase in operating cash flows in fiscal 2002 was due to improvements in
inventory and accounts receivable as compared with the previous year, partially
offset by lower net income.

Cash used for investing activities was $5.4 million in fiscal 2002, compared
with $15.8 million in fiscal 2001 and $5.8 million in fiscal 2000. The
decrease in cash used for investing activities was due to $2.5 million being
used as part of the acquisition of LC Packings in fiscal 2002, compared with
net cash of $12.4 million relating to the LC Packings acquisition in fiscal
2001 and a decrease in capital expenditures. Capital expenditures in fiscal
2002 decreased by $2.3 million to $4.8 million, compared with $7.1 million in
fiscal 2001 and $5.1 million in fiscal 2000. The higher level of capital
expenditures in fiscal 2001 was due primarily to the construction of a building
in Japan.

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Cash used for financing activities was $31.3 million in fiscal 2002, compared
with $3.7 million in fiscal 2001 and $26.1 million in fiscal 2000. Financing
activities for all three years consisted primarily of common stock repurchases
as discussed above. Additionally, in connection with the construction of the
building in Japan, the Company borrowed $2.7 million in long-term borrowings in
fiscal 2001.

At June 30, 2002, the Company had outstanding borrowings of $2.0 million from
bank lines of credit and $1.5 million from a foreign denominated mortgage note
payable. At June 30, 2002 bank lines of credit totaled $32.7 million. The
Company believes its cash flow from operations, its existing cash and cash
equivalents and its bank lines of credit will be adequate to meet its cash
requirements for the near term. The impact of inflation on the Companys
financial position and results of operations was not significant during any of
the periods presented.

The following summarizes our contractual obligations at June 30, 2002, and the
effect such obligations are expected to have on our liquidity and cash flows in
future periods (in thousands):

|                              |  |                        |        |        |  |           |       |       |  |       |        |         |  |   |       |  |  |   |       | 
|----------------------------- |  | ---------------------- | ------ | ------ |  | --------- | ----- | ----- |  | ----- | ------ | ------- |  | - | ----- |  |  | - | ----- | 
|Contractual Obligations       |  | Payments Due by Period
|                              |  |                       
|                              |  |                        |        |        |  | Less Than |       | 1-3   |  | 4-5   |        | After 5
|                              |  | Total                  |        | 1 Year |  | Years     |       | Years |  | Years
|                              |  |                        |        |        |  |           |       |       |  |      
|Lines of Credit               |  | $                      | 2,003  |        |  | $         | 2,003 |       |  | $     |       |         |  | $ |      |  |  | $ |      | 
|Long Term Debt                |  |                        | 1,502  |        |  |           | 500   |       |  |       | 1,002  |         |  |   |      |  |  |   |      | 
|Operating Lease Obligations   |  |                        | 13,949 |        |  |           | 2,681 |       |  |       | 3,729  |         |  |   | 2,507 |  |  |   | 5,032 | 
|Other Obligations             |  |                        | 9,500  |        |  |           | 3,000 |       |  |       | 6,500  |         |  |   |      |  |  |   |      | 
|                              |  |                        |        |        |  |           |       |       |  |       |        |         |  |   |       |  |  |   |       | 
|Total Contractual
Commitments |  | $                      | 26,954 |        |  | $         | 8,184 |       |  | $     | 11,231 |         |  | $ | 2,507 |  |  | $ | 5,032 | 
|                              |  |                        |        |        |  |           |       |       |  |       |        |         |  |   |       |  |  |   |       | 

At June 30, 2002, the Company had recorded $5.7 million of Other Obligations in
its consolidated financial statements. Other Obligations relate to the
earn-out from the acquisition of LC Packings.

Acquisition In October 2000, the Company purchased all of the issued and
outstanding shares of LC Packings for total consideration, including
acquisition costs, of approximately $12.4 million.

The acquisition 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 the acquisition.

In connection with the acquisition, the Company recorded nonrecurring charges
of $865,000 in fiscal 2001 for the write-off of acquired in-process research
and development. In addition, cost of sales in fiscal 2001 included $121,000
related to the sale of acquired inventory which had been revalued as a part of
the purchase accounting.

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Risks and Uncertainties  The Company is subject to certain risks and
uncertainties and believes that changes in any of the following areas could
have a material adverse effect on the Companys future financial position or
results of operations. Such factors include, among others: the continuation or
spread of the current economic downturn; risks related to international
operations, including foreign currency fluctuations; the importance of meeting
customer demand for new products; competition in the analytical instrumentation
market; our ability to maintain inventories; the importance of attracting and
retaining key personnel; and our ability to protect our proprietary
information.

Effect of New Accounting Standards In October 2001, the Financial Accounting
Standards Board issued SFAS No. 144, Impairment on Disposal of Long-Lived
Assets, effective for fiscal years beginning after December 31, 2001. Under
SFAS No. 144, the criteria required for classifying an asset as held-for-sale
have been significantly changed. Assets held-for-sale are stated at the lower
of their fair values or carrying amounts, and depreciation is no longer
recognized. In addition, the expected future operating losses from
discontinued operations will be displayed in discontinued operations in the
period in which the losses are incurred rather than as of the measurement date.
More dispositions will qualify for discontinued operations treatment in the
income statement under the new rules. The Company is currently evaluating the
impact of SFAS No. 144 on its consolidated financial statements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Summary  The preparation of consolidated financial statements requires the
Company 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. The Company evaluates its estimates on
an on-going basis, including those related to product returns and allowances,
bad debts, inventory valuation, goodwill and intangible assets, income taxes,
warranty and installation provisions, and contingencies.

The Company bases its estimates on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates. The Company believes the
following critical accounting policies affect its more significant judgments
and estimates used in the preparation of its consolidated financial statements.

Revenue Recognition Policy We derive revenue from the sale of products and
from services rendered to our customers, including installation, training and
maintenance. Generally, our products contain embedded software that is
essential to their functionality.

We recognize revenue in accordance with SAB No. 101 and Statement of Position
97-2, Software Revenue Recognition, (SOP 97-2) when persuasive evidence of an
arrangement exists, the product has been delivered, the price is fixed or
determinable, collection is probable and vendor specific objective evidence
exists to allocate revenue to the various elements of the arrangement. Vendor
specific objective evidence is based on the price charged when an element is
sold separately or, if not yet sold separately, when the price is established
by authorized management. Delivery is generally considered to have occurred
when shipped.

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We sell our equipment through our direct sales force and through distributors
and resellers. Sales through distributors and resellers are recognized as
revenue upon sale to the distributor or reseller as these sales are considered
to be final and no right of return or price protection exists. Customer
acceptance is generally limited to performance under our published product
specifications. When additional customer acceptance conditions apply, all
revenue related to the sale is deferred until acceptance is obtained. Our
equipment typically includes a one-year warranty. The estimated cost of
product warranty claims is accrued at the time the sale is recognized, based on
historical experience.

Installation and training services are not considered to be essential to the
functionality of our products, and revenue related to these items is recognized
when the services are completed. We recognize maintenance fees ratably over
the period of the related maintenance contract. Maintenance consists of
product repair services, unspecified software upgrades and telephone support.

Loss Provisions on Accounts Receivable and Inventory We maintain allowances
for doubtful accounts for estimated losses resulting from the inability of
customers to make required payments. If the financial condition of our
customers were to deteriorate, resulting in an impairment of their ability to
make payments, additional allowances may be required. We assess collectibility
based on a number of factors including, but not limited to, past transaction
history with the customer, the credit-worthiness of the customer, independent
credit reports, industry trends and the macro-economic environment. Sales
returns and allowances are estimates of future product returns related to
current period revenue. Material differences may result in the amount and
timing of our revenue for any period. Historically, we have not experienced
significant sales returns or bad debt losses.

We value our inventory at the lower of standard cost (which approximates to
cost on a first-in, first-out basis) or market. We estimate revisions to
inventory valuations based on technical obsolescence, historical demand,
projections of future demand and industry and market conditions. If actual
future demand or market conditions are less favorable than those projected by
management, additional valuation provisions may be required. If demand or
market conditions are more favorable then abnormally high margins could be
realized to the extent inventory is sold which had previously been written
down.

Long-Lived Assets, Intangible Assets with Finite Lives and Goodwill We assess
the impairment of long-lived assets, intangible assets with finite lives and
goodwill whenever events or changes in circumstances indicate that the carrying
value may not be recoverable. In addition, we assess goodwill for impairment
at least annually. Factors we consider important which could trigger an
impairment review include but are not limited to the following:



| |  |  | significant underperformance relative to expected historical or
projected future operating results;
| | - |  | ---------------------------------------------------------------------------------------------------
|
| |  |  | significant negative industry or economic trends; and                                              
|
| |  |  | significant changes or developments in strategic technology.                                       

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When we determine that the carrying value of long-lived assets and intangible
assets with finite lives may not be recoverable based upon the existence of one or
more of the above or other indicators, we measure any impairment based on a
projected discounted cash flow method using a discount rate determined by our
management to be commensurate with the risk inherent in our current business
model. Goodwill is tested for impairment by comparing the fair value of
related reporting units to its carrying value. As of July 1, 2001, the Company
adopted Statement of Financial Accounting Standard No. 142, Goodwill and Other
Intangible Assets (SFAS No. 142) and as a result, we ceased to amortize
approximately $13.2 million of goodwill at June 30, 2001. In lieu of
amortization, we are required to perform an impairment review at least
annually. We completed our review and no impairment was necessary.

Warranty Product warranties are recorded at the time revenue is recognized
for certain product shipments based on historical experience. While the
Company engages in extensive product quality programs and processes, our
warranty obligation is affected by product failure rates, material usage and
service costs incurred in correcting a product failure. Should actual product
failure rates, material usage or service costs differ from our previous
estimates, revisions to the estimated warranty liability would be required.

Taxes on Income As part of the process of preparing our consolidated
financial statements, we are required to estimate our income taxes in each of
the jurisdictions in which we operate. This process involves estimating our
actual current tax exposure together with assessing temporary differences
resulting from differing treatment of items, such as depreciation, amortization
and inventory reserves, for tax and accounting purposes. These differences
result in deferred tax assets and liabilities, which are included within our
consolidated balance sheets. We must then assess the likelihood that our
deferred tax assets will be recovered from future taxable income and, to the
extent we believe that recovery is not likely, we must establish a valuation
allowance. In the event that actual results differ from these estimates, we
may need to revise the valuation allowance, which could materially impact our
financial position and results of operations.




Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to financial market risks from fluctuations in foreign currency
exchange rates, interest rates and stock prices of marketable equity
securities. With the exception of the stock price volatility of our marketable
equity securities, we manage our exposure to these and other risks through our
regular operating and financing activities and, when appropriate, through our
hedging activities. Our policy is not to use hedges or other derivative
financial instruments for speculative purposes. We deal with a diversified
group of major financial institutions to limit the risk of nonperformance by
any one institution on any financial instrument. Separate from our financial
hedging activities, material changes in foreign exchange rates, interest rates
and, to a lesser extent, commodity prices could cause significant changes in
the costs to manufacture and deliver our products and in our customers buying
practices. We have not substantially changed our risk management practices
during fiscal 2002 and do not currently anticipate significant changes in
financial market risk exposures in the near future that would require us to
change our risk management practices.

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Foreign Currency Exchange  Revenues generated from international operations
are generally denominated in foreign currencies. We enter into outright
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 has not been material in any of the
three years presented. At June 30, 2002 and 2001, our primary net foreign
currency market exposures included Euros, Yen, British pounds, Swiss francs and
Canadian dollars.

A sensitivity analysis assuming a hypothetical 10% movement in foreign exchange
rates applied to our hedging contracts and underlying balances being hedged at
June 30, 2002 and 2001, indicated that these market movements would not have a
material effect on our business, operating results or financial condition.
Actual gains or losses in the future may differ materially from this analysis,
depending on actual changes in the timing and amount of interest rate and
foreign currency exchange rate movements and our actual balances and hedges.
Foreign currency rate fluctuations can impact the U.S. dollar translation of
our foreign operations in our consolidated financial statements. Currency
fluctuations decreased reported sales by 1%, 5% and 1% in fiscal 2002, 2001 and
2000, respectively.

