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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




---

FORM 10-Q

x
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended
    
    December 31, 2003


OR

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


DIONEX CORPORATION

(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

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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

YES     X        NO

Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of February 9, 2004:

CLASS
    
    NUMBER OF SHARESCommon Stock
    
    
    21,290,216






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|                              |                                                                                               |                                                      |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                              |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS               
|                              |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF INCOME         
|                              |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF INCOME         
|                              |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                              |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                              | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                              | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS                          
|                              | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II. OTHER INFORMATION   
|                              | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|                              | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                   
|EXHIBIT INDEX                
|EXHIBIT 10.1                 
|EXHIBIT 31.1                 
|EXHIBIT 31.2                 
|EXHIBIT 32.1                 
|EXHIBIT 32.2                 



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DIONEX CORPORATION
INDEX




PART I. FINANCIAL INFORMATION




ITEM 1.
    
    FINANCIAL STATEMENTS
    
    PageCONDENSED CONSOLIDATED BALANCE SHEETSDecember 31, 2003 and June 30, 2003
    
    
    3CONDENSED CONSOLIDATED STATEMENTS OF INCOMEThree Months Ended December 31, 2003 and 2002
    
    
    4CONDENSED CONSOLIDATED STATEMENTS OF INCOMESix Months Ended December 31, 2003 and 2002
    
    
    5CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSSix Months Ended December 31, 2003 and 2002
    
    
    6NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    
    
    7-13ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    
    
    14-25ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISKS
    
    
    26-27ITEM 4.
    
    CONTROLS AND PROCEDURES
    
    
    28PART II. OTHER INFORMATIONITEM 4.
    
    SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    29ITEM 6.
    
    EXHIBITS AND REPORTS ON FORM 8-K
    
    
    30SIGNATURES
    
    
    31EXHIBITS


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DIONEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)

December 31,
    
    June 30,2003
    
    2003(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    67,278
    
    
    $
    46,831Marketable equity securities
    
    
    1,674
    
    
    
    1,402Accounts receivable (net of allowance for doubtful
accounts of $1,251 at December 31, 2003 and $1,275
at June 30, 2003)
    
    
    47,843
    
    
    
    46,613Inventories
    
    
    25,011
    
    
    
    25,462Deferred tax assets
    
    
    10,655
    
    
    
    9,612Prepaid expenses and other
    
    
    4,005
    
    
    
    3,125Total current assets
    
    
    156,466
    
    
    
    133,045Property, plant and equipment, net
    
    
    47,667
    
    
    
    45,436Goodwill, net
    
    
    24,898
    
    
    
    24,261Intangible assets, net
    
    
    4,960
    
    
    
    4,595Other assets
    
    
    5,340
    
    
    
    5,763$
    239,331
    
    
    $
    213,100LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Notes payable to banks
    
    $
    1,774
    
    
    $
    1,334Accounts payable
    
    
    6,526
    
    
    
    5,443Accrued liabilities
    
    
    29,435
    
    
    
    29,045Income taxes payable
    
    
    2,586
    
    
    
    6,189Accrued product warranty
    
    
    3,433
    
    
    
    3,188Total current liabilities
    
    
    43,754
    
    
    
    45,199Deferred taxes
    
    
    4,376
    
    
    
    4,107Long-term debt
    
    
    280
    
    
    
    500Other long-term liabilities
    
    
    3,918
    
    
    
    4,014Stockholders 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; issued and outstanding:21,167,324 shares at December 31, 2003 and
20,933,913 shares at June 30, 2003)
    
    
    91,612
    
    
    
    77,395Retained earnings
    
    
    84,826
    
    
    
    78,774Accumulated other comprehensive income
    
    
    10,565
    
    
    
    3,111Total stockholders equity
    
    
    187,003
    
    
    
    159,280$
    239,331
    
    
    $
    213,100


See notes to condensed consolidated financial statements.

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DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED DECEMBER 31, 2003 AND 2002
(In thousands, except per share amounts)

Three Months EndedDecember 31,2003
    
    2002(unaudited)Net sales
    
    $
    65,539
    
    
    $
    54,478Cost of sales
    
    
    21,837
    
    
    
    18,321Gross profit
    
    
    43,702
    
    
    
    36,157Operating expenses:Selling, general and administrative
    
    
    22,894
    
    
    
    19,240Research and product development
    
    
    5,027
    
    
    
    4,334Total operating expenses
    
    
    27,921
    
    
    
    23,574Operating income
    
    
    15,781
    
    
    
    12,583Interest income
    
    
    194
    
    
    
    158Interest expense
    
    
    (31
    )
    
    
    (49
    )Other income, net
    
    
    4
    
    
    
    492Income before taxes
    
    
    15,948
    
    
    
    13,184Taxes on income
    
    
    5,183
    
    
    
    4,285Net income
    
    $
    10,765
    
    
    $
    8,899Basic earnings per share
    
    $
    0.51
    
    
    $
    0.42Diluted earnings per share
    
    $
    0.49
    
    
    $
    0.41Shares used in computing per share amounts:Basic
    
    
    21,135
    
    
    
    21,161Diluted
    
    
    21,985
    
    
    
    21,713


See notes to condensed consolidated financial statements.

