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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 March 31, 2004
 OR [  ]
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 0-11250
 DIONEX CORPORATION 
  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 May 7, 2004: CLASS
    
    NUMBER OF SHARESCommon Stock
    
    20,995,020




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DIONEX CORPORATION
INDEX PagePART I. FINANCIAL INFORMATIONITEM 1.
    
    FINANCIAL STATEMENTSCONDENSED CONSOLIDATED BALANCE SHEETS March 31, 2004 and June 30, 2003

    
    
    3CONDENSED CONSOLIDATED STATEMENTS OF INCOME Three Months Ended March 31, 2004 and 2003
    
    
    4CONDENSED CONSOLIDATED STATEMENTS OF INCOME Nine Months Ended March 31, 2004 and 2003
    
    
    5CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended March 31, 2004 and 2003
    
    
    6NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    
    
    7-14ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    15-26ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
    
    
    27-28ITEM 4.
    
    CONTROLS AND PROCEDURES
    
    
    29PART II. OTHER INFORMATIONITEM 2.
    
    ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    30ITEM 6.
    
    EXHIBITS AND REPORTS ON FORM 8-K
    
    
    31SIGNATURES
    
    
    
    
    32EXHIBITSEXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2




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DIONEX CORPORATION 
   March 31,
    
    June 30,2004
    
    2003(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    64,479
    
    
    $
    46,831Marketable equity securities
    
    
    1,660
    
    
    
    1,402Accounts receivable (net of allowance for doubtful accounts of
$1,158 at March 31, 2004 and $1,275 at June 30,
2003)
    
    
    56,176
    
    
    
    46,613Inventories
    
    
    25,997
    
    
    
    25,462Deferred tax assets
    
    
    10,834
    
    
    
    9,612Prepaid expenses and other
    
    
    3,487
    
    
    
    3,125Total current assets
    
    
    162,633
    
    
    
    133,045Property, plant and equipment, net
    
    
    47,304
    
    
    
    45,436Goodwill, net
    
    
    24,739
    
    
    
    24,261Intangible assets, net
    
    
    4,570
    
    
    
    4,595Other assets
    
    
    5,187
    
    
    
    5,763$
    244,433
    
    
    $
    213,100LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Notes payable to banks
    
    $
    2,163
    
    
    $
    1,334Accounts payable
    
    
    10,590
    
    
    
    5,443Accrued liabilities
    
    
    30,371
    
    
    
    29,045Income taxes payable
    
    
    2,163
    
    
    
    6,189Accrued product warranty
    
    
    3,594
    
    
    
    3,188Total current liabilities
    
    
    48,881
    
    
    
    45,199Deferred taxes
    
    
    4,325
    
    
    
    4,107Long-term debt
    
    
    144
    
    
    
    500Other long-term liabilities
    
    
    903
    
    
    
    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: 21,112,453 shares at March 31, 2004 and 20,933,913
shares at June 30, 2003)
    
    
    98,853
    
    
    
    77,395Retained earnings
    
    
    81,708
    
    
    
    78,774Accumulated other comprehensive income
    
    
    9,619
    
    
    
    3,111Total stockholders equity
    
    
    190,180
    
    
    
    159,280$
    244,433
    
    
    $
    213,100
 See notes to condensed consolidated financial statements. 3




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DIONEX CORPORATION 
 
  Three Months EndedMarch 31,2004
    
    2003(unaudited)Net sales
    
    $
    70,746
    
    
    $
    56,069Cost of sales
    
    
    24,629
    
    
    
    18,810Gross profit
    
    
    46,117

    
    
    
    37,259Operating expenses:Selling, general and administrative
    
    
    23,367
    
    
    
    19,415Research and product development
    
    
    4,606
    
    
    
    4,176Total operating expenses
    
    
    27,973
    
    
    
    23,591Operating income
    
    
    18,144
    
    
    
    13,668Interest income
    
    
    214
    
    
    
    104Interest expense
    
    
    (66
    )
    
    
    (35
    )Write-off of non-affiliate investment
    
    
    
    
    
    
    (2,067
    )Other income (expense), net
    
    
    60
    
    
    
    (393
    )Income before taxes
    
    
    18,352
    
    
    
    11,277Taxes on income
    
    
    5,965
    
    
    