Interest and Investment Income  Our interest and investment income is subject
to changes in the general level of U.S. interest rates. Changes in U.S.
interest rates affect the interest earned on our cash equivalents and
short-term investments. A sensitivity analysis assuming a hypothetical 10%
movement in interest rates applied to our investment balances at June 30, 2002
and 2001, indicated that such market movement would not have a material effect
on our business, operating results or financial condition. Actual gains or
losses in the future may differ materially from this analysis, depending on our
actual balances and changes in the timing and amount of interest rate
movements.

Marketable Equity Securities  We are exposed to market price risks on our
marketable equity securities. These investments are in publicly traded
companies in the laboratory analytical instruments sector. We do not attempt
to reduce or eliminate our market exposure on these securities. A 50% adverse
change in the equity price would result in an approximate $1 million and $3
million decrease in the fair value of our marketable equity securities as of
June 30, 2002 and 2001, respectively.

Debt and Interest Expense  A sensitivity analysis assuming a hypothetical 10%
movement in interest rates applied to our outstanding debt balance at June 30,
2002 and 2001, indicated that such market movement would not have a material
effect on our business, operating results or financial condition. Actual gains
or losses in the future may differ materially from this analysis, depending on
changes in the timing and amount of interest rate movements.

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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

|                                                                                                 |  |      |       | 
|------------------------------------------------------------------------------------------------ |  | ---- | ----- | 
|                                                                                                 |  | Page
|                                                                                                 |  |     
|FINANCIAL STATEMENTS                                                                             |  |      |       | 
|Independent Auditors Report                                                                     |  |      | 32    | 
|Consolidated Balance Sheets at June 30, 2002 and 2001                                            |  |      | 33    | 
|Consolidated Statements of Income for the years
ended June 30, 2002, 2001 and 2000               |  |      | 34    | 
|Consolidated Statements of Stockholders Equity for
the years ended June 30, 2002, 2001 and 2000 |  |      | 35    | 
|Consolidated Statements of Cash Flows for the years
ended June 30, 2002, 2001 and 2000           |  |      | 36    | 
|Notes to Consolidated Financial Statements                                                       |  |      | 37-50 | 

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INDEPENDENT AUDITORS REPORT

The Board of Directors and Stockholders, Dionex Corporation:

We have audited the accompanying consolidated balance sheets of Dionex
Corporation and its subsidiaries as of June 30, 2002 and 2001, and the related
consolidated statements of income, stockholders equity and cash flows for each
of the three years in the period ended June 30, 2002. 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 auditing standards generally
accepted in the United States of America. 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 Dionex Corporation and its
subsidiaries at June 30, 2002 and 2001, and the results of their operations and
their cash flows for each of the three years in the period ended June 30, 2002
in conformity with accounting principles generally accepted in the United
States of America.

DELOITTE & TOUCHE LLP

San Jose, California
July 29, 2002

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CONSOLIDATED BALANCE SHEETS

|                                         |                                                                                                                                       |                            |         |        |         |   |         |        |         | 
|---------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | ------ | ------- | - | ------- | ------ | ------- | 
|At June 30                               |                                                                                                                                       | 2002                       |         | 2001  
|                                         |                                                                                                                                       |                            |         |        |         |  
|(In thousands, except per share amounts) |                                                                                                                                       |                            |         |        |         |   |         |       
|ASSETS                                   |                                                                                                                                       |                            |         |        |         |   |         |       
|Current assets:                          |                                                                                                                                       |                            |         |        |         |   |         |       
|                                         | Cash and equivalents (including invested cash of
$12,877 in 2002 and $7,853 in 2001)                                                  |                            | $       | 22,169 |         |   | $       | 17,311 |        
|                                         | Marketable equity securities                                                                                                          |                            |         | 2,281  |         |   |         | 5,858  |        
|                                         | Accounts receivable (net of allowance for doubtful
accounts of $989 in 2002 and $890 in 2001)                                         |                            |         | 45,139 |         |   |         | 45,142 |        
|                                         | Inventories                                                                                                                           |                            |         | 22,410 |         |   |         | 25,017 |        
|                                         | Deferred taxes                                                                                                                        |                            |         | 7,756  |         |   |         | 8,619  |        
|                                         | Prepaid expenses and other                                                                                                            |                            |         | 2,634  |         |   |         | 2,810  |        
|                                         |                                                                                                                                       |                            |         |        |         |   |         |       
|                                         |                                                                                                                                       | Total current assets       |         |        | 102,389 |   |         |        | 104,757 | 
|Property, plant and equipment, net       |                                                                                                                                       |                            | 44,895  |        |         |   | 42,327  |       
|Goodwill                                 |                                                                                                                                       |                            | 19,549  |        |         |   | 13,233  |       
|Intangible assets, net                   |                                                                                                                                       |                            | 5,506   |        |         |   | 6,423   |       
|Other assets                             |                                                                                                                                       |                            | 8,379   |        |         |   | 6,942   |       
|                                         |                                                                                                                                       |                            |         |        |         |   |         |       
|                                         |                                                                                                                                       | $                          | 180,718 |        |         | $ | 173,682 |       
|                                         |                                                                                                                                       |                            |         |        |         |   |         |       
|LIABILITIES AND STOCKHOLDERS EQUITY     |                                                                                                                                       |                            |         |        |         |   |         |       
|Current liabilities:                     |                                                                                                                                       |                            |         |        |         |   |         |       
|                                         | Notes payable to banks                                                                                                                |                            | $       | 2,503  |         |   | $       | 2,495  |        
|                                         | Accounts payable                                                                                                                      |                            |         | 5,227  |         |   |         | 6,250  |        
|                                         | Accrued liabilities                                                                                                                   |                            |         | 24,770 |         |   |         | 21,533 |        
|                                         | Income taxes payable                                                                                                                  |                            |         | 4,902  |         |   |         | 3,425  |        
|                                         | Accrued product warranty                                                                                                              |                            |         | 2,912  |         |   |         | 2,983  |        
|                                         |                                                                                                                                       |                            |         |        |         |   |         |       
|                                         |                                                                                                                                       | Total current liabilities  |         |        | 40,314  |   |         |        | 36,686  | 
|Deferred taxes                           |                                                                                                                                       |                            | 4,949   |        |         |   | 5,837   |       
|Long-term debt                           |                                                                                                                                       |                            | 1,002   |        |         |   | 966     |       
|Other long-term liabilities              |                                                                                                                                       |                            | 2,746   |        |         |   | 335     |       
|Commitments (Note 12)                    |                                                                                                                                       |                            |         |        |         |   |         |       
|Stockholders equity:                    |                                                                                                                                       |                            |         |        |         |   |         |       
|                                         | Preferred stock (par value $.001 per share;
1,000,000 shares authorized; none outstanding)                                            |                            |         |       |         |   |         |       |        
|                                         | Common stock (par value $.001 per share;
80,000,000 shares authorized; shares
outstanding: 21,089,372 in 2002 and 22,177,005
in 2001) |                            |         | 67,626 |         |   |         | 67,282 |        
|                                         | Retained earnings                                                                                                                     |                            |         | 67,439 |         |   |         | 70,204 |        
|                                         | Accumulated other comprehensive loss                                                                                                  |                            |         | (3,358 | )       |   |         | (7,628 | )      
|                                         |                                                                                                                                       |                            |         |        |         |   |         |       
|                                         |                                                                                                                                       | Total stockholders equity |         |        | 131,707 |   |         |        | 129,858 | 
|                                         |                                                                                                                                       |                            |         |        |         |   |         |       
|                                         |                                                                                                                                       | $                          | 180,718 |        |         | $ | 173,682 |       
|                                         |                                                                                                                                       |                            |         |        |         |   |         |       

See notes to consolidated financial statements.

33



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##### Table of Contents



CONSOLIDATED STATEMENTS OF INCOME

|                                                                      |                                                                   |                          |         |        |        |      |         |        |        |   |         |        |        | 
|--------------------------------------------------------------------- | ----------------------------------------------------------------- | ------------------------ | ------- | ------ | ------ | ---- | ------- | ------ | ------ | - | ------- | ------ | ------ | 
|Years ended June 30                                                   |                                                                   | 2002                     |         | 2001   |        | 2000
|                                                                      |                                                                   |                          |         |        |        |      |         |       
|(In thousands, except per share amounts)                              |                                                                   |                          |         |        |        |      |         |        |        |   |         |       
|Net sales                                                             |                                                                   | $                        | 182,434 |        |        | $    | 186,757 |        |        | $ | 179,529 |       
|Cost of sales                                                         |                                                                   |                          | 63,740  |        |        |      | 64,071  |        |        |   | 56,462  |       
|Revaluation of acquired inventory                                     |                                                                   |                          |        |        |        |      | 121     |        |        |   |        |       
|                                                                      |                                                                   |                          |         |        |        |      |         |        |        |   |         |       
|Gross profit                                                          |                                                                   |                          | 118,694 |        |        |      | 122,565 |        |        |   | 123,067 |       
|Operating expenses:                                                   |                                                                   |                          |         |        |        |      |         |        |        |   |         |       
|                                                                      | Selling, general and administrative                               |                          |         | 65,126 |        |      |         | 63,443 |        |   |         | 58,196 |       
|                                                                      | Research and product development                                  |                          |         | 15,094 |        |      |         | 14,742 |        |   |         | 14,850 |       
|                                                                      | Write-off of in-process research and development                  |                          |         |       |        |      |         | 865    |        |   |         |       |       
|                                                                      |                                                                   |                          |         |        |        |      |         |        |        |   |         |       
|                                                                      |                                                                   | Total operating expenses |         |        | 80,220 |      |         |        | 79,050 |   |         |        | 73,046 | 
|                                                                      |                                                                   |                          |         |        |        |      |         |        |        |   |         |       
|Operating income                                                      |                                                                   |                          | 38,474  |        |        |      | 43,515  |        |        |   | 50,021  |       
|Other income                                                          |                                                                   |                          | 2,101   |        |        |      | 3,048   |        |        |   |        |       
|Interest income                                                       |                                                                   |                          | 528     |        |        |      | 850     |        |        |   | 844     |       
|Interest expense                                                      |                                                                   |                          | (203    | )      |        |      | (353    | )      |        |   | (431    | )     
|                                                                      |                                                                   |                          |         |        |        |      |         |        |        |   |         |       
|Income before taxes on income                                         |                                                                   |                          | 40,900  |        |        |      | 47,060  |        |        |   | 50,434  |       
|Taxes on income                                                       |                                                                   |                          | 13,292  |        |        |      | 15,295  |        |        |   | 16,391  |       
|                                                                      |                                                                   |                          |         |        |        |      |         |        |        |   |         |       
|Net income before cumulative effect of
change in accounting principle |                                                                   |                          | 27,608  |        |        |      | 31,765  |        |        |   | 34,043  |       
|Cumulative effect of change in
accounting principle                   |                                                                   |                          |        |        |        |      | 359     |        |        |   |        |       
|                                                                      |                                                                   |                          |         |        |        |      |         |        |        |   |         |       
|Net income                                                            |                                                                   | $                        | 27,608  |        |        | $    | 31,406  |        |        | $ | 34,043  |       
|                                                                      |                                                                   |                          |         |        |        |      |         |        |        |   |         |       
|Basic earnings per share:                                             |                                                                   |                          |         |        |        |      |         |        |        |   |         |       
|                                                                      | Income before cumulative effect of
change in accounting principle |                          | $       | 1.27   |        |      | $       | 1.43   |        |   | $       | 1.54   |       
|                                                                      | Cumulative effect of change in
accounting principle               |                          |         |       |        |      |         | (0.01  | )      |   |         |       |       
|                                                                      |                                                                   |                          |         |        |        |      |         |        |        |   |         |       
|Net income                                                            |                                                                   | $                        | 1.27    |        |        | $    | 1.42    |        |        | $ | 1.54    |       
|                                                                      |                                                                   |                          |         |        |        |      |         |        |        |   |         |       
|Diluted earnings per share:                                           |                                                                   |                          |         |        |        |      |         |        |        |   |         |       
|                                                                      | Income before cumulative effect of
change in accounting principle |                          | $       | 1.24   |        |      | $       | 1.39   |        |   | $       | 1.46   |       
|                                                                      | Cumulative effect of change in
accounting principle               |                          |         |       |        |      |         | (0.02  | )      |   |         |       |       
|                                                                      |                                                                   |                          |         |        |        |      |         |        |        |   |         |       
|Net income                                                            |                                                                   | $                        | 1.24    |        |        | $    | 1.37    |        |        | $ | 1.46    |       
|                                                                      |                                                                   |                          |         |        |        |      |         |        |        |   |         |       
|Shares used in computing earnings per share:                          |                                                                   |                          |         |        |        |      |         |        |        |   |         |       
|                                                                      | Basic                                                             |                          |         | 21,705 |        |      |         | 22,137 |        |   |         | 22,174 |       
|                                                                      | Diluted                                                           |                          |         | 22,184 |        |      |         | 22,895 |        |   |         | 23,364 |       

See notes to consolidated financial statements.