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DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
SIX MONTHS ENDED DECEMBER 31, 2003 AND 2002
(In thousands, except per share amounts)

Six Months EndedDecember 31,2003
    
    2002(unaudited)Net sales
    
    $
    118,815
    
    
    $
    101,750Cost of sales
    
    
    39,845
    
    
    
    35,272Gross profit
    
    
    78,970
    
    
    
    66,478Operating expenses:Selling, general and administrative
    
    
    42,062
    
    
    
    36,357Research and product development
    
    
    9,598
    
    
    
    8,240Total operating expenses
    
    
    51,660
    
    
    
    44,597Operating income
    
    
    27,310
    
    
    
    21,881Interest income
    
    
    316
    
    
    
    244Interest expense
    
    
    (104
    )
    
    
    (118
    )Other income (expense), net
    
    
    (328
    )
    
    
    524Income before taxes
    
    
    27,194
    
    
    
    22,531Taxes on income
    
    
    8,838
    
    
    
    7,323Net income
    
    $
    18,356
    
    
    $
    15,208Basic earnings per share
    
    $
    0.87
    
    
    $
    0.72Diluted earnings per share
    
    $
    0.84
    
    
    $
    0.70Shares used in computing per share amounts:Basic
    
    
    21,058
    
    
    
    21,137Diluted
    
    
    21,885
    
    
    
    21,629


See notes to condensed consolidated financial statements.

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DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED DECEMBER 31, 2003 AND 2002
(In thousands)

Six Months EndedDecember 31,2003
    
    2002(unaudited)Cash and equivalents provided by (used for):Cash flows from operating activities:Net income
    
    $
    18,356
    
    
    $
    15,208Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    2,835
    
    
    
    2,747Gain on sale of marketable securities
    
    
    
    
    
    
    (414
    )Tax benefit related to stock option plans
    
    
    3,753
    
    
    
    1,746Deferred taxes
    
    
    (795
    )
    
    
    (1,663
    )Changes in assets and liabilities:Accounts receivable
    
    
    1,806
    
    
    
    2,597Inventories
    
    
    2,365
    
    
    
    (2,398
    )Prepaid expenses and other assets
    
    
    (1,232
    )
    
    
    (1,546
    )Accounts payable
    
    
    822
    
    
    
    887Accrued liabilities
    
    
    (822
    )
    
    
    2,439Income taxes payable
    
    
    (4,197
    )
    
    
    (890
    )Accrued product warranty
    
    
    56
    
    
    
    48Net cash provided by operating activities
    
    
    22,947
    
    
    
    18,761Cash flows from investing activities:Proceeds from sale of marketable securities
    
    
    
    
    
    
    728Purchase of property, plant and equipment
    
    
    (2,312
    )
    
    
    (1,204
    )Acquisition of other intangible assets
    
    
    (975
    )
    
    
    Other
    
    
    59
    
    
    
    (498
    )Net cash used for investing activities
    
    
    (3,228
    )
    
    
    (974
    )Cash flows from financing activities:Net change in notes payable to banks
    
    
    322
    
    
    
    (322
    )Principal payments on long-term debt
    
    
    (324
    )
    
    
    (258
    )Sale of common stock
    
    
    11,734
    
    
    
    3,471Repurchase of common stock
    
    
    (13,574
    )
    
    
    (8,386
    )Net cash used for financing activities
    
    
    (1,842
    )
    
    
    (5,495
    )Effect of exchange rate changes on cash
    
    
    2,570
    
    
    
    1,127Net increase in cash and equivalents
    
    
    20,447
    
    
    
    13,419Cash and equivalents, beginning of period
    
    
    46,831
    
    
    
    22,169Cash and equivalents, end of period
    
    $
    67,278
    
    
    $
    35,588Supplemental disclosures of cash flow information:Income taxes paid
    
    $
    9,437
    
    
    $
    7,663Interest paid
    
    $
    72
    
    
    $
    82


See notes to condensed consolidated financial statements.

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DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. Basis of Presentation

The condensed consolidated financial statements included herein have been
prepared by Dionex Corporation (the Company), without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been condensed or omitted pursuant to such rules
and regulations. It is suggested that these condensed consolidated financial
statements be read in conjunction with the consolidated financial statements
and the notes thereto included in the Companys Annual Report to Stockholders
and Form 10-K for the fiscal year ended June 30, 2003.

The unaudited condensed consolidated financial statements included herein
reflect all adjustments (which include only normal, recurring adjustments) that
are, in the opinion of management, necessary to state fairly the results for
the periods presented. The results for such periods are not necessarily
indicative of the results to be expected for the entire fiscal year ending June
30, 2004.

Reclassifications. Amounts in the condensed consolidated financial statements
for the periods ended December 31, 2002 and June 30, 2003 have been
reclassified to conform to the current periods presentation.

2. New Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 46 (FIN 46), Consolidation of Variable Interest
Entities, and in December 2003 issued a revised interpretation of FIN 46 (FIN
46-R). FIN 46 requires certain variable interest entities (VIEs) to be
consolidated by the primary beneficiary of the entity if the equity investors
in the entity do not have the characteristics of a controlling financial
interest or do not have sufficient equity at risk for the entity to finance its
activities without additional subordinated financial support from other
parties. The provisions of FIN 46 are effective immediately for all
arrangements entered into after January 31, 2003. The Company has not invested
in any entities it believes are variable interest entities for which it is the
primary beneficiary. The adoption of FIN 46-R had no impact, and the Company
does not expect the adoption of FIN 46-R to have an impact on the financial
position, results of operations or cash flows of the Company.