    3,665Net income
    
    $
    12,387
    
    
    $
    7,612Basic earnings per share
    
    $
    0.58
    
    
    $
    0.36Diluted earnings per share
    
    $
    0.56
    
    
    $
    0.35Shares used in computing per share amounts:Basic
    
    
    21,180
    
    
    
    21,028Diluted
    
    
    22,177
    
    
    
    21,619
 See notes to condensed consolidated financial statements. 4




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DIONEX CORPORATION 
 
  Nine Months EndedMarch 31,2004
    
    2003(unaudited)Net sales
    
    $
    189,561
    
    
    $
    157,819Cost of sales
    
    
    64,474
    
    
    
    54,082Gross profit
    
    
    125,087
    
    
    
    103,737Operating expenses:Selling, general and administrative
    
    
    65,429
    
    
    
    55,772Research and product development
    
    
    14,204
    
    
    
    12,416Total operating expenses
    
    
    79,633
    
    
    
    68,188Operating income
    
    
    45,454
    
    
    
    35,549Interest income
    
    
    530
    
    
    
    348Interest expense
    
    
    (170
    )
    
    
    (153
    )Write-off of non-affiliate investment
    
    
    
    
    
    
    (2,067
    )Other income (expense), net
    
    
    (268
    )
    
    
    131Income before taxes
    
    
    45,546
    
    
    
    33,808Taxes on income
    
    
    14,803
    
    
    
    10,988Net income
    
    $
    30,743
    
    
    $
    22,820Basic earnings per share
    
    $
    1.46
    
    
    $
    1.08Diluted earnings per share
    
    $
    1.40
    
    
    $
    1.06Shares used in computing per share amounts:Basic
    
    
    21,099
    
    
    
    21,100Diluted
    
    
    21,983
    
    
    
    21,625
 See notes to condensed consolidated financial statements. 5




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DIONEX CORPORATION 
 
  Nine Months EndedMarch 31,2004
    
    2003(unaudited)Cash and equivalents provided by (used for):Cash flows from operating activities:Net income
    
    $
    30,743
    
    
    $
    22,820Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    4,372
    
    
    
    4,339Gain on sale of marketable securities
    
    
    
    
    
    
    (414
    )Write-off of non-affiliated investment
    
    
    
    
    
    
    2,067Tax benefit related to stock option plans
    
    
    6,313
    
    
    
    2,430Deferred taxes
    
    
    (937
    )
    
    
    (2,811
    )Changes in assets and liabilities:Accounts receivable
    
    
    (6,202
    )
    
    
    422Inventories
    
    
    1,216
    
    
    
    (2,637
    )Prepaid expenses and other assets
    
    
    (344
    )
    
    
    (1,416
    )Accounts payable
    
    
    4,818
    
    
    
    703Accrued liabilities
    
    
    121
    
    
    
    1,196Income taxes payable
    
    
    (4,417
    )
    
    
    1,377Accrued product warranty
    
    
    248
    
    
    
    56Net cash provided by operating activities
    
    
    35,931
    
    
    
    28,132Cash flows from investing activities:Proceeds from sale of marketable securities
    
    
    
    
    
    
    728Purchase of property, plant and equipment
    
    
    (3,108
    )
    
    
    (2,697
    )Earn-out provision of LC Packings
    
    
    (3,000
    )
    
    
    (3,000
    )Investments in non-affiliated companies
    
    
    
    
    
    
    (500
    )Acquisition of other intangible assets
    
    
    (975
    )
    
    
    Other
    
    
    91
    
    
    
    5Net cash used for investing activities
    
    
    (6,992
    )
    
    
    (5,464
    )Cash flows from financing activities:Net change in notes payable to banks
    
    
    662
    
    
    
    (324
    )Principal payments on long-term debt
    
    
    (484
    )
    
    
    (384
    )Sale of common stock
    
    
    17,794
    
    
    
    6,050Repurchase of common stock
    
    
    (30,458
    )
    
    
    (15,838
    )Net cash used for financing activities
    
    
    (12,486
    )
    
    
    (10,496
    )Effect of exchange rate changes on cash
    
    
    1,195
    
    
    
    1,851Net increase in cash and equivalents
    
    
    17,648
    
    
    
    14,023Cash and equivalents, beginning of period
    
    
    46,831
    
    
    