34



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##### Table of Contents



CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

|                                                                                |                                          |  |              |   |          |   |               |   |              |   |         |        |               |   |        |         |   |   |         |         |   |   |        |         |  
|------------------------------------------------------------------------------- | ---------------------------------------- |  | ------------ | - | -------- | - | ------------- | - | ------------ | - | ------- | ------ | ------------- | - | ------ | ------- | - | - | ------- | ------- | - | - | ------ | ------- | -
|                                                                                |                                          |  |              |   |          |   |               |   |              |   |         |        |               |   | Other  |         |   |   |         |         |   |   |       
|                                                                                |                                          |  | Common Stock |   | Retained |   | Comprehensive |   |              |   |         |        | Comprehensive
|                                                                                |                                          |  | Shares       |   | Amount   |   | Earnings      |   | Income(Loss) |   | Total   |        | Income       
|                                                                                |                                          |  |              |   |          |   |               |   |              |   |         |        |              
|(Dollars in thousands)                                                          |                                          |  |              |   |          |   |               |   |              |   |         |        |               |   |        |         |   |   |         |         |   |   |        |        
|Balance at June 30, 1999                                                        |                                          |  | 22,314,442   |   |          | $ | 46,445        |   |              | $ | 46,677  |        |               | $ | 2,616  |         |   | $ | 95,738  |         |   |   |        |        
|Comprehensive income,
net of tax:                                               |                                          |  |              |   |          |   |               |   |              |   |         |        |               |   |        |         |   |   |         |         |   |   |        |        
|                                                                                | Net income                               |  |              |   |          |   |               |   |              |   |         | 34,043 |               |   |        |         |   |   |         | 34,043  |   |   | $      | 34,043  |  
|                                                                                | Foreign currency
translation
adjustments |  |              |   |          |   |               |   |              |   |         |        |               |   |        | (689    | ) |   |         | (689    | ) |   |        | (689    | )
|                                                                                | Unrealized gain on
securities            |  |              |   |          |   |               |   |              |   |         |        |               |   |        | 7,273   |   |   |         | 7,273   |   |   |        | 7,273   |  
|                                                                                |                                          |  |              |   |          |   |               |   |              |   |         |        |               |   |        |         |   |   |         |         |   |   |        |        
|Comprehensive income                                                            |                                          |  |              |   |          |   |               |   |              |   |         |        |               |   |        |         |   |   |         |         |   | $ | 40,627 |        
|                                                                                |                                          |  |              |   |          |   |               |   |              |   |         |        |               |   |        |         |   |   |         |         |   |   |        |        
|Common stock issued
under employee benefit
plans including related
tax benefits |                                          |  | 744,271      |   |          |   | 16,699        |   |              |   |         |        |               |   |        |         |   |   | 16,699  |         |   |   |        |        
|Repurchase of common
stock                                                      |                                          |  | (935,850     | ) |          |   | (2,187        | ) |              |   | (32,435 | )      |               |   |        |         |   |   | (34,622 | )       |   |   |        |        
|                                                                                |                                          |  |              |   |          |   |               |   |              |   |         |        |               |   |        |         |   |   |         |         |   |   |        |        
|Balance at June 30, 2000                                                        |                                          |  | 22,122,863   |   |          |   | 60,957        |   |              |   | 48,285  |        |               |   | 9,200  |         |   |   | 118,442 |         |   |   |        |        
|Comprehensive income,
net of tax:                                               |                                          |  |              |   |          |   |               |   |              |   |         |        |               |   |        |         |   |   |         |         |   |   |        |        
|                                                                                | Net income                               |  |              |   |          |   |               |   |              |   |         | 31,406 |               |   |        |         |   |   |         | 31,406  |   |   | $      | 31,406  |  
|                                                                                | Foreign currency
translation
adjustments |  |              |   |          |   |               |   |              |   |         |        |               |   |        | (4,900  | ) |   |         | (4,900  | ) |   |        | (4,900  | )
|                                                                                | Unrealized loss on
Securities            |  |              |   |          |   |               |   |              |   |         |        |               |   |        | (11,928 | ) |   |         | (11,928 | ) |   |        | (11,928 | )
|                                                                                |                                          |  |              |   |          |   |               |   |              |   |         |        |               |   |        |         |   |   |         |         |   |   |        |        
|Comprehensive income                                                            |                                          |  |              |   |          |   |               |   |              |   |         |        |               |   |        |         |   |   |         |         |   | $ | 14,578 |        
|                                                                                |                                          |  |              |   |          |   |               |   |              |   |         |        |               |   |        |         |   |   |         |         |   |   |        |        
|Common stock issued
under employee benefit
plans including related
tax benefits |                                          |  | 415,142      |   |          |   | 7,352         |   |              |   |         |        |               |   |        |         |   |   | 7,352   |         |   |   |        |        
|Repurchase of common
stock                                                      |                                          |  | (361,000     | ) |          |   | (1,027        | ) |              |   | (9,487  | )      |               |   |        |         |   |   | (10,514 | )       |   |   |        |        
|                                                                                |                                          |  |              |   |          |   |               |   |              |   |         |        |               |   |        |         |   |   |         |         |   |   |        |        
|Balance at June 30, 2001                                                        |                                          |  | 22,177,005   |   |          |   | 67,282        |   |              |   | 70,204  |        |               |   | (7,628 | )       |   |   | 129,858 |         |   |   |        |        
|Comprehensive income,
net of tax:                                               |                                          |  |              |   |          |   |               |   |              |   |         |        |               |   |        |         |   |   |         |         |   |   |        |        
|                                                                                | Net income                               |  |              |   |          |   |               |   |              |   |         | 27,608 |               |   |        |         |   |   |         | 27,608  |   |   | $      | 27,608  |  
|                                                                                | Foreign currency
translation
adjustments |  |              |   |          |   |               |   |              |   |         |        |               |   |        | 5,644   |   |   |         | 5,644   |   |   |        | 5,644   |  
|                                                                                | Unrealized loss on
Securities            |  |              |   |          |   |               |   |              |   |         |        |               |   |        | (1,374  | ) |   |         | (1,374  | ) |   |        | (1,374  | )
|                                                                                |                                          |  |              |   |          |   |               |   |              |   |         |        |               |   |        |         |   |   |         |         |   |   |        |        
|Comprehensive income                                                            |                                          |  |              |   |          |   |               |   |              |   |         |        |               |   |        |         |   |   |         |         |   | $ | 31,878 |        
|                                                                                |                                          |  |              |   |          |   |               |   |              |   |         |        |               |   |        |         |   |   |         |         |   |   |        |        
|Common stock issued
under employee benefit
plans including related
tax benefits |                                          |  | 246,237      |   |          |   | 4,468         |   |              |   |         |        |               |   |        |         |   |   | 4,468   |         |   |   |        |        
|Repurchase of common
stock                                                      |                                          |  | (1,333,870   | ) |          |   | (4,124        | ) |              |   | (30,373 | )      |               |   |        |         |   |   | (34,497 | )       |   |   |        |        
|                                                                                |                                          |  |              |   |          |   |               |   |              |   |         |        |               |   |        |         |   |   |         |         |   |   |        |        
|Balance at June 30, 2002                                                        |                                          |  | 21,089,372   |   |          | $ | 67,626        |   |              | $ | 67,439  |        |               | $ | (3,358 | )       |   | $ | 131,707 |         |   |   |        |        
|                                                                                |                                          |  |              |   |          |   |               |   |              |   |         |        |               |   |        |         |   |   |         |         |   |   |        |        

See notes to consolidated financial statements

35



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##### Table of Contents



CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                |                                                                                   |                                                  |                                   |         |        |        |         |         |        |        |         |         |       |        |  
|----------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------ | --------------------------------- | ------- | ------ | ------ | ------- | ------- | ------ | ------ | ------- | ------- | ----- | ------ | -
|Years ended June 30                             |                                                                                   | 2002                                             |                                   | 2001    |        | 2000  
|                                                |                                                                                   |                                                  |                                   |         |        |        |         |         |       
|(In thousands)                                  |                                                                                   |                                                  |                                   |         |        |        |         |         |        |        |         |        
|Cash and equivalents provided by (used for):    |                                                                                   |                                                  |                                   |         |        |        |         |         |        |        |         |        
|Cash flows from operating activities:           |                                                                                   |                                                  |                                   |         |        |        |         |         |        |        |         |        
|                                                | Net income                                                                        |                                                  | $                                 | 27,608  |        |        | $       | 31,406  |        |        | $       | 34,043  |      
|                                                | Adjustments to reconcile net income to
net cash provided by operating activities: |                                                  |                                   |         |        |        |         |         |        |        |         |         |      
|                                                |                                                                                   | Write-off of in-process research and
development |                                   |         |       |        |         |         | 865    |        |         |         |      |       
|                                                |                                                                                   | Depreciation and amortization                    |                                   |         | 4,827  |        |         |         | 5,251  |        |         |         | 4,519 |       
|                                                |                                                                                   | Gain on sale of marketable equity securities     |                                   |         | (2,093 | )      |         |         | (2,951 | )      |         |         |      |       
|                                                |                                                                                   | Tax benefit related to stock option plans        |                                   |         | 1,225  |        |         |         | 2,688  |        |         |         | 8,555 |       
|                                                |                                                                                   | Deferred taxes                                   |                                   |         | 807    |        |         |         | 1,126  |        |         |         | 499   |       
|                                                |                                                                                   | Changes in assets and liabilities:               |                                   |         |        |        |         |         |        |        |         |         |       |       
|                                                |                                                                                   |                                                  | Accounts receivable               |         |        | 3,046  |         |         |        | (4,020 | )       |         |       | (2,646 | )
|                                                |                                                                                   |                                                  | Inventories                       |         |        | 4,187  |         |         |        | (8,825 | )       |         |       | (4,363 | )
|                                                |                                                                                   |                                                  | Prepaid expenses and other assets |         |        | 282    |         |         |        | 505    |         |         |       | 39     |  
|                                                |                                                                                   |                                                  | Accounts payable                  |         |        | (1,313 | )       |         |        | 297    |         |         |       | (351   | )
|                                                |                                                                                   |                                                  | Accrued liabilities               |         |        | 2,320  |         |         |        | 1,443  |         |         |       | (3,378 | )
|                                                |                                                                                   |                                                  | Income taxes payable              |         |        | 1,187  |         |         |        | 1,037  |         |         |       | (6,308 | )
|                                                |                                                                                   |                                                  | Accrued product warranty          |         |        | (249   | )       |         |        | (1,504 | )       |         |       | (6     | )
|                                                |                                                                                   |                                                  |                                   |         |        |        |         |         |        |        |         |        
|Net cash provided by operating activities       |                                                                                   |                                                  | 41,834                            |         |        |        | 27,318  |         |        |        | 30,603  |        
|Cash flows from investing activities:           |                                                                                   |                                                  |                                   |         |        |        |         |         |        |        |         |        
|                                                | Proceeds from sale of marketable equity securities                                |                                                  |                                   | 3,380   |        |        |         | 3,658   |        |        |         |        |      
|                                                | Purchase of property, plant and equipment                                         |                                                  |                                   | (4,790  | )      |        |         | (7,128  | )      |        |         | (5,128  | )    
|                                                | Acquisition, net of cash acquired                                                 |                                                  |                                   | (2,500  | )      |        |         | (12,404 | )      |        |         |        |      
|                                                | Investments in unaffiliated companies                                             |                                                  |                                   | (1,567  | )      |        |         |        |        |        |         |        |      
|                                                | Other                                                                             |                                                  |                                   | 94      |        |        |         | 102     |        |        |         | (664    | )    
|                                                |                                                                                   |                                                  |                                   |         |        |        |         |         |        |        |         |        
|Net cash used for investing activities          |                                                                                   |                                                  | (5,383                            | )       |        |        | (15,772 | )       |        |        | (5,792  | )      
|Cash flows from financing activities:           |                                                                                   |                                                  |                                   |         |        |        |         |         |        |        |         |        
|                                                | Net change in notes payable to banks                                              |                                                  |                                   | (80     | )      |        |         | 480     |        |        |         | 213     |      
|                                                | Proceeds from long-term debt                                                      |                                                  |                                   | 483     |        |        |         | 2,691   |        |        |         |        |      
|                                                | Principal payments on long-term debt                                              |                                                  |                                   | (475    | )      |        |         | (1,056  | )      |        |         |        |      
|                                                | Sale of common stock                                                              |                                                  |                                   | 3,243   |        |        |         | 4,664   |        |        |         | 8,144   |      
|                                                | Repurchase of common stock                                                        |                                                  |                                   | (34,497 | )      |        |         | (10,514 | )      |        |         | (34,622 | )    
|                                                | Other                                                                             |                                                  |                                   |        |        |        |         |        |        |        |         | 149     |      
|                                                |                                                                                   |                                                  |                                   |         |        |        |         |         |        |        |         |        
|Net cash used for financing activities          |                                                                                   |                                                  | (31,326                           | )       |        |        | (3,735  | )       |        |        | (26,116 | )      
|Effect of exchange rate changes on cash         |                                                                                   |                                                  | (267                              | )       |        |        | 114     |         |        |        | (645    | )      
|                                                |                                                                                   |                                                  |                                   |         |        |        |         |         |        |        |         |        
|Net increase/(decrease) in cash and equivalents |                                                                                   |                                                  | 4,858                             |         |        |        | 7,925   |         |        |        | (1,950  | )      
|Cash and equivalents, beginning of year         |                                                                                   |                                                  | 17,311                            |         |        |        | 9,386   |         |        |        | 11,336  |        
|                                                |                                                                                   |                                                  |                                   |         |        |        |         |         |        |        |         |        
|Cash and equivalents, end of year               |                                                                                   | $                                                | 22,169                            |         |        | $      | 17,311  |         |        | $      | 9,386   |        
|                                                |                                                                                   |                                                  |                                   |         |        |        |         |         |        |        |         |        