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In May 2003, FASB issued Statement of Financial Accounting Standard
(SFAS) No. 150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity, which requires that certain
financial instruments be presented as liabilities, and for which the financial
instruments were previously properly presented as equity or as temporary
equity. Such instruments include mandatory redeemable preferred and common
stock, and certain options and warrants. SFAS No. 150 is effective for
financial instruments entered into or modified after May 31, 2003 and was
effective at the beginning of the first interim period beginning after June 15,
2003. In November 2003, the FASB issued FASB Staff Position (FSP) No. 150-3,
Effective Date, Disclosures, and Transition for Mandatorily Redeemable
Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily
Redeemable Noncontrolling Interests under SFAS No. 150",which defers the
effective date for various provisions of SFAS No. 150. The Company believes
that it has properly classified and measured in its balance sheets and
disclosed in its interim consolidated financial statements certain financial
instruments with characteristics of both liabilities and equity.

3. Inventories

Inventories consisted of (in thousands):

December 31, 2003
    
    June 30, 2003Finished goods
    
    $
    12,734
    
    
    $
    11,638Work in process
    
    
    2,316
    
    
    
    3,822Raw materials
    
    
    9,961
    
    
    
    10,002$
    25,011
    
    
    $
    25,462


4. Income Taxes

The effective income tax rate for the first six months of
fiscal 2004 was 32.5%, unchanged from the same period in fiscal 2003.

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DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

5. Comprehensive Income

Components of comprehensive income include net income, foreign currency
translation adjustments and unrealized gain (loss)on equity securities
available for sale. As such, accumulated other comprehensive income in the
Condensed Consolidated Balance Sheets represents cumulative foreign currency
translation adjustments and unrealized gain or loss on equity securities
available for sale. Comprehensive income was $16,664,000 and $11,779,000 for
the three months ended December 31, 2003 and 2002, respectively, and
$25,810,000 and $17,771,000 for the six months ended December 31, 2003 and
2002, respectively.

6. Net Income Per Share

Basic earnings per share excludes dilution and is computed by dividing net
income by the weighted average of common shares outstanding for the period.
Diluted earnings per share reflects the potential dilution from securities and
other contracts that are exercisable or convertible into common stock. Diluted
earnings per share is computed by dividing net income by the weighted average
number of common shares that would have been outstanding during the period
assuming the issuance of common shares for all dilutive potential common shares
outstanding using the treasury stock method. The difference between the number
of shares outstanding for basic and diluted earnings per share is due to stock
options outstanding during the periods presented. At December 31, 2003 and
2002, there were 12,000 and 1,236,186 shares, respectively, excluded from the
computation to calculate earnings per share because they were anti-dilutive.

7. Common Stock Repurchases

During the three months ended December 31, 2003, the Company repurchased
53,900 shares of its common stock on the open market for approximately $2.5
million (an average of $45.62 per share), compared with 209,400 shares
repurchased for approximately $6.3 million (an average of $29.97 per share) for
the same period in the previous fiscal year.

During the first six months of fiscal 2004, the Company repurchased
336,000 shares of its common stock on the open market, for approximately $13.6
million (an average of $40.39 per share) compared with 291,900 shares
repurchased for approximately $8.4 million (an average of $28.73 per share), in
the first six months of the previous fiscal year.

During all of fiscal 2003, the Company repurchased 722,700 shares.

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DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

8. Goodwill and Other Intangible Assets

Information regarding the Companys goodwill and other intangible assets
reflects current foreign exchange rates.

Changes in the carrying amount of goodwill for the six months ended
December 31, 2003 are as follows (in thousands):

TotalBalance as of July 1, 2003
    
    $
    24,261Goodwill acquired during the period
    
    
    Translation adjustments and other
    
    
    637Balance as of December 31, 2003
    
    $
    24,898


The Company performed an annual impairment test on goodwill as of April
2003 and determined that goodwill was not impaired.

Information regarding the Companys other intangible assets follows (in
thousands):

As of December 31, 2003
    
    As of June 30,2003Carrying
    
    Accumulated
    
    
    
    
    
    Carrying
    
    AccumulatedAmount
    
    Amortization
    
    Net
    
    Amount
    
    Amortization
    
    NetPatents and
Trademarks
    
    $
    379
    
    
    $
    (379
    )
    
    $
    
    
    
    $
    379
    
    
    $
    (379
    )
    
    $
    Developed
Technology
    
    
    9,917
    
    
    
    (5,893
    )
    
    
    4,024
    
    
    
    9,475
    
    
    
    (4,880
    )
    
    
    4,595Customer
Relationships
    
    
    960
    
    
    
    (24
    )
    
    
    936
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    11,256
    
    
    $
    (6,296
    )
    
    $
    4,960
    
    
    $
    9,854
    
    
    $
    (5,259
    )
    
    $
    4,595


Amortization expense of other intangible assets was $368,000 and $713,000,
respectively, for the quarter and six months ended December 31, 2003 as
compared to $309,000 and $618,000 respectively, for the quarter and six months
ended December 31, 2002. The estimated amortization for each of the five fiscal
years subsequent to June 30, 2003 is as follows:

Year Ended
    
    AmortizationJune 30,
    
    
    
    
    
    Expense2004
    
    
    
    
    
    $
    1,5372005
    
    
    
    
    
    
    1,5372006
    
    
    
    
    
    
    9812007
    
    
    
    
    
    
    8102008
    
    
    
    
    
    
    304Total
    
    $
    5,169


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DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

9. Warranty

Product warranties are recorded at the time revenue is recognized for
certain product shipments. 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.