    22,169Cash and equivalents, end of period
    
    $
    64,479
    
    
    $
    36,192Supplemental disclosures of cash flow information:Income taxes paid
    
    $
    13,371
    
    
    $
    9,770Interest paid
    
    $
    126
    
    
    $
    103
 See notes to condensed consolidated financial statements. 6




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DIONEX CORPORATION 
   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 March 31, 2003 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 on the financial
position, results of operations or cash flows of the Company. 7




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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): March 31,
    
    June 30,2004
    
    2003Finished goods
    
    $
    14,285
    
    
    $
    11,638Work in process
    
    
    2,503
    
    
    
    3,822Raw materials
    
    
    9,209
    
    
    
    10,002$
    25,997
    
    
    $
    25,462
 4. Income Taxes The effective income tax rate for the first nine months of
fiscal 2004 was 32.5%, unchanged from the same period in fiscal 2003. 8




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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. Comprehensive income was $11,442,000 and $8,956,000 for
the three months ended March 31, 2004 and 2003, respectively, and $ 37,251,000
and $26,727,000 for the nine months ended March 31, 2004 and 2003,
respectively. 6. Net Income Per Share Basic earnings per share excludes dilution and is computed by dividing net
income by the weighted average number 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 March 31, 2004 all stock options were included in the diluted
earnings per share calculation; however, at March 31, 2003, 1,020,941 shares
were excluded from the computation because they were anti-dilutive. 7. Common Stock Repurchases During the three months ended March 31, 2004, the Company repurchased
316,700 shares of its common stock on the open market for approximately $16.9
million (an average of $53.31 per share), compared with 234,500 shares
repurchased for approximately $7.5 million (an average of $31.78 per share)
during the same period in the previous fiscal year. During the first nine months of fiscal 2004, the Company repurchased
652,700 shares of its common stock on the open market for approximately $30.5
million (an average of $46.66 per share), compared with 526,400 shares
repurchased for approximately $15.8 million (an average of $30.09 per share)
during the same period in the previous fiscal year. During all of fiscal 2003, the Company repurchased a total of 722,700
shares of its common stock on the open market for approximately $22.5 million
at an average of $31.15 per share. 9




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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 nine months ended March
31, 2004 are as follows (in thousands): TotalBalance as of July 1, 2003
    
    $
    24,261Goodwill acquired during the period
    
    
    Translation adjustments and other
    
    
    478Balance as of March 31, 2004
    
    $
    24,739
 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 is as follows
(in thousands): As of March 31, 2004
    
    As of June 30, 2003Carrying
    
    Accumulated
    
    
    
    
    
    Carrying
    
    AccumulatedAmount
    
    Amortization
    
    Net
    
    Amount
    
    Amortization
    
    NetPatents and
Trademarks
    
    $
    379
    
    
    $
    (379
    )
    
    $
    
    
    
    $
    379
    
    
    $
    (379
    )
    
    $
    Developed
Technology
    
    
    9,791
    
    
    
    (6,170
    )
    
    
    3,621
    
    
    
    9,475
    
    
    
    (4,880
    )
    
    
    4,595Customer
Relationships
    
    
    999
    
    
    
    (50
    )
    
    
    949
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    11,169
    
    
    $
    (6,599
    )
    
    $
    4,570
    
    
    $
    9,854
    
    
    $
    (5,259
    )
    
    $
    4,595
 Amortization expense of other intangible assets was $396,000 and $1.1
million, respectively, for the quarter and nine months ended March 31, 2004 as
compared to $324,000 and $942,000, respectively, for the quarter and nine
months ended March 31, 2003. The estimated amortization for each of the five
fiscal years subsequent to June 30, 2003 is as follows: Year Ended
    
    AmortizationJune 30,
    
    Expense2004
    
    $
    1,5232005
    
    
    1,5202006
    
    
    9912007
    
    
    8142008
    
    
    308Total
    
    $
    5,156
 10




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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 product
failures. 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 nine months
ended March 31, 2004 and 2003 are as follows (in thousands): Balance
    
    
    
    
    
    Charged
    
    
    
    
    
    BalanceBeginning
    
    
    
    
    
    to Other
    
    
    
    
    
    End ofof Period
    
    Additions
    
    Accounts (1)
    
    Deductions (2)
    
    PeriodAccrued product
warrantyNine Months Ended:March 31, 2004
    
    $
    3,188
    
    
    