See notes to consolidated financial statements

36



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##### Table of Contents



Note 1 / SIGNIFICANT ACCOUNTING POLICIES

Organization  Dionex Corporation (the Company) is a leading manufacturer and
marketer of chromatography systems for chemical analysis. The Companys systems
are used in environmental analysis and by the pharmaceutical, life sciences,
chemical, petrochemical, power generation, food and electronics industries in a
variety of applications.

Principles of Consolidation  The consolidated financial statements include the
Company and its subsidiaries. All significant intercompany transactions and
accounts are eliminated in consolidation.

Certain Risks and Uncertainties  The preparation of financial statements in
conformity with generally accepted accounting principles 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 investments and trade receivables. The
Company invests in high-grade instruments which it places for safekeeping with
high quality financial institutions. 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. The Company maintains allowances for
potential credit losses.

The Company is subject to certain risks and uncertainties and believes that
changes in any of the following areas could have a material adverse effect on
the Companys future financial position or results of operations. Such factors
include, among others: the continuation or spread of the current economic
downturn; risks related to international operations, including foreign currency
fluctuations; the importance of meeting customer demand for new products;
competition in the analytical instrumentation market; our ability to maintain
inventories; the importance of attracting and retaining key personnel; and our
ability to protect our proprietary information.

Cash Equivalents  Cash equivalents are highly liquid debt instruments with a
maturity at date of purchase of three months or less.

Investments  The Company classifies its debt and equity securities as held to
maturity or available for sale. Securities classified as held to maturity
are reported at amortized cost and available for sale securities are reported
at fair market value, with a corresponding recognition of the unrealized gains
and losses (net of tax effect) as a separate component of stockholders equity.
The Companys investments in marketable equity securities have been classified
as available for sale.

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Inventories  Inventories are stated at the lower of standard cost (which
approximates cost on a 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.

Purchased Technology and Goodwill  Purchased technology amounts are recorded
at their fair market value as of the date of acquisition and amortized over
their estimated useful lives of up to seven years.

In July 2001, the Company adopted Statement of Financial Accounting Standard
No. 141, Business Combinations (SFAS No. 141) which is effective for any
business combination accounted for by the purchase method that is completed
after June 30, 2001. This statement requires that the purchase method of
accounting be used for all business combinations and eliminates the
pooling-of-interests method of accounting for business combinations. The
Company has completed two business combinations in the previous three years and
used the purchase method of accounting in each business combination.

In July 2001, the Company adopted Statement of Financial Accounting Standard
No. 142, Goodwill and Other Intangible Assets (SFAS No. 142). The statement
establishes that goodwill is not amortized but is tested for impairment as
required. It requires that identifiable intangible assets be recognized
separately from goodwill if certain criteria are met and, amortizes those
assets over the useful economic life. Goodwill is to be tested on an annual
basis for impairment and, if impaired, is recorded as an impairment charge in
income from operations. The Company has goodwill and other intangible assets
primarily from its acquisitions made in the previous three years.

Valuation of Long-Lived Assets  The carrying value of the Companys long-lived
assets is reviewed for impairment whenever events or changes in circumstances
indicate that an asset may not be recoverable. The Company looks to current and
future profitability, as well as current and future undiscounted cash flows, as
primary indicators of recoverability. If impairment is determined to exist, any
related impairment loss is calculated based on fair value.

Revenue Recognition  Revenue is derived from the sale of products and from
services rendered to our customers including installation, training and
maintenance. Generally, our products contain embedded software that is
essential to their functionality.

Revenue is recognized in accordance with Staff Accounting Bulletin No. 101,
Revenue Recognition in Financial Statements (SAB 101) and Statement of
Position 97-2, Software Revenue Recognition (SOP 97-2), when persuasive
evidence of an arrangement exists, the product has been delivered, the price is
fixed or determinable, collection is probable and vendor specific objective
evidence exists to allocate revenue to the various elements of the arrangement.
Vendor specific objective evidence is based on the price charged when a
element is sold separately or, if not yet sold separately, when the price is
established by authorized management. Delivery is generally considered to have
occurred when shipped.

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The Company sells equipment through our direct sales force and through
distributors and resellers. Sales through distributors and resellers are
recognized as revenue upon sale to the distributor or reseller as these sales
are considered to be final and no right of return or price protection exists.
Customer acceptance is generally limited to performance under our published
product specifications. When additional customer acceptance conditions apply,
all revenue related to the sale is deferred until acceptance is obtained.
Equipment typically includes a one-year warranty. The estimated cost of
product warranty claims is accrued at the time the sale is recognized, based on
historical experience.

Installation and training services are not considered to be essential to the
functionality of our products, and revenue related to these items is recognized
when the services are completed. Maintenance fees are recognized ratably over
the period of the related maintenance contract. Maintenance consists of
product repair services, unspecified software upgrades and telephone support.

Taxes on Income  The Company records income taxes using the asset and
liability approach to account for deferred income taxes.

Cumulative Effect of Change in Accounting Principle  Effective July 1, 2000,
the Company adopted SAB 101. SAB 101 outlines the basic criteria that must be
met to recognize revenue and provides guidance for disclosures related to
revenue recognition policies.

The Companys previous policy was to recognize product installation revenue
upon shipment and to accrue product installation costs at the time revenue was
recognized. Upon adoption of SAB 101, the Company defers installation revenue
until installation has been completed and recognizes installation costs as
incurred.

The cumulative effect of the change, totaling $359,000, is shown as a one-time
charge to income in the consolidated statement of income for fiscal 2001. If
SAB 101 had been adopted at the beginning of fiscal 2000, the effect on the
results of operations for the years ended June 30, 2000 would not have been
material.

Stock-based Compensation Plans  The Company applies Accounting Principles
Board Opinion No. 25, Accounting for Stock Issued to Employees (APB No. 25)
and related interpretations in accounting for its stock-based compensation
plans (Note 9). Accordingly, no accounting recognition is given to stock
options granted at fair market value until they are exercised. Upon exercise,
net proceeds, including tax benefits realized, are credited to equity.

Earnings per Share  Basic earnings per share is computed based upon the
weighted average number of shares of common stock outstanding and the net
income attributable to common stockholders. Diluted earnings per share is
computed by dividing net income by the weighted average number of common shares
for all dilutive potential common shares outstanding. Shares used in the
calculation of diluted earnings per share during fiscal 2002, 2001 and 2000
include 479,000, 758,000 and 1,190,000, respectively, of common equivalent
shares related to stock options. Antidilutive common equivalent shares related
to stock options excluded from the calculation of diluted shares were
1,167,000, 1,068,000 and 11,000 for fiscal 2002, 2001 and 2000, respectively.

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Common Stock Repurchases  The Company repurchases shares in the open market
under its ongoing stock repurchase program. For each share repurchased, the
Company reduces the common stock account by the average value per share
reflected in the account prior to the repurchase with the excess allocated to
retained earnings. The Company currently retires all shares repurchased.

Translation of Foreign Currency  The Companys foreign operations 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.

Derivative Securities  Every derivative instrument, including certain
derivative instruments embedded in other contracts, is recorded on the
consolidated balance sheet at its fair value. Changes in the fair value of
derivatives is recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of a hedge
transaction and, if it is, the type of hedge transaction. The Company formally
documents, designates and assesses the effectiveness of transactions that
receive hedge accounting.

The Company enters into foreign exchange forward contracts with high quality
financial institutions to manage its exposure to the impact of fluctuations in
foreign currency exchange rates on its intercompany receivables balances. These
contracts generally have maturities of approximately 30 days and require the
Company to exchange foreign currencies for U.S. dollars at maturity. The
Company has not designated these contracts as hedging instruments. The
contracts are recorded at fair value on the consolidated balance sheet. Changes
in the fair values of these derivative instruments are recognized in earnings
in the period they occur.

At June 30, 2002, the Company had forward exchange contracts to sell foreign
currencies totaling $16.9 million dollars, including
approximately $4.8 million in Japanese yen, $10.3 million in Euros and the remainder in British pounds, Swiss
francs and Canadian dollars. At June 30, 2002 and 2001, the aggregate
unrealized gains or losses on the forward exchange contracts were not material.

Comprehensive Income  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 and comprehensive income are foreign
currency translation adjustments and net unrealized gains or losses on
securities available for sale. At June 30, 2002 and 2001, the components of
accumulated other comprehensive loss were as follows:

|                                                      |  |      |        |      |  |   |        |  
|----------------------------------------------------- |  | ---- | ------ | ---- |  | - | ------ | -
|(In thousands)                                        |  | 2002 |        | 2001
|                                                      |  |      |        |     
|Foreign currency translation adjustments              |  | $    | (4,125 | )    |  | $ | (9,769 | )
|Unrealized gain on securities available
for sale, net |  |      | 767    |      |  |   | 2,141  |  
|                                                      |  |      |        |      |  |   |        |  
|                                                      |  | $    | (3,358 | )    |  | $ | (7,628 | )
|                                                      |  |      |        |      |  |   |        |  

Reclassifications  Certain reclassifications have been made to the prior year
financial statements to conform with the fiscal 2002 financial statements
presentation.

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New Accounting Pronouncements  In October 2001, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standard No. 144,
Impairment on Disposal of Long-Lived Assets (SFAS No. 144), effective for
fiscal years beginning after December 31, 2001. Under SFAS No. 144, the
criteria required for classifying an asset as held-for-sale has been
significantly changed. Assets held-for-sale are stated at the lower of their
fair values or carrying amounts, and depreciation is no longer recognized. In
addition, the expected future operating losses from discontinued operations
will be displayed in discontinued operations in the period in which the losses
are incurred rather than as of the measurement date. More dispositions will
qualify for discontinued operations treatment in the income statement under the
new rules. The Company is currently evaluating the impact of SFAS No. 144 on
its consolidated financial statements.