Details of the change in accrued product warranty for the six months ended
December 31, 2003 and 2002 are as follows (in thousands):

Balance
    
    
    
    
    
    Charged
    
    
    
    
    
    BalanceBeginning
    
    
    
    
    
    to Other
    
    
    
    
    
    End ofof Period
    
    Additions
    
    Accounts (1)
    
    Deductions (2)
    
    PeriodAccrued product
warranty
Six Months Ended:December 31, 2003
    
    $
    3,188
    
    
    
    1,070
    
    
    
    196
    
    
    
    (1,021
    )
    
    $
    3,433December 31, 2002
    
    $
    2,912
    
    
    
    1,180
    
    
    
    85
    
    
    
    (1,132
    )
    
    $
    3,045




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|(1) |  | Effects of exchange rate changes
|--- |  | --------------------------------
|   
|(2) |  | Product warranty costs          

10. Commitments

One of the Companys foreign subsidiaries discounts trade notes receivable
with banks. The uncollected balances of notes receivable due to the
discounting banks at December 31, 2003 and June 30, 2003 were $2.8 million and
$2.9 million, respectively. The Company is contingently liable for these
unpaid balances to the extent the amounts are not paid to the bank by the end
customer. The Company has determined that the carrying amount of its
contingent liability under this guarantee is zero at December 31, 2003 and June
30, 2003 based on its past experience of discounting trade notes receivable.

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DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

11. Stock-Based Compensation

SFAS No. 123, Accounting for Stock-Based Compensation, 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
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 data):

Three Months Ended
    
    Six Months EndedDecember 31,
    
    December 31,2003
    
    2002
    
    2003
    
    2002Net income, as reported
    
    $
    10,765
    
    
    $
    8,899
    
    
    $
    18,356
    
    
    $
    15,208Less: Total stock-based
employee compensation
expense determined
under fair value method
for all awards, net of
related tax effects
    
    
    1,415
    
    
    
    1,368
    
    
    
    2,783
    
    
    
    3,268Pro forma net income
    
    $
    9,350
    
    
    $
    7,531
    
    
    $
    15,573
    
    
    $
    11,940Earnings per share:Basic  as reported
    
    $
    0.51
    
    
    $
    0.42
    
    
    $
    0.87
    
    
    $
    0.72Basic  pro forma
    
    $
    0.44
    
    
    $
    0.36
    
    
    $
    0.74
    
    
    $
    0.56Diluted  as reported
    
    $
    0.49
    
    
    $
    0.41
    
    
    $
    0.84
    
    
    $
    0.70Diluted  pro forma
    
    
    0.43
    
    
    $
    0.35
    
    
    $
    0.71
    
    
    $
    0.55Basic shares
    
    
    21,135
    
    
    
    21,161
    
    
    
    21,058
    
    
    
    21,137Diluted shares
    
    
    21,985
    
    
    
    21,713
    
    
    
    21,885
    
    
    
    21,629


The pro forma results may not be indicative of the future results for the
full fiscal year due to potential grants vesting and other factors such as
forfeitures.

The fair value of each option grant on the date of grant is estimated
using the Black-Scholes option-pricing model with a volatility of 49% for
fiscal 2004 and 53% for fiscal 2003, expected life of options of 5.9 years,
risk free interest rate of approximately 3.30% in 2004 and 3.03% in 2003 and a
dividend yield of 0% for both fiscal years.

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DIONEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The Black-Scholes option-pricing model was developed for estimating the
fair value of traded options that 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 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.

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DIONEX CORPORATION




ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-looking statements

Except for historical information contained herein, the discussion below
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, Section 21E of the Securities and Exchange
Act of 1934, as amended and the Private Securities Litigation Reform Act of
1995, and are made under the safe harbor provisions thereof. Such statements
are subject to certain risks and uncertainties that could cause actual results
to differ materially from those discussed here. Such risks and uncertainties
include: general economic conditions, foreign currency fluctuations,
competition from other products, existing product obsolescence, fluctuation in
worldwide demand for analytical instrumentation, new product development,
including market receptiveness, the ability to manufacture products on an
efficient and timely basis and at a reasonable cost and in sufficient volume,
the ability to attract and retain talented employees and other risks as
described in more detail below under the heading Risks and Uncertainties.
Readers are cautioned not to place under reliance on these forward-looking
statements that reflect managements analysis only as of the date hereof. The
Company undertakes no obligation to publicly release the results of any
revision to these forward-looking statements that may be made to reflect events
or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

The Company

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 electronic industries in a variety of
applications.

Results of Operations  Three Months Ended December 31, 2003 and 2002

Net sales for the second quarter of fiscal 2004 were $65.5 million, an increase
of 20% compared with $54.5 million reported for the same period last year. Net
sales increased over the prior year period in all geographic markets reflecting
continued growth in the Companys IC and HPLC product lines. Sales in North
America increased by 1% in reported dollars and decreased by approximately 1%
in local curre(ncy during the quarter compared to the same quarter last year.
In Europe, sales increased by approximately 26% in reported dollars and 10% in
local currency. Sales in the Asia/Pacific region grew 41% in reported dollars
and over 33% in local currency. Sales in Japan grew 33% in reported dollars,
which is partially attributed to new drinking water regulations for bromate
analysis. The Companys IC product line sales increased by approximately 18%
while sales for the HPLC products increased by 28%. Overall, consolidated
sales were positively affected by currency fluctuations of 9% for the quarter
compared with a positive effect of 4% for the same period last year.