    1,797
    
    
    
    172
    
    
    
    (1,563
    )
    
    $
    3,594March 31, 2003
    
    $
    2,912
    
    
    
    2,060
    
    
    
    140
    
    
    
    (1,998
    )
    
    $
    3,114
  (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 March 31, 2004 and June 30, 2003 were $4.2 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 was insignificant at March 31, 2004
and June 30, 2003 based on its past experience with the discounting of trade
notes receivable by its foreign subsidiary. 11




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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
    
    Nine Months EndedMarch 31,
    
    March 31,2004
    
    2003
    
    2004
    
    2003Net income, as reported
    
    $
    12,387
    
    
    $
    7,612
    
    
    $
    30,743
    
    
    $
    22,820Less: Total stock-based
employee compensation
expense determined
under fair value method
for all awards, net of
related tax effects
    
    
    1,283
    
    
    
    1,141
    
    
    
    4,066
    
    
    
    4,368Pro forma net income
    
    $
    11,104
    
    
    $
    6,471
    
    
    $
    26,677
    
    
    $
    18,452Earnings per share:Basic  as reported
    
    $
    0.58
    
    
    $
    0.36
    
    
    $
    1.46
    
    
    $
    1.08Basic  pro forma
    
    $
    0.52
    
    
    $
    0.31
    
    
    $
    1.26
    
    
    $
    0.87Diluted  as reported
    
    $
    0.56
    
    
    $
    0.35
    
    
    $
    1.40
    
    
    $
    1.06Diluted  pro forma
    
    $
    0.50
    
    
    $
    0.30
    
    
    $
    1.21
    
    
    $
    0.85Basic shares
    
    
    21,180
    
    
    
    21,028
    
    
    
    21,099
    
    
    
    21,100Diluted shares
    
    
    22,177
    
    
    
    21,619
    
    
    
    21,983
    
    
    
    21,625
 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. 12




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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. 13




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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,
fluctuation in worldwide demand for analytical instrumentation, fluctuations in
quarterly operating results, competition from other products, existing product
obsolescence, 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 undue 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 that may be made to these forward-looking
statements 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 March 31, 2004 and 2003 Net sales for the third quarter of fiscal 2004 were $70.7 million, an increase
of 26% compared with $56.1 million reported for the same period last year. Net
sales increased over the prior year period in all geographic markets as
indicated in the table below: Q3
    
    Q3Reported
    
    LocalDollar
    
    CurrencyGrowth %
    
    Growth %Total Growth
    
    
    26
    
    
    
    16North America
    
    
    7
    
    
    
    5Europe
    
    
    20
    
    
    
    4Asia/Pacific
    
    
    66
    
    
    
    52
 14




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Growth in Europe reflected difficult economic conditions in that area. The
growth in sales in the Asia/Pacific region was primarily attributable to Japan
where sales grew over 100% compared with the third quarter of last year and
continued growth in China. The significant sales increase in Japan was due to
the implementation of new drinking water standards in Japan requiring bromate
analysis. Gross margin for the third quarter of fiscal 2004 was 65.2%, down from the
66.5% reported for the same period last year. Gross margin was lower primarily
due to higher third party component content for the Japanese sales relating to
new drinking water regulations. The Company anticipates the gross margin
percentage to be slightly lower at approximately 65% in the fourth quarter of
fiscal 2004 due to the impact of Japans lower gross margin sales. Operating expenses of $28.0 million for the third quarter of fiscal 2004 were
up $4.4 million, or 19%, from the $23.6 million reported in the same quarter
last year. As a percentage of sales, operating expenses decreased to 40% for
the third quarter of fiscal 2004 as compared to 42% for the same quarter last
year. Currency fluctuations increased operating expenses by 8 percentage
points for the quarter. Selling, general and administrative (SG&A) expenses increased $4.0 million, or
20%, to $23.4 million in the third quarter of fiscal 2004 as compared to $19.4
million during the same quarter last year. However, as a percentage of sales
SG&A expenses decreased to 33% for the third quarter of fiscal 2004 as compared
to 35% for the same quarter last year. The increase in SG&A expenses was due
to currency fluctuations of approximately $1.6 million and approximately $1.3
million that included expenses for the Companys Korean office acquired in
October 2003 as well as the other expansion efforts in Europe and Asia.
Additionally, the Company incurred approximately $700,000 related to
Sarbanes-Oxley Section 404 implementation. During the quarter, the SEC
announced an extension delaying the Companys compliance date to the end of its
next fiscal year. Research and development (R&D) costs of $4.6 million were $430,000 higher, or
10%, from the $4.2 million reported in the same quarter last year. Although
absolute dollars were higher, R&D costs decreased to 6.5% as a percentage of
sales as compared to 7.4% for the same quarter last year. R&D costs for the
third quarter of fiscal 2004 increased due to higher spending for the
development of 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 $60,000 in the third quarter of fiscal 2004 compared to an
expense of $393,000 in the same quarter of fiscal 2003. Other income in fiscal
2003 resulted primarily from losses on the Companys currency hedging
activities. 15