Note 2 / BUSINESS COMBINATIONS

On October 17, 2000, the Company purchased all of the issued and outstanding
shares of LC Packings Nederlands B.V. and LC Packings (U.S.A.), Inc.
(collectively referred to as LC Packings) for a purchase price of $12.4
million including acquisition costs. In addition, the shareholders of LC
Packings have the right to receive additional contingent purchase
consideration, to be paid in varying amounts at the end of calendar years 2000
through 2004, in the event LC Packings achieves certain revenue goals. If the
entire additional contingent purchase consideration is achieved, the
shareholders of LC Packings will be paid an additional amount not to exceed
$13.0 million. At June 30, 2002, $9.2 million of the additional contingent
purchase consideration had been earned and was recorded as goodwill, of which
$3.5 million has been paid as of June 30, 2002, $3.0 million is included in
current liabilities and the remaining amount is classified as other long-term
liabilities at June 30, 2002.

The acquisition of LC Packings was accounted for using the purchase method of
accounting and its results of operations have been included in the Companys
results of operations since the date of acquisition.

The final purchase price allocation among the tangible and intangible assets
and liabilities acquired (including acquired in-process research and
development) is summarized as follows: developed and core technology, $5.0
million; assembled workforce, $241,000; goodwill, $4.4 million; in-process
research and development, $865,000; and net tangible assets of $1.9 million.

In connection with the acquisition, the Company recorded a nonrecurring charge
of $865,000 for the write-off of in-process research and development acquired.
In addition, cost of sales in fiscal 2001 included $121,000 related to the sale
of inventory acquired which has been written-up to fair market value as part of
the purchase price allocation.

The write-off of in-process research and development related to six projects
that were in development, had not reached technological feasibility, had no
alternative future use and for which successful development was uncertain.

LC Packings, which markets its products primarily in the United States and
Europe, specializes in micro, capillary and nano liquid chromatography used by
proteomics and genomics researchers in pharmaceutical, biotechnology and
scientific laboratories to analyze and separate proteins, glycoproteins and
other complex compounds.

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The following unaudited pro forma results of operations for the years ended
June 30, 2001 and 2000 give effect to the acquisition as if it had occurred at
the beginning of fiscal 2000. The pro forma results of operations exclude the
$1.0 million in fiscal 2001 of nonrecurring pre-tax charges that were recorded
in conjunction with the acquisitions.

|                                                            |  |      |         |      |  |   |         | 
|----------------------------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | 
|Years ended June
30(In thousands, except per share amounts) |  | 2001 |         | 2000
|                                                            |  |      |         |     
|Net sales                                                   |  | $    | 188,725 |      |  | $ | 183,013 | 
|Operating income                                            |  | $    | 44,901  |      |  | $ | 49,747  | 
|Net income                                                  |  | $    | 32,235  |      |  | $ | 33,885  | 
|Basic earnings per share                                    |  | $    | 1.46    |      |  | $ | 1.52    | 
|Diluted earnings per share                                  |  | $    | 1.41    |      |  | $ | 1.45    | 

Note 3 / INVESTMENTS

The Company had no temporary cash investments at June 30, 2002 and 2001.

There were no sales of held-to-maturity securities for the years ended June 30,
2002, 2001 and 2000.

In December 1989, the Company invested $3.0 million in the stock of Molecular
Devices Corporation (MDC). The Companys Chairman and a director serve on the
Board of Directors of MDC. The Companys ownership interest in MDC is
approximately 1% and has been classified as available for sale and is
included in marketable equity securities. At June 30, 2002 and 2001, the fair
value of this investment was $2.3 million and $5.9 million, respectively.

In the years ended June 30, 2002 and 2001, the Company realized gross proceeds
from the sale of marketable securities of $3.4 million and $3.7 million,
respectively, and recognized net gains on sale of $2.1 million and $3.0
million, respectively.

Note 4 / INVENTORIES

Inventories at June 30 consist of:

|                                |  |      |        |      |  |   |        | 
|------------------------------- |  | ---- | ------ | ---- |  | - | ------ | 
|(In thousands)                  |  | 2002 |        | 2001
|                                |  |      |        |     
|Finished goods                  |  | $    | 9,127  |      |  | $ | 9,342  | 
|Work in process                 |  |      | 3,643  |      |  |   | 4,469  | 
|Raw materials and subassemblies |  |      | 9,640  |      |  |   | 11,206 | 
|                                |  |      |        |      |  |   |        | 
|                                |  | $    | 22,410 |      |  | $ | 25,017 | 
|                                |  |      |        |      |  |   |        | 

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Note 5 / PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment at June 30 consist of:

|                                          |  |      |         |      |  |   |         |  
|----------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|(In thousands)                            |  | 2002 |         | 2001
|                                          |  |      |         |     
|Land                                      |  | $    | 19,196  |      |  | $ | 18,726  |  
|Buildings and improvements                |  |      | 26,985  |      |  |   | 23,260  |  
|Machinery, equipment and tooling          |  |      | 19,786  |      |  |   | 19,004  |  
|Furniture and fixtures                    |  |      | 6,295   |      |  |   | 5,536   |  
|                                          |  |      |         |      |  |   |         |  
|                                          |  |      | 72,262  |      |  |   | 66,526  |  
|Accumulated depreciation and amortization |  |      | (27,367 | )    |  |   | (24,199 | )
|                                          |  |      |         |      |  |   |         |  
|Property, plant and equipment, net        |  | $    | 44,895  |      |  | $ | 42,327  |  
|                                          |  |      |         |      |  |   |         |  

Note 6 / GOODWILL AND INTANGIBLE ASSETS

In accordance with SFAS No. 142, the Company discontinued the amortization of
goodwill effective July 1, 2001. A reconciliation of previously reported net
income and earnings per share to the amounts adjusted for the exclusion of
goodwill amortization net of the related income tax effect follows:

|                                                             |                                   |      |        |      |  |   |        |      | 
|------------------------------------------------------------ | --------------------------------- | ---- | ------ | ---- |  | - | ------ | ---- | 
|Years Ended June 30,(in thousands, except per share amounts) |                                   | 2002 |        | 2001
|                                                             |                                   |      |        |      | 
|Reported net income                                          |                                   | $    | 27,608 |      |  | $ | 31,406 |     
|Add: Goodwill amortization, net of tax                       |                                   |      |       |      |  |   | 460    |     
|                                                             |                                   |      |        |      |  |   |        |     
|Adjusted net income                                          |                                   | $    | 27,608 |      |  | $ | 31,866 |     
|                                                             |                                   |      |        |      |  |   |        |     
|Diluted earnings per share:                                  |                                   |      |        |      |  |   |        |     
|                                                             | As reported                       |      | $      | 1.24 |  |   | $      | 1.37 | 
|                                                             | Goodwill amortization, net of tax |      |        |     |  |   |        | 0.02 | 
|                                                             |                                   |      |        |      |  |   |        |     
|                                                             | As adjusted                       |      | $      | 1.24 |  |   | $      | 1.39 | 
|                                                             |                                   |      |        |      |  |   |        |     

Changes in the carrying amount of goodwill for the twelve months ended June 30,
2002 are as follows (in thousands):

|                                    |  |   |        | 
|----------------------------------- |  | - | ------ | 
|Balance as of July 1, 2001          |  | $ | 13,233 | 
|Goodwill acquired during the period |  |   | 5,498  | 
|Translation adjustments and other   |  |   | 818    | 
|                                    |  |   |        | 
|Balance as of June 30, 2002         |  | $ | 19,549 | 
|                                    |  |   |        | 

In connection with SFAS No. 142, the Company
performed an impairment test on
goodwill and determined that goodwill was not impaired.

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Information regarding the Companys other intangible assets having a finite
life is as follows (in thousands):

|                       |  |                     |       |                     |  |     |        |        |  |              |       |             |  |   |       |  |  |   |        |   |  |   |       | 
|---------------------- |  | ------------------- | ----- | ------------------- |  | --- | ------ | ------ |  | ------------ | ----- | ----------- |  | - | ----- |  |  | - | ------ | - |  | - | ----- | 
|                       |  | As of June 30, 2002 |       | As of June 30, 2001
|                       |  |                     |       |                    
|                       |  | Carrying            |       | Accumulated         |  |     |        |        |  | Carrying     |       | Accumulated |  |   |       | 
|                       |  | Amount              |       | Amortization        |  | Net |        | Amount |  | Amortization |       | Net        
|                       |  |                     |       |                     |  |     |        |        |  |              |       |            
|Patents and
Trademarks |  | $                   | 379   |                     |  | $   | (375   | )      |  | $            | 4     |             |  | $ | 375   |  |  | $ | (375   | ) |  | $ |      | 
|Developed Technology   |  |                     | 5,807 |                     |  |     | (2,455 | )      |  |              | 3,352 |             |  |   | 5,295 |  |  |   | (1,428 | ) |  |   | 3,867 | 
|Core Technology        |  |                     | 2,844 |                     |  |     | (694   | )      |  |              | 2,150 |             |  |   | 2,844 |  |  |   | (288   | ) |  |   | 2,556 | 
|                       |  |                     |       |                     |  |     |        |        |  |              |       |             |  |   |       |  |  |   |        |   |  |   |       | 
|Total                  |  | $                   | 9,030 |                     |  | $   | (3,524 | )      |  | $            | 5,506 |             |  | $ | 8,514 |  |  | $ | (2,091 | ) |  | $ | 6,423 | 
|                       |  |                     |       |                     |  |     |        |        |  |              |       |             |  |   |       |  |  |   |        |   |  |   |       | 

The Company amortizes developed technology and core technology over a period of
seven years. Amortization expense of other intangible assets was $1,214,000,
$861,000 and $530,000, respectively, for the twelve months ended June 30, 2002,
2001 and 2000. The estimated amortization for each of the five fiscal years
subsequent to June 30, 2002 is as follows:

|           |  |              |       | 
|---------- |  | ------------ | ----- | 
|Year Ended |  | Amortization
|June 30,   |  | Expense     
|           |  |             
|2003       |  | $            | 1,236 | 
|2004       |  | $            | 1,236 | 
|2005       |  | $            | 1,236 | 
|2006       |  | $            | 871   | 
|2007       |  | $            | 714   | 
|           |  |              |       | 
|           |  | $            | 5,293 | 
|           |  |              |       | 

Note 7 / FINANCING ARRANGEMENTS

The Company has unsecured lines of credit with various domestic and foreign
banks totaling approximately $32.7 million which have been used primarily to
minimize the Companys exposure to foreign currency fluctuations and to fund
acquisitions (Note 2). These lines of credit expire between June 30, 2002 and
December 31, 2002. Borrowings in each country bear interest at the local
reference rates which ranged from 0.6% to 10.5% at June 30, 2002. Amounts
outstanding under these lines totaled $2.0 million at June 30, 2002.

Such line of credit agreements impose certain financial restrictions relating
to cash dividends, working capital and tangible net worth. At June 30, 2002,
the Company was in compliance with all such covenants.

At June 30, 2002, the Company had a mortgage note payable denominated in
Japanese Yen totaling $1.5 million. This note bears interest at a rate of 1.5%
per annum. Principal payments are due monthly until June 30, 2005 with a
current portion totaling $500,000. During the year ended June 30, 2001, the
Company capitalized interest of $221,000 related to the construction of a
building in Japan.

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One of the Companys foreign subsidiaries discounts trade notes receivable with
banks. Total notes receivable discounted were approximately $9.3 million in
fiscal 2002 and $11.7 million in fiscal 2001. The uncollected balances of notes
receivable due to the discounting banks at June 30, 2002 and 2001 were
approximately $2.6 million and $3.2 million, respectively. The Company is
contingently liable for these unpaid balances.

Total interest paid was $118,000 in 2002, $578,000 in 2001, and $470,000 in
2000.

Note 8 / ACCRUED LIABILITIES

Accrued liabilities at June 30 consist of:

|                                     |  |      |        |      |  |   |        | 
|------------------------------------ |  | ---- | ------ | ---- |  | - | ------ | 
|(In thousands)                       |  | 2002 |        | 2001
|                                     |  |      |        |     
|Accrued payroll and related expenses |  | $    | 9,269  |      |  | $ | 8,778  | 
|Deferred revenues                    |  |      | 6,169  |      |  |   | 4,364  | 
|Accrued earn-out on acquisition      |  |      | 3,000  |      |  |   | 2,500  | 
|Other accrued liabilities            |  |      | 6,332  |      |  |   | 5,891  | 
|                                     |  |      |        |      |  |   |        | 
|                                     |  | $    | 24,770 |      |  | $ | 21,533 | 
|                                     |  |      |        |      |  |   |        | 

Note 9 / STOCK OPTION AND PURCHASE PLANS

Stock Option Plans  The Company has two stock option plans (the Option
Plans) under which incentive and nonqualified options may be granted. Options
are granted at the stocks fair market value at the grant date. Options
generally become exercisable in increments over a period of four years from the
date of grant and expire five or ten years from the grant date.