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Gross margin for the second quarter of fiscal 2004 was 66.7%, up from the 66.4%
reported for the same period last year. Gross margin was higher primarily due
to the favorable effects of currency
fluctuations and lower manufacturing costs due to more efficient manufacturing
practices when compared to the same period last year. The Company anticipates
the gross margin percentage to be slightly lower at approximately 65% in the
third and fourth quarters of fiscal 2004 affected by Japanese sales for water
regulations with lower margins due to higher third part component content.

Operating expenses of $27.9 million for the second quarter of fiscal 2004 were
up $4.3 million, or 18%, from the $23.6 million reported in the same quarter
last year. As a percentage of sales, operating expenses were flat at 43% for
the second quarter of fiscal 2004 and for the second quarter last year.
Currency fluctuations increased operating expenses by 7% for the quarter.

Selling, general and administrative (SG&A) expenses increased $3.7 million, or
19%, to $22.9 million in the second quarter of fiscal 2003 as compared to the
same quarter last year. However, as a percentage of sales SG&A expenses were
35% of sales for both quarters. The increase in SG&A expenses was due to
currency fluctuations and to the Companys expansion efforts internationally in
Europe and Asia and relates primarily to additional headcount and associated
travel expenses. In particular, the Company opened a direct sales and
marketing subsidiary in Korea on October 1, 2003, which contributed to higher
SG&A expenses this quarter as approximately 28 full-time employees were added
to the Companys payroll.

Research and development (R&D) costs of $5.0 million were $693,000 higher, or
16%, from the $4.3 million reported in the same period last year. Although
absolute dollars were higher, R&D costs were flat as a percentage of sales at
8% for both periods. R&D costs for the second quarter of fiscal 2004 increased
due to higher spending for the development of IC and HPLC products and the
effects of currency fluctuations. In general, the level of the Companys R&D
spending varies depending on both the breadth of the Companys current R&D
efforts and the stage of specific product development.

Other income was $4,000 in the second quarter of fiscal 2004 compared to
$492,000 in the same quarter of fiscal 2003. Other income in fiscal 2003
resulted primarily from the sale of marketable equity securities and gains on
currency hedging activities.

The effective tax rate for the second quarter of fiscal 2004 was 32.5%,
unchanged from the second quarter a year ago. The tax rate reflects taxable
incomes among the varied tax jurisdictions in which the Company does business.
The Companys tax rate is subject to fluctuations upon changes in tax
regulations in the jurisdictions in which the Company does business.

Net income in the second quarter of fiscal 2004 increased 21% to $10.8 million
compared with $8.9 million reported for the same period last year. Diluted
earnings per share were $.49 compared with $.41, an increase of 20%, in the
same period last year.

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Results of Operations  Six Months Ended December 31, 2003 and 2002

Net sales for the six months ended December 31, 2003 were $118.8 million, an
increase of approximately 17% over the $101.8 million reported for the same
period last year. Sales increased in all geographic markets and in the
Companys IC and HPLC product lines when compared to the same period last year.
Sales in North America and Europe both increased by approximately 8% and 21%,
respectively, in reported dollars and increased approximately by 6% and 7%,
respectively, in local currencies. Sales in the Asia/Pacific region increased
approximately 25% in reported dollars and approximately 21% in local
currencies. The Companys IC product line sales increased by, in reported
dollars, approximately 15% while sales for the HPLC products increased 21%.
Overall, currency fluctuations increased net sales by approximately 7% for the
first six months of fiscal 2004 and by approximately 4% for the same time
period in fiscal 2003.

Gross margin for the first six months of fiscal 2004 was 66.5%, up from the
65.3% reported for the same period last year. Gross margin was higher due to
the favorable effects of currency fluctuations and lower manufacturing costs
from and economies of scale due to higher production volumes when compared to
the same period last year.

Operating expenses of $51.7 million for the first six months of fiscal 2004
increased $7.1 million, or 16%, from the $44.6 million reported for the same
period last year. As a percentage of sales, operating expenses in the first
six months of fiscal year 2004 were 43% of sales, compared with 44% in the same
period last year. Currency fluctuations increased operating expenses by 6% for
the first six months of fiscal 2004.

SG&A expenses were $42.1 million, an increase of 16%, compared with the $36.4
million reported in the same period last year. The increase in expenses was
primarily due to currency fluctuations, higher marketing expenses for our HPLC
product line and higher international selling and marketing costs in our
European and Asia/Pacific regions. Additional expense and headcount occurred
in connection with opening our Korean subsidiary on October 1, 2003 as
mentioned earlier.

R&D costs of $9.6 million were up 16% from the same period last year when R&D
costs were $8.2 million. However, as a percentage of sales, R&D costs were 8%
in both fiscal years. R&D costs in the first half of fiscal 2004 increased due
to the Companys higher spending to develop the Companys IC and HPLC products
and the effects of currency fluctuations. The level of R&D spending varies
depending on both the breadth of the Companys R&D efforts and the stage of
specific product development.

Other expense was $328,000 for the first half of fiscal 2004, resulting from
losses incurred in the Companys hedging activities due to wide currency
fluctuations. Other income in fiscal 2003 was $524,000 due to the sale of
marketable equity securities and gains from hedging activities.

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The effective tax rate for the first six months of fiscal 2004 was 32.5%,
unchanged from the same period last year. The tax rate reflects offsetting
taxable incomes among the varied tax jurisdictions in which the Company does
business. The Companys tax rate is subject to fluctuations upon changes in
tax regulations in the jurisdictions in which the Company does business.

Net income for the first six months of fiscal 2004 was $18.4 million, an
increase of 21%, compared with $15.2 million reported for the same period last
year. Diluted earnings per share for the first half of fiscal 2004 were $.84,
an increase of 20%, compared with $.70 for the same period last year.

Liquidity and Capital Resources

At December 31, 2003, the Company had cash and cash investments of $67.3
million. The Companys working capital was $112.7 million, up $24.9 million
from the $87.8 million reported at June 30, 2003. Cash generated by operating
activities for the six months ended December 31, 2003 was $22.0 million
compared with $18.8 million for the same period last year. The increase in
operating cash flow was primarily due to an increase in net income, an increase
in the tax benefit related to stock option plans and a decrease in inventory;
it was partially offset by an increase in accounts receivable, a decrease in
income taxes payable and a decrease in other prepaid expenses and other assets.

Cash used for investing activities was $2.3 million and $1.0 million in the
first six months of fiscal 2004 and 2003, respectively. Capital expenditures
were $2.3 million and $1.2 million during the first six months of fiscal 2004
and 2003, respectively. The amount reflected in fiscal 2004 includes building
improvements at the corporate headquarters and computer hardware and software
spending in connection with the Companys e-business initiative. Proceeds from
the sale of marketable securities were $728,000 for the first six months of
fiscal 2003. Additionally, cash of $975,000 was used in the acquisition of
intangibles related to the acquisition of our Korean subsidiary.

Cash used for financing activities was $1.8 million and $5.5 million in the
first six months of fiscal 2004 and 2003, respectively. The decrease is
primarily attributable to the repurchase of 336,000 shares of the Companys
common stock for $13.6 million in fiscal 2004, (at a average price of $40.39
per share) compared with 291,900 shares for $8.4 million in fiscal 2003 (at an
average price of $28.73 per share), partially offset by proceeds received from
the issuance of common stock for the exercise of employee stock options and
from the employee stock purchase plan of $11.7 million in fiscal 2004 and $3.5
million in fiscal 2003.

At December 31, 2003, the Company had utilized $2.1 million of the Companys
$35.3 million in committed bank lines of credit, mainly due to borrowings
related to the Companys Japanese operations. The Company believes that its
cash flow from operations, current cash and cash investments and the remainder
of its bank lines of credit will be adequate to meet its cash requirements for
fiscal 2004 and the foreseeable future.

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The following summarizes our contractual obligations at June 30, 2003, and the
effect such obligations are expected to have on our liquidity and cash flows in
future periods (in thousands):

ContractualObligations
    
    
    
    
    
    Payments Due by PeriodLessThan 1
    
    1-3
    
    4-5
    
    After 5Total
    
    Year
    
    Years
    
    Years
    
    YearsLines of Credit
    
    $
    834
    
    
    $
    834
    
    
    $
    
    
    
    $
    
    
    
    $
    Long Term Debt
    
    
    1,000
    
    
    
    500
    
    
    
    500
    
    
    
    
    
    
    
    Operating Lease
Obligations
    
    
    16,358
    
    
    
    3,582
    
    
    
    5,107
    
    
    
    2,749
    
    
    
    4,920Other Obligations
    
    
    6,500
    
    
    
    3,000
    
    
    
    3,500
    
    
    
    
    
    
    
    Total Contractual
Commitments
    
    $
    24,692
    
    
    $
    7,916
    
    
    $
    9,107
    
    
    $
    2,749
    
    
    $
    4,920


At June 30, 2003 and 2002, the Company had recorded $6.5 million and $5.7
million, respectively, of Other Obligations in its consolidated financial
statements. Other Obligations relate to the earn-out from the acquisition of LC
Packings.

There have been no material changes outside ordinary business activities since
June 30, 2003.

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New Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 46 (FIN 46), Consolidation of Variable Interest
Entities, and in December 2003 issued a revised interpretation of FIN 46 (FIN
46-R). FIN 46 requires certain variable interest entities (VIEs) to be
consolidated by the primary beneficiary of the entity if the equity investors
in the entity do not have the characteristics of a controlling financial
interest or do not have sufficient equity at risk for the entity to finance its
activities without additional subordinated financial support from other
parties. The provisions of FIN 46 are effective immediately for all
arrangements entered into after January 31, 2003. The Company has not invested
in any entities it believes are variable interest entities for which it is the
primary beneficiary. The adoption of FIN 46-R had no impact, and the Company
does not expect the adoption of FIN 46-R to have an impact on the financial
position, results of operations or cash flows of the Company.