Activity under the Option Plans for the three-year period ended June 30, 2002
is summarized below.

|                                                               |  |        |           |       |  |           |       |       |  |        |           |           |  |   |       |  |  |           |           |   |  |   |       | 
|-------------------------------------------------------------- |  | ------ | --------- | ----- |  | --------- | ----- | ----- |  | ------ | --------- | --------- |  | - | ----- |  |  | --------- | --------- | - |  | - | ----- | 
|                                                               |  | 2002   |           | 2001  |  | 2000     
|                                                               |  |        |           |       |  |          
|                                                               |  |        |           |       |  | Wtd. Avg. |       |       |  |        |           | Wtd. Avg. |  |   |       |  |  | Wtd. Avg.
|                                                               |  |        |           |       |  | Exercise  |       |       |  |        |           | Exercise  |  |   |       |  |  | Exercise 
|                                                               |  | Shares |           | Price |  | Shares    |       | Price |  | Shares |           | Price    
|                                                               |  |        |           |       |  |           |       |       |  |        |           |          
|Options outstanding,
beginning of year                         |  |        | 2,839,047 |       |  | $         | 22.54 |       |  |        | 3,090,082 |           |  | $ | 20.66 |  |  |           | 2,869,031 |   |  | $ | 13.88 | 
|Granted                                                        |  |        | 852,700   |       |  |           | 23.99 |       |  |        | 186,150   |           |  |   | 31.57 |  |  |           | 1,107,200 |   |  |   | 32.28 | 
|Exercised                                                      |  |        | (190,050  | )     |  |           | 10.22 |       |  |        | (358,835  | )         |  |   | 9.50  |  |  |           | (699,549  | ) |  |   | 9.84  | 
|Canceled                                                       |  |        | (82,525   | )     |  |           | 30.57 |       |  |        | (78,350   | )         |  |   | 29.95 |  |  |           | (186,600  | ) |  |   | 25.92 | 
|                                                               |  |        |           |       |  |           |       |       |  |        |           |           |  |   |       |  |  |           |           |   |  |   |       | 
|Options outstanding,
end of year                               |  |        | 3,419,172 |       |  | $         | 23.39 |       |  |        | 2,839,047 |           |  | $ | 22.54 |  |  |           | 3,090,082 |   |  | $ | 20.66 | 
|                                                               |  |        |           |       |  |           |       |       |  |        |           |           |  |   |       |  |  |           |           |   |  |   |       | 
|Options exercisable
at year-end                                |  |        | 1,976,010 |       |  | $         | 20.48 |       |  |        | 1,777,332 |           |  | $ | 17.33 |  |  |           | 1,620,934 |   |  | $ | 12.79 | 
|Weighted average fair
value of options
granted during the year |  |        |           |       |  | $         | 12.79 |       |  |        |           |           |  | $ | 15.63 |  |  |           |           |   |  | $ | 17.78 | 

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Additional information regarding options outstanding and exercisable as of June
30, 2002 is as follows:

|                    |               |                     |  |             |  |          |               |             |          |          |   |       |  |  |          |           |  |  |   |       | 
|------------------- | ------------- | ------------------- |  | ----------- |  | -------- | ------------- | ----------- | -------- | -------- | - | ----- |  |  | -------- | --------- |  |  | - | ----- | 
|Options Outstanding |               | Options Exercisable
|                    |               |                    
|                    |               |                     |  |             |  |          | Weighted Avg. |             | Weighted |          |   |       |  |  | Weighted
|                    |               |                     |  |             |  |          | Remaining     |             | Avg.     |          |   |       |  |  | Avg.    
|Range of            |               | Number              |  | Contractual |  | Exercise |               | Number      |          | Exercise
|Exercise Prices     |               | Outstanding         |  | Life (yrs)  |  | Price    |               | Exercisable |          | Price   
|                    |               |                     |  |             |  |          |               |             |          |         
|                    | $7.94 - 13.88 |                     |  | 564,010     |  |          |               | 2.12        |          |          | $ | 9.51  |  |  |          | 564,010   |  |  | $ | 9.51  | 
|                    | 16.31 - 23.98 |                     |  | 1,267,275   |  |          |               | 7.64        |          |          |   | 21.33 |  |  |          | 438,275   |  |  |   | 16.31 | 
|                    | 24.13 - 29.95 |                     |  | 529,187     |  |          |               | 5.89        |          |          |   | 25.04 |  |  |          | 459,248   |  |  |   | 24.54 | 
|                    | 30.81 - 32.00 |                     |  | 620,100     |  |          |               | 7.47        |          |          |   | 31.93 |  |  |          | 303,582   |  |  |   | 31.95 | 
|                    | 32.25 - 45.75 |                     |  | 438,600     |  |          |               | 7.65        |          |          |   | 33.13 |  |  |          | 210,895   |  |  |   | 33.16 | 
|                    |               |                     |  |             |  |          |               |             |          |          |   |       |  |  |          |           |  |  |   |      
|                    | $7.94 - 45.75 |                     |  | 3,419,172   |  |          |               | 6.43        |          |          | $ | 23.39 |  |  |          | 1,976,010 |  |  | $ | 20.48 | 
|                    |               |                     |  |             |  |          |               |             |          |          |   |       |  |  |          |           |  |  |   |      

At June 30, 2002, 1,604,733 shares were available for future grants under the
Option Plans. In October 2001, the stockholders approved an amendment to one
of the Option Plans to increase the number of authorized shares by 1,000,000.

Employee Stock Purchase Plan  Under the Companys Employee Stock Purchase
Plan, (the Purchase Plan), eligible employees are permitted to have salary
withholdings to purchase shares of common stock at a price equal to 85% of the
lower of the market value of the stock at the beginning or end of each
six-month offer period, subject to certain annual limitations. Stock issued
under the Purchase Plan was 56,187, 56,307 and 44,722 shares in fiscal 2002,
2001 and 2000 at weighted average prices of $23.16, $22.31 and $28.24,
respectively. The weighted average fair value of the fiscal 2002, 2001 and 2000
awards was $3.83, $7.29 and $8.69, respectively. At June 30, 2002, 1,080,716
shares were reserved for future issuances under the Purchase Plan.

Pro Forma Stock-based Compensation Expense  Statement of Financial Accounting
Standard No. 123, Accounting for Stock-Based Compensation (SFAS No. 123) sets
forth a fair-value based method of recognizing stock-based compensation
expense. As permitted by SFAS No. 123, the Company has elected to continue to
apply APB No. 25 to account for its stock-based compensation plans. Had
compensation costs for awards in fiscal 2002, 2001 and 2000 under the Companys
stock-based compensation plans been determined based on the fair value at the
grant dates consistent with the method set forth under SFAS No. 123, the effect
on the Companys net income and earnings per share would have been as follows:

|                                         |             |      |   |        |  |      |   |        |  |  |   |        | 
|---------------------------------------- | ----------- | ---- | - | ------ |  | ---- | - | ------ |  |  | - | ------ | 
|(In thousands, except per share amounts) |             | 2002 |   | 2001   |  | 2000
|                                         |             |      |   |        |  |      |  
|Net income:                              |             |      |   |        |  |      |   |        |  |  |   |       
|                                         | As reported |      | $ | 27,608 |  |      | $ | 31,406 |  |  | $ | 34,043 | 
|                                         | Pro forma   |      |   | 21,699 |  |      |   | 25,125 |  |  |   | 30,421 | 
|Basic earnings per share:                |             |      |   |        |  |      |   |        |  |  |   |       
|                                         | As reported |      | $ | 1.27   |  |      | $ | 1.42   |  |  | $ | 1.54   | 
|                                         | Pro forma   |      |   | 1.00   |  |      |   | 1.13   |  |  |   | 1.37   | 
|Diluted earnings per share:              |             |      |   |        |  |      |   |        |  |  |   |       
|                                         | As reported |      | $ | 1.24   |  |      | $ | 1.37   |  |  | $ | 1.46   | 
|                                         | Pro forma   |      |   | 0.98   |  |      |   | 1.10   |  |  |   | 1.30   | 

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The resulting pro forma compensation expense may not be representative of the
amount to be expected in future years. Pro forma compensation expense for
options granted is reflected over the vesting period; therefore, future pro
forma compensation expense may be greater as additional options are granted.
The fair value of each option grant was estimated on the grant date using the
Black-Scholes option-pricing model with the following weighted-average
assumptions:

|                         |  |           |      |           |  |           |      |   |  |  |      |  
|------------------------ |  | --------- | ---- | --------- |  | --------- | ---- | - |  |  | ---- | -
|                         |  | 2002      |      | 2001      |  | 2000     
|                         |  |           |      |           |  |          
|Volatility               |  |           | 52   | %         |  |           | 45   | % |  |  | 40   | %
|Risk-free interest rate  |  |           | 3.94 | %         |  |           | 4.97 | % |  |  | 6.13 | %
|Expected life of options |  | 5.9 years |      | 5.9 years |  | 5.6 years

The Black-Scholes option-pricing model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option-pricing models require the input of highly
subjective assumptions, including expected stock price volatility. Because the
Companys employee stock options have characteristics significantly different
from those of traded options, and because changes in the subjective input
assumptions can materially affect the fair value estimate, in managements
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

Note 10 / EMPLOYEE 401(k) PLAN

The Company has a 401(k) tax deferred savings plan covering most U.S.
employees. Participants may contribute up to 10% of their compensation and the
Company makes matching contributions ($1,223,000 in fiscal 2002, $1,188,000 in
fiscal 2001 and $1,156,000 in fiscal 2000) limited to 5% of each participants
compensation. Matching contributions vest in 25% increments each year beginning
two years after the participants date of employment.

Note 11 / TAXES ON INCOME

The provision for taxes on income consists of:

|                                  |         |                |        |       |        |      |        |       |        |   |        |        |        | 
|--------------------------------- | ------- | -------------- | ------ | ----- | ------ | ---- | ------ | ----- | ------ | - | ------ | ------ | ------ | 
|Years ended June 30(In thousands) |         | 2002           |        | 2001  |        | 2000
|                                  |         |                |        |       |        |      |        |      
|Current:                          |         |                |        |       |        |      |        |       |        |   |        |       
|                                  | Federal |                | $      | 5,981 |        |      | $      | 8,302 |        |   | $      | 10,050 |       
|                                  | State   |                |        | 1,063 |        |      |        | 1,313 |        |   |        | 1,574  |       
|                                  | Foreign |                |        | 5,348 |        |      |        | 4,599 |        |   |        | 4,268  |       
|                                  |         |                |        |       |        |      |        |       |        |   |        |       
|                                  |         | Total current  |        |       | 12,392 |      |        |       | 14,214 |   |        |        | 15,892 | 
|                                  |         |                |        |       |        |      |        |       |        |   |        |       
|Deferred:                         |         |                |        |       |        |      |        |       |        |   |        |       
|                                  | Federal |                |        | 346   |        |      |        | 770   |        |   |        | 505    |       
|                                  | State   |                |        | 29    |        |      |        | 169   |        |   |        | 186    |       
|                                  | Foreign |                |        | 525   |        |      |        | 142   |        |   |        | (192   | )     
|                                  |         |                |        |       |        |      |        |       |        |   |        |       
|                                  |         | Total deferred |        |       | 900    |      |        |       | 1,081  |   |        |        | 499    | 
|                                  |         |                |        |       |        |      |        |       |        |   |        |       
|                                  |         | $              | 13,292 |       |        | $    | 15,295 |       |        | $ | 16,391 |       
|                                  |         |                |        |       |        |      |        |       |        |   |        |       