In May 2003, FASB issued Statement of Financial Accounting Standard
(SFAS) No. 150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity, which requires that certain
financial instruments be presented as liabilities, and for which the financial
instruments were previously properly presented as equity or as temporary
equity. Such instruments include mandatory redeemable preferred and common
stock, and certain options and warrants. SFAS No. 150 is effective for
financial instruments entered into or modified after May 31, 2003 and was
effective at the beginning of the first interim period beginning after June 15,
2003. In November 2003, the FASB issued FASB Staff Position (FSP) No. 150-3,
Effective Date, Disclosures, and Transition for Mandatorily Redeemable
Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily
Redeemable Noncontrolling Interests under SFAS No. 150",which defers the
effective date for various provisions of SFAS No. 150. The Company believes
that it has properly classified and measured in its balance sheets and
disclosed in its interim consolidated financial statements certain financial
instruments with characteristics of both liabilities and equity.

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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
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:

The Company derives revenue from the sale of products and from services
rendered to its customers including installation, training and maintenance.
Generally, its products contain embedded software that is essential to their
functionality.

Revenue is recognized in accordance with Staff Accounting Bulletin 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.

Equipment is sold 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.

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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:

The Company maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments. If the
financial condition of its 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, the Company has not experienced significant bad debt losses.

The Company values all of its inventories at the lower of standard cost (which
approximates cost on a first-in, first-out basis) or market. The Company
estimates revisions to its 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
higher 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:

The Company assesses 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, the
Company assesses goodwill for impairment at least annually. Factors that are
considered important and could trigger an impairment review include but are not
limited to the following:



| |  |  | significant underperformance relative to historical or projected future operating results;
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | significant negative industry or economic trends; and
| | - |  | -----------------------------------------------------



| |  |  | significant changes or developments in strategic technology.
| | - |  | ------------------------------------------------------------

When the Company determines that the carrying value of long-lived assets or
intangible assets with finite lives may not be recoverable based upon the
existence of one or more of the above or other indicators, impairment is
measured based on a projected discounted cash flow method using a discount rate
determined by management to be commensurate with the risk inherent in the
Companys current business model. Goodwill is tested for impairment by
comparing the fair values of related reporting units to their carrying values.
The
Company completed a review in fiscal 2003 and no impairment was necessary.

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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, the 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.

Income Taxes:

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

Risks and Uncertainties:

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

The Company sells 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. Despite economic
uncertainty in Europe, we showed continued growth in the European market;
however a continuation of an economic downturn in any of our major markets
would likely harm our results of operations.

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

The Company derived approximately 66% of our net sales from outside North
America in the six months ended December 31, 2003 and expects to continue to
derive the majority of net sales from outside North America for the foreseeable
future. Most of the Companys sales outside North America are denominated in
the local currency of its customers. As a result, the U.S. dollar value of our
net sales varies with currency rate fluctuations. Significant changes in the
value of the U.S. dollar relative to certain foreign currencies could have a
material adverse effect on our results of operations. 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 may also impact international sales negatively.

Fluctuation in worldwide demand for analytical instrumentation could affect the
Companys operating results.

The demand for analytical instrumentation products can fluctuate depending upon
capital expenditure cycles. Most companies consider the Companys
instrumentation products capital equipment; 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 the Companys quarterly operating results may cause our stock
price to decline.

A high proportion of the Companys 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 the Company does not introduce new products that are attractive to our
customers on a timely basis, our products may become obsolete.

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

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The Companys revenues depend on successfully competing for market share.

The analytical instrumentation market is highly competitive and the Company
competes 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, the Companys market share may decline and
operating results could suffer.

The Companys ability to maintain inventories and meet customer demand for our
products is critical to our operating results.

Most raw materials, components and supplies purchased by the Company 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.

The Company manufactures 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 the
results of operations.

The Companys 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. Each of
the executive officers and key employees located in the United States is
employed at will and may leave the employment of the Company at any time. 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.

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The success of Dionexs business is dependent in part on protection of
proprietary information and inventions; but obtaining and
enforcing legal protection of the Companys proprietary products, processes and
technologies can be difficult and expensive.

Patent and trade secret protection is important to Dionex because developing
new technologies and products is time-consuming and expensive. The Company
owns many U.S. and foreign patents and intends to apply for additional patents
to cover our technology and products. The Company may be unable to obtain
issued patents from any pending or future patent applications that it owns.
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 Dionex owns.

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

The Company may incur significant expense in any legal proceedings to protect
its proprietary rights.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

The Company is exposed to financial market risks, including changes in foreign
currency rates, interest rates and marketable equity securities, as well as
debt and interest expense.

Foreign Currency ExchangeRevenues generated from international
operations are generally denominated in foreign currencies. The Company enters
into forward foreign exchange contracts to hedge against fluctuations of
intercompany account balances. Market value gains and losses on these hedge
contracts are substantially offset by fluctuations in the underlying balances
being hedged, and the net financial impact is not expected to be material in
future periods. At December 31, 2003, the Company had forward exchange
contracts to sell foreign currencies totaling $15.1 million dollars, including
approximately $8.3 million in Euros, $6.2 million in Japanese yen and $600,000
in Canadian dollars. The foreign exchange contracts at the end of each fiscal
quarter mature within the following quarter. Additionally, contract values and
fair market values are the same. A sensitivity analysis assuming a hypothetical
10% movement in foreign currency exchange rates applied to hedging contracts
and underlying balances being hedged at December 31, 2003 indicated that these
market movements would not have a material effect on the Companys business,
operating results or financial condition.