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Domestic and foreign income before taxes on income is as follows:

|                                  |  |      |        |      |  |      |        |  |  |   |        | 
|--------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | ------ | 
|Years ended June 30(In thousands) |  | 2002 |        | 2001 |  | 2000
|                                  |  |      |        |      |  |     
|Domestic                          |  | $    | 29,928 |      |  | $    | 38,357 |  |  | $ | 43,040 | 
|Foreign                           |  |      | 10,972 |      |  |      | 8,703  |  |  |   | 7,394  | 
|                                  |  |      |        |      |  |      |        |  |  |   |        | 
|                                  |  | $    | 40,900 |      |  | $    | 47,060 |  |  | $ | 50,434 | 
|                                  |  |      |        |      |  |      |        |  |  |   |        | 

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The components of the
current and noncurrent deferred tax assets and liabilities are as follows:

|                                                                         |                                                                      |                                   |       |       |       |   |       |       |       | 
|------------------------------------------------------------------------ | -------------------------------------------------------------------- | --------------------------------- | ----- | ----- | ----- | - | ----- | ----- | ----- | 
|Years ended June 30(In thousands)                                        |                                                                      | 2002                              |       | 2001 
|                                                                         |                                                                      |                                   |       |       |       |  
|Current deferred tax assets:                                             |                                                                      |                                   |       |       |       |   |       |      
|                                                                         | Accounting accruals deductible in different periods
for tax purposes |                                   | $     | 7,309 |       |   | $     | 8,182 |      
|                                                                         | State income tax                                                     |                                   |       | 301   |       |   |       | 291   |      
|                                                                         | Other                                                                |                                   |       | 146   |       |   |       | 146   |      
|                                                                         |                                                                      |                                   |       |       |       |   |       |      
|                                                                         |                                                                      | Total current deferred tax assets |       |       | 7,756 |   |       |       | 8,619 | 
|                                                                         |                                                                      |                                   |       |       |       |   |       |      
|Noncurrent deferred tax asset  Difference in tax
basis from acquisition |                                                                      |                                   | 3,145 |       |       |   | 3,454 |      
|Noncurrent deferred tax liabilities:                                     |                                                                      |                                   |       |       |       |   |       |      
|                                                                         | Accelerated depreciation                                             |                                   |       | 898   |       |   |       | 897   |      
|                                                                         | Net unrealized gain on available for sale securities                 |                                   |       | 515   |       |   |       | 1,428 |      
|                                                                         | Excess tax basis from acquisition                                    |                                   |       | 3,145 |       |   |       | 3,454 |      
|                                                                         | Other                                                                |                                   |       | 391   |       |   |       | 58    |      
|                                                                         |                                                                      |                                   |       |       |       |   |       |      
|                                                                         |                                                                      | Total deferred tax liabilities    |       |       | 4,949 |   |       |       | 5,837 | 
|                                                                         |                                                                      |                                   |       |       |       |   |       |      
|Net deferred tax assets (liabilities)                                    |                                                                      | $                                 | 5,952 |       |       | $ | 6,236 |      
|                                                                         |                                                                      |                                   |       |       |       |   |       |      

Total income tax expense differs from the amount computed by applying the
statutory Federal income tax rate to income before taxes as follows:

|                                                     |  |      |      |      |  |      |      |   |  |  |      |  
|---------------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|Years ended June 30                                  |  | 2002 |      | 2001 |  | 2000
|                                                     |  |      |      |      |  |     
|Statutory Federal income tax rate                    |  |      | 35.0 | %    |  |      | 35.0 | % |  |  | 35.0 | %
|State income taxes, net of Federal
income tax effect |  |      | 1.7  |      |  |      | 1.8  |   |  |  | 2.0  |  
|FSC income not taxed                                 |  |      | (2.4 | )    |  |      | (3.1 | ) |  |  | (2.8 | )
|Taxes on foreign income                              |  |      | 0.2  |      |  |      | 0.8  |   |  |  | 1.0  |  
|Other                                                |  |      | (2.0 | )    |  |      | (2.0 | ) |  |  | (2.7 | )
|                                                     |  |      |      |      |  |      |      |   |  |  |      |  
|                                                     |  |      | 32.5 | %    |  |      | 32.5 | % |  |  | 32.5 | %
|                                                     |  |      |      |      |  |      |      |   |  |  |      |  

Income taxes paid were $9,398,000 in fiscal 2002, $11,953,000 in fiscal 2001
and $11,822,000 in fiscal 2000.

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The Company has not provided for Federal income taxes on approximately $38.6
million of undistributed earnings of foreign subsidiaries, which have been
permanently reinvested in subsidiary operations. If these earnings were
distributed to the parent company, foreign tax credits available under current
law would substantially eliminate the resulting Federal income tax liability.

Note 12 / 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 $2,681,000 for fiscal 2003, $2,030,000 for
fiscal 2004, $1,699,000 for fiscal 2005, $1,453,0000 for fiscal 2006,
$1,054,000 for fiscal 2007 and $5,032,0000 thereafter.

Total rental expense for all operating leases was $3,928,000 in fiscal 2002,
$3,855,000 in fiscal 2001 and $3,713,000 in fiscal 2000.

Note 13 / BUSINESS SEGMENT INFORMATION

SFAS No. 131 establishes standards for reporting information about operating
segments in annual financial statements of public business enterprises. It also
establishes standards for related disclosures about products and service,
geographic areas and major customers. The Company evaluated its business
activities that are regularly reviewed by the Companys senior management and
has determined that it has one reporting segment.

The Company sells products, installation and training services and maintenance
within this reportable segment, detailed as follows:

|                                   |  |      |         |      |  |      |         |  |  |   |         | 
|---------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- |  |  | - | ------- | 
|(In thousands)                     |  | 2002 |         | 2001 |  | 2000
|                                   |  |      |         |      |  |     
|Products                           |  | $    | 160,053 |      |  | $    | 165,188 |  |  | $ | 162,620 | 
|Installation and Training Services |  |      | 6,276   |      |  |      | 6,508   |  |  |   | 957     | 
|Maintenance                        |  |      | 16,105  |      |  |      | 15,061  |  |  |   | 15,952  | 
|                                   |  |      |         |      |  |      |         |  |  |   |         | 
|                                   |  | $    | 182,434 |      |  | $    | 186,757 |  |  | $ | 179,529 | 
|                                   |  |      |         |      |  |      |         |  |  |   |         | 

Geographic information is presented below:

|                                                 |                     |      |         |         |   |      |         |         |   |   |         |        | 
|------------------------------------------------ | ------------------- | ---- | ------- | ------- | - | ---- | ------- | ------- | - | - | ------- | ------ | 
|(In thousands)                                   |                     | 2002 |         | 2001    |   | 2000
|                                                 |                     |      |         |         |   |     
|Net sales to unaffiliated customers:             |                     |      |         |         |   |      |         |         |   |   |         |       
|                                                 | United States       |      | $       | 66,585  |   |      | $       | 69,564  |   |   | $       | 69,823 | 
|                                                 | Europe              |      |         | 72,696  |   |      |         | 68,899  |   |   |         | 63,399 | 
|                                                 | Japan               |      |         | 22,853  |   |      |         | 29,758  |   |   |         | 29,837 | 
|                                                 | Other International |      |         | 20,300  |   |      |         | 18,536  |   |   |         | 16,470 | 
|                                                 |                     |      |         |         |   |      |         |         |   |   |         |       
|Consolidated net sales to
unaffiliated customers |                     | $    | 182,434 |         |   | $    | 186,757 |         |   | $ | 179,529 |       
|                                                 |                     |      |         |         |   |      |         |         |   |   |         |       
|Long-lived assets:                               |                     |      |         |         |   |      |         |         |   |   |         |       
|                                                 | United States       |      | $       | 96,474  |   |      | $       | 91,673  |   |   |         |        | 
|                                                 | Europe              |      |         | 39,501  |   |      |         | 34,922  |   |   |         |        | 
|                                                 | Japan               |      |         | 10,149  |   |      |         | 9,522   |   |   |         |        | 
|                                                 | Other International |      |         | 231     |   |      |         | 300     |   |   |         |        | 
|                                                 | Eliminations        |      |         | (68,026 | ) |      |         | (67,492 | ) |   |         |        | 
|                                                 |                     |      |         |         |   |      |         |         |   |   |         |       
|Consolidated assets                              |                     | $    | 78,329  |         |   | $    | 68,925  |         |   |   |         |       
|                                                 |                     |      |         |         |   |      |         |         |   |   |         |       

No individual customer was greater than 10% of net sales in fiscal 2002, 2001
and 2000 or greater than 10% of consolidated accounts receivable at June 30,
2002 and 2001.

Note 14 / QUARTERLY RESULTS OF OPERATIONS (unaudited)

The following is a summary of the unaudited quarterly results of operations for
the years ended June 30, 2002 and 2001.

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|                                         |  |         |        |        |  |       |        |        |  |   |        |  |  |   |        | 
|---------------------------------------- |  | ------- | ------ | ------ |  | ----- | ------ | ------ |  | - | ------ |  |  | - | ------ | 
|                                         |  | Quarter
|                                         |  |        
|(In thousands, except per share amounts) |  | First   |        | Second |  | Third |        | Fourth
|                                         |  |         |        |        |  |       |        |       
|Fiscal 2002:                             |  |         |        |        |  |       |        |        |  |   |        |  |  |   |        | 
|Net sales                                |  | $       | 42,067 |        |  | $     | 46,729 |        |  | $ | 45,060 |  |  | $ | 48,578 | 
|Gross profit                             |  |         | 26,751 |        |  |       | 30,659 |        |  |   | 29,672 |  |  |   | 31,612 | 
|Net income                               |  |         | 5,357  |        |  |       | 7,597  |        |  |   | 7,148  |  |  |   | 7,506  | 
|Basic earnings per share                 |  | $       | 0.24   |        |  | $     | 0.35   |        |  | $ | 0.33   |  |  | $ | 0.35   | 
|Diluted earnings per share               |  | $       | 0.24   |        |  | $     | 0.34   |        |  | $ | 0.33   |  |  | $ | 0.35   | 
|Fiscal 2001:                             |  |         |        |        |  |       |        |        |  |   |        |  |  |   |        | 
|Net sales                                |  | $       | 42,675 |        |  | $     | 48,540 |        |  | $ | 48,184 |  |  | $ | 47,358 | 
|Gross profit                             |  |         | 28,142 |        |  |       | 31,665 |        |  |   | 31,972 |  |  |   | 30,786 | 
|Net income                               |  |         | 6,600  |        |  |       | 8,399  |        |  |   | 9,154  |  |  |   | 7,253  | 
|Basic earnings per share                 |  | $       | 0.30   |        |  | $     | 0.38   |        |  | $ | 0.41   |  |  | $ | 0.33   | 
|Diluted earnings per share               |  | $       | 0.29   |        |  | $     | 0.37   |        |  | $ | 0.40   |  |  | $ | 0.32   | 

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Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not Applicable.




PART III




Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

IDENTIFICATION OF DIRECTORS

The information required by Item 10 of Form 10-K with respect to identification
of directors is incorporated by reference to the information contained in the
section captioned Nominees of the Registrants definitive Proxy Statement for
the Annual Meeting of Stockholders to be held October 25, 2002, which will be
filed in accordance with Regulation 14A under the Securities Exchange Act of
1934, as amended.

IDENTIFICATION OF OFFICERS

See Pages 18 and 19 of this Report captioned Executive Officers of the
Registrant.




Item 11. EXECUTIVE COMPENSATION

The information required by Item 11 of Form 10-K is incorporated by reference
to the information contained in the section captioned Executive Compensation,
of the Registrants definitive Proxy Statement for the Annual Meeting of
Stockholders to be held October 25, 2002, which will be filed in accordance
with Regulation 14A under the Securities Exchange Act of 1934, as amended.




Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by Item 12 of Form 10-K is incorporated by reference
to the information contained in the sections captioned Security Ownership of
Certain Beneficial Owners and Management of the Registrants definitive Proxy
Statement for the Annual Meeting of Stockholders to be held October 25, 2002,
which will be filed in accordance with Regulation 14A under the Securities
Exchange Act of 1934, as amended.




Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.

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PART IV




Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

|    |  |                                                                                                                |  |                                                                                                      
|--- |  | -------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------
|(a) |  | (1)                                                                                                            |  | Financial Statements  See Index to Financial Statements at
Page 31 of this Report.                  
|   
|    |  | (2)                                                                                                            |  | Financial Statement Schedules  See Index to Financial Statement
Schedules at page 57 of this Report.
|   
|    |  | (3)                                                                                                            |  | Exhibits  See Exhibit Index at page 53 through 55 of this Report.                                   
|   
|(b) |  | Reports on Form 8-K  The Company did not file any reports on Form 8-K
during the quarter ended June 30, 2002.