Foreign currency rate fluctuations can impact the U.S. dollar translation of
the Companys foreign operations in our consolidated financial statements.
Currency fluctuations increased reported sales by 9% for the quarter and 7% for
the six months ended December 31, 2003 compared to 4% for both the quarter and
six months ended December 31, 2002.

Interest and Investment IncomeThe Companys interest and investment income is
subject to changes in the general level of interest rates. Changes in 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 the Companys investment balances at December 31
2003, indicated that such market movement would not have a material effect on
the business, operating results or financial condition. Actual gains or losses
in the future may differ materially from this analysis, depending upon actual
balances and changes in the timing and amount of interest rate movements.

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Marketable Equity SecuritiesThe Company is exposed to market price risks on
its marketable equity securities. These investments are in
publicly traded companies in the laboratory analytical instruments sector. The
Company does 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 $837,000 decrease in the fair value of its marketable equity
securities as of December 31, 2003.

Debt and Interest ExpenseA sensitivity analysis assuming a hypothetical 10%
movement in interest rates applied to the Companys outstanding debt balance at
December 31, 2003, indicated that such market movement would not have a
material effect on its business, operating results or financial condition.
Actual gains or losses in the future may differ materially from this analysis,
depending on the level of the Companys outstanding debt and changes in the
timing and amount of interest rate movements.


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ITEM 4. CONTROLS AND PROCEDURES



| | (a) |  | Evaluation of disclosure controls and procedures. Based on their
evaluation of the Companys disclosure controls and procedures (as
defined in rules promulgated under the Securities Exchange Act of 1934),
the Companys chief executive officer and chief financial officer
concluded that the Companys disclosure controls and procedures were
effective as of the end of the period covered by this report.
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) |  | Changes in internal controls. There were no significant changes in
the Companys internal control over financial reporting during the
period covered by this report that have materially affected, or are
reasonably likely to materially affect, the Companys internal control
over financial reporting.
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) |  | Limitation on the Effectiveness of Controls. A control system, no
matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met.
Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control
issues, if any, within a company have been detected. The Companys
disclosure controls and procedures are designed to provide reasonable
assurance of achieving their objectives, and the chief executive officer
and the chief financial officer have concluded that these controls and
procedures are effective at the reasonable assurance level.
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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PART II. OTHER INFORMATION




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

The 2003 Annual Meeting of Stockholders was held on October 24, 2003. The
six persons name below were elected as proposed in the proxy statement pursuant
to Regulation 14A of the Securities Exchange Act of 1934, as amended, to serve
as directors until the Companys Annual Meeting of Stockholders in 2004 and
until their successors are duly elected and qualified. There were 21,120,445
shares of the Companys common stock entitled to vote at the Annual Meeting of
Stockholders. The voting regarding each nominee was as follows:

For
    
    WithheldDavid L. Anderson
    
    
    18,359,172
    
    
    
    378,209A. Blaine Bowman
    
    
    18,335,993
    
    
    
    401,388Lukas Braunschweiler
    
    
    18,342,343
    
    
    
    395,038B.J. Moore
    
    
    18,273,400
    
    
    
    463,981Ricardo Pigliucci
    
    
    18,275,292
    
    
    
    462,089Michael W. Pope
    
    
    17,756,119
    
    
    
    981,262


Other matters voted upon at the Annual Meeting and the results of the
voting with respect to each such matter were as follows:

1. To vote on the adoption of the 2003 Employee Stock Participation Plan.

For
    
    Against
    
    Abstained15,066,105
    
    
    792,042
    
    
    
    1,012,336


2. To ratify the selection of Deloitte & Touche LLP as the independent
auditors of the Company for the fiscal year ending June 30, 2004.

For
    
    Against
    
    Abstained16,144,886
    
    
    2,585,179
    
    
    
    7,316


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##### Table of Contents






ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



| | (a) |  | Exhibits
| | --- |  | --------

10.1 The Companys 2003 Employee Stock Participation
Program

31.1 Certification of Chief Executive Officer, Lukas
Braunschweiler, pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.

31.2 Certification of Chief Financial Officer, Craig A.
McCollam, pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.

32.1 Certification of Chief Executive Officer, Lukas
Braunschweiler, pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.

32.2 Certification of Chief Executive Officer, Craig A.
McCollam, pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.



| | (b) |  | Reports on Form 8-K.
| | --- |  | --------------------

On October 20, 2003, the Company filed a current Report
on Form 8-K to furnish a press release announcing the
financial results for the
quarter and year ended September 30, 2003.

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SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.

DIONEX CORPORATION
(Registrant)Date:  February 13, 2004
    
    By:
    
    /s/ Lukas BraunschweilerLukas Braunschweiler
President, Chief Executive Officer
And DirectorBy:
    
    /s/ Craig A. McCollamCraig A. McCollam
Vice President, Finance and Administration


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EXHIBIT INDEX

Exhibit
    
    Description10.1
    
    The Companys 2003 Employee Stock Participation
Program31.1
    
    Certification of Chief Executive Officer, Lukas
Braunschweiler, pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.31.2
    
    Certification of Chief Financial Officer, Craig A.
McCollam, pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.32.1
    
    Certification of Chief Executive Officer, Lukas
Braunschweiler, pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.32.2
    
    Certification of Chief Executive Officer, Craig A.
McCollam, pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.


32