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EXHIBIT INDEX

|        |  |                                                                                                                                                             |  |           |    |  
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------- | -- | -
|Exhibit |  |                                                                                                                                                             |  |           |    |  
|Number  |  | Description                                                                                                                                                 |  | Reference
|        |  |                                                                                                                                                             |  |          
|       
|3.1     |  | Restated Certificate of Incorporation, filed
November 6, 1996.                                                                                              |  |           | (6 | )
|       
|3.2     |  | Bylaws, as amended on July 29, 2002.                                                                                                                        |  |           |    |  
|       
|4.1     |  | Shareholder Rights Agreement dated January 21, 1999,
between the Registrant and BankBoston N.A.                                                             |  |           | (9 | )
|       
|10.1    |  | Agreement, effective as of January 1, 1975,
between The Dow Chemical Company and
International Plasma Corporation                                           |  |           | (1 | )
|       
|10.2    |  | Memorandum agreement, dated March 14, 1975,
between The Dow Chemical Company and
International Plasma Corporation                                           |  |           | (1 | )
|       
|10.3    |  | Agreement, dated March 6, 1975, between
International Plasma Corporation and the
former Dionex Corporation                                                  |  |           | (1 | )
|       
|10.4    |  | Consent to Assignment executed as of March 26,
1980, between the Dow Chemical Company and the
former Dionex Corporation                                     |  |           | (1 | )
|       
|10.5    |  | Amendatory Agreement, effective as of November 1,
1981, between The Dow Chemical Company and the
Registrant (with certain confidential information
deleted) |  |           | (1 | )
|       
|10.6    |  | Amendatory Agreement, effective as of July 1, 1982,
between The Dow Chemical Company and the Registrant
(with certain confidential information deleted)     |  |           | (1 | )
|       
|10.7    |  | Registrants Supplemental Stock Option Plan
(Exhibit 28.4)                                                                                                  |  |           | (2 | )
|       
|10.8    |  | Registrants Medical Care Reimbursement Plan
(Exhibit 10.17)                                                                                                |  |           | (1 | )
|       
|10.9    |  | Registrants Employee Stock Participation Plan
(Exhibit 28.3)                                                                                               |  |           | (4 | )

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|        |  |                                                                                                                      |  |           |     |  
|------- |  | -------------------------------------------------------------------------------------------------------------------- |  | --------- | --- | -
|Exhibit |  |                                                                                                                      |  |           |     |  
|Number  |  | Description                                                                                                          |  | Reference
|        |  |                                                                                                                      |  |          
|       
|10.10   |  | Credit Agreement dated February 26, 1996
between Bank of America and the Registrant                                  |  |           | (5  | )
|       
|10.11   |  | First amendment to Credit Agreement dated
February 29, 1996 between Bank of America and
the Registrant               |  |           | (7  | )
|       
|10.12   |  | Second amendment to Credit Agreement dated
February 29, 1996 between Bank of America and
the Registrant              |  |           | (7  | )
|       
|10.13   |  | Third amendment to Credit Agreement dated
February 29, 1996 between BankAmerica and the
Registrant (Exhibit 10.1)    |  |           | (8  | )
|       
|10.14   |  | Credit Agreement dated November 13, 2000
between Wells Fargo Bank and the Registrant
(Exhibit 10.15)                 |  |           | (11 | )
|       
|10.15   |  | 1988 Directors Stock Option Plan (and related
stock option grant form) (Exhibit 10.20)                              |  |           | (3  | )
|       
|10.16   |  | Dionex Corporation Stock Option Plan, as
amended and restated (formerly, the 1990 Stock
Option Plan) (Exhibit 10.12) |  |           | (10 | )
|       
|21.1    |  | Subsidiaries of Registrant                                                                                           |  |           |     |  
|       
|23.1    |  | Independent Auditors Consent                                                                                        |  |           |     |  
|       
|99.1    |  | Certification of the Chief Executive Officer                                                                         |  |           |     |  
|       
|99.2    |  | Certification of the Chief Financial Officer                                                                         |  |           |     |  



---

|(1) |  | Incorporated by reference to the indicated exhibit in Amendment No. 1 of
the Registrants Registration Statement on Form S-1 filed December 7,
1982.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Incorporated by reference to the indicated exhibit in the Registrants
Registration Statement on Form S-8 filed March 3, 1987.                      
|   
|   
|   
|   
|(3) |  | Incorporated by reference to the indicated exhibit in the Registrants
Annual Report on Form 10-K filed September 27, 1988.                         
|   
|   
|   
|   
|(4) |  | Incorporated by reference to the indicated exhibit in the Registrants
Statement on Form S-8 filed May 6, 1994.                                     
|   
|   
|   
|   
|(5) |  | Incorporated by reference to the corresponding exhibit in the
Registrants Annual Report on Form 10-K filed September 26, 1996.                     
|   
|   
|   
|   
|(6) |  | Incorporated by reference to the corresponding exhibit in the
Registrants Annual Report on Form 10-Q filed February 13, 1997.                      

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##### Table of Contents



|(7)  |  | Incorporated by reference to the corresponding exhibit in the
Registrants Annual Report on Form 10-K filed September 28, 1998.  
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------
|    
|    
|    
|    
|(8)  |  | Incorporated by reference to the indicated exhibit in the Registrants
Quarterly Report on Form 10-Q filed November 16, 1998.    
|    
|    
|    
|    
|(9)  |  | Incorporated by reference to the corresponding exhibit in the
Registrants Quarterly Report on Form 10-Q filed February 16, 1999.
|    
|    
|    
|    
|(10) |  | Incorporated by reference to the indicated exhibit in the Registrants
Statement on Form S-8 filed December 22, 1999.            
|    
|    
|    
|    
|(11) |  | Incorporated by reference to the indicated exhibit in the Registrants
Quarterly Report on Form 10-Q filed November 14, 2001.    

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##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 August 27, 2002 | By                                                         | /s/ Lukas Braunschweiler
|                     |                                                           
|                     | Lukas Braunschweiler
President and Chief Executive
Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

|                                             |  |                                                                                         |  |                
|-------------------------------------------- |  | --------------------------------------------------------------------------------------- |  | ---------------
|Signature                                    |  | Title                                                                                   |  | Date           
|                                             |  |                                                                                         |  |                
|                                            
|/s/ Lukas BraunschweilerLukas Braunschweiler |  | President, Chief Executive
Officer, and Director
(Principal Executive Officer)          |  | August 27, 2002
|                                            
|/s/ Craig A. McCollamCraig A. McCollam       |  | Vice President and Chief
Financial Officer
(Principal Financial and
Accounting Officer) |  | August 27, 2002
|                                            
|/s/ A. Blaine BowmanA. Blaine Bowman         |  | Chairman of the Board                                                                   |  | August 27, 2002
|                                            
|/s/ David L. AndersonDavid L. Anderson       |  | Director                                                                                |  | August 27, 2002
|                                            
|/s/ James F. BatteyJames F. Battey           |  | Director                                                                                |  | August 27, 2002
|                                            
|/s/ B.J. MooreB.J. Moore                     |  | Director                                                                                |  | August 27, 2002
|                                            
|/s/ Riccardo PigliucciRiccardo Pigliucci     |  | Director                                                                                |  | August 27, 2002

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##### Table of Contents



INDEX TO FINANCIAL STATEMENT SCHEDULES

|                                                             |  |     
|------------------------------------------------------------ |  | ----
|                                                             |  | Page
|                                                             |  |     
|                                                            
|FINANCIAL STATEMENT SCHEDULES                                |  |     
|                                                            
|Independent Auditors Report                                 |  | 58  
|                                                            
|Schedule II  Valuation and Qualifying Accounts
and Reserves |  | 59  

All other schedules are omitted because they are not required, are not
applicable or the information is included in the consolidated financial
statements or notes thereto.

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##### Table of Contents



INDEPENDENT AUDITORS REPORT

Dionex Corporation

We have audited the consolidated financial statements of Dionex Corporation and
its subsidiaries as of June 30, 2002 and 2001, and for each of the three years
in the period ended June 30, 2002, and have issued our report thereon dated
July 29, 2002; such financial statements and report are included herein. Our
audits also included the consolidated financial statement schedule of Dionex
Corporation and its subsidiaries, listed in the accompanying Index to Financial
Statement Schedules. This financial statement schedule is the responsibility
of the Companys management. Our responsibility is to express an opinion based
on our audits. In our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.

DELOITTE & TOUCHE LLP

San Jose, California
July 29, 2002

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##### Table of Contents



SCHEDULE II

DIONEX CORPORATION
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEARS ENDED JUNE 30, 2002, 2001 AND 2000
(IN THOUSANDS)

|                          |                                           |  |           |       |           |  |             |       |            |  |         |      |   |  |         |        |      |  |   |       | 
|------------------------- | ----------------------------------------- |  | --------- | ----- | --------- |  | ----------- | ----- | ---------- |  | ------- | ---- | - |  | ------- | ------ | ---- |  | - | ----- | 
|                          |                                           |  |           |       |           |  |             |       |            |  | Charged |      |   |  |         |        |      |  |  
|                          |                                           |  | Balance   |       |           |  |             |       | (Credited) |  |         |      |   |  | Balance
|                          |                                           |  | Beginning |       |           |  |             |       | to Other   |  |         |      |   |  | End of 
|                          |                                           |  | of Year   |       | Additions |  | Accounts(1) |       | Deductions |  | Year   
|                          |                                           |  |           |       |           |  |             |       |            |  |        
|YEAR ENDED JUNE 30,
2002: |                                           |  |           |       |           |  |             |       |            |  |         |      |   |  |         |        |      |  |   |      
|                          | Allowance for doubtful
accounts           |  | $         | 890   |           |  | $           | 181   |            |  | $       | 84   |   |  | $       | (166   | )(2) |  | $ | 989   | 
|                          |                                           |  |           |       |           |  |             |       |            |  |         |      |   |  |         |        |      |  |   |      
|                          | Accrued product
warranty                  |  | $         | 2,983 |           |  | $           | 3,191 |            |  | $       | 181  |   |  | $       | (3,443 | )(3) |  | $ | 2,912 | 
|                          |                                           |  |           |       |           |  |             |       |            |  |         |      |   |  |         |        |      |  |   |      
|YEAR ENDED JUNE 30,
2001: |                                           |  |           |       |           |  |             |       |            |  |         |      |   |  |         |        |      |  |   |      
|                          | Allowance for doubtful
accounts           |  | $         | 765   |           |  | $           | 288   |            |  | $       | (71  | ) |  | $       | (92    | )(2) |  | $ | 890   | 
|                          |                                           |  |           |       |           |  |             |       |            |  |         |      |   |  |         |        |      |  |   |      
|                          | Accrued product
warranty                  |  | $         | 4,645 |           |  | $           | 1,085 |            |  | $       | (178 | ) |  | $       | (2,569 | )(3) |  | $ | 2,983 | 
|                          |                                           |  |           |       |           |  |             |       |            |  |         |      |   |  |         |        |      |  |   |      
|YEAR ENDED JUNE 30,
2000: |                                           |  |           |       |           |  |             |       |            |  |         |      |   |  |         |        |      |  |   |      
|                          | Allowance for doubtful
accounts           |  | $         | 812   |           |  | $           | 245   |            |  | $       | (21  | ) |  | $       | (271   | )(2) |  | $ | 765   | 
|                          |                                           |  |           |       |           |  |             |       |            |  |         |      |   |  |         |        |      |  |   |      
|                          | Accrued product
warranty and
installation |  | $         | 4,701 |           |  | $           | 2,877 |            |  | $       | (53  | ) |  | $       | (2,880 | )(3) |  | $ | 4,645 | 
|                          |                                           |  |           |       |           |  |             |       |            |  |         |      |   |  |         |        |      |  |   |      



---

|(1) |  | Effects of exchange rate changes       
|--- |  | ---------------------------------------
|   
|   
|   
|   
|(2) |  | Accounts written off, net of recoveries
|   
|   
|   
|   
|(3) |  | Product warranty and installation costs

59