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The effective tax rate for the third quarter of fiscal 2004 was 32.5%,
unchanged from the third 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 third quarter of fiscal 2004 increased 63% to $12.4 million
compared with $7.6 million reported for the same period last year. Diluted
earnings per share were $.56 compared with $.35 in the same period last year,
an increase of 59%. 16




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Results of Operations  Nine Months Ended March 31, 2004 and 2003 Net sales for the nine months ended March 31, 2004 were $189.6 million, an
increase of approximately 20% over the $157.8 million reported for the same
period last year. Sales increased in all geographic markets year as indicated
in the table below: Q3 YTD
    
    Q3 YTDReported
    
    LocalDollar
    
    CurrencyGrowth %
    
    Growth %Total Growth
    
    
    20
    
    
    
    12North America
    
    
    7
    
    
    
    6Europe
    
    
    4
    
    
    
    6Asia/Pacific
    
    
    41
    
    
    
    33
 Growth in the Asia/Pacific region reflects the impact of the new Japanese
drinking water regulations requiring bromate analysis as well as the expansion
of sales in our China operations. Gross margin for the first nine months of fiscal 2004 was 66.0%, up from the
65.7% reported for the same period last year. When compared to the same period
last year, the gross margin for fiscal 2004 was higher due to the favorable
effects of currency fluctuations and lower manufacturing costs related to
economies of scale of higher production volumes, partially offset by the higher
third party content in Japan. Operating expenses of $79.6 million for the first nine months of fiscal 2004
increased $11.4 million, or 17%, from the $68.2 million reported for the same
period last year. As a percentage of sales, operating expenses in the first
nine months of fiscal year 2004 were 42% of sales, compared with 43% in the
same period last year. Currency fluctuations increased operating expenses by 7
percentage points for the nine months of fiscal 2004. SG&A expenses were $65.4 million, an increase of 17%, compared with the $55.8
million reported in the same period last year. The increase in expenses was
primarily due to currency fluctuations of approximately $3.9 million, higher
marketing expenses for our HPLC
product line and higher selling and marketing costs in our European and
Asia/Pacific regions. Additional expense and headcount occurred in connection
with the opening of the Companys Korean subsidiary on October 1, 2003 with
approximately 28 full-time employees added to the Companys payroll. 17




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R&D costs of $14.2 million were up 14% from the same period last year when R&D
costs were $12.4 million. However, as a percentage of sales, R&D costs were
7.5% and 8% for the nine months in fiscal years 2004 and 2003, respectively.
R&D costs in the nine months 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 $268,000 for the nine months of fiscal 2004, resulting from
losses incurred in the Companys hedging activities due to wide currency
fluctuations. Other income in fiscal 2003 was $131,000 due to the sale of
marketable equity securities partially offset by the impact of hedging
activities. The effective tax rate for the first nine 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 nine months of fiscal 2004 was $30.7 million, an
increase of 35%, compared with $22.8 million reported for the same period last
year. Diluted earnings per share for the nine months of fiscal 2004 were
$1.40, an increase of 33%, compared with $1.06 for the same period last year. Liquidity and Capital Resources At March 31, 2004, the Company had cash and cash investments of $64.5 million.
The Companys working capital was $113.8 million, up $26.0 million from the
$87.8 million reported at June 30, 2003. Cash generated by operating
activities for the nine months ended March 31, 2004 was $35.9 million compared
with $28.1 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 benefits related to stock option plans, and an increase in accounts payable
partially offset by an increase in accounts receivable and a decrease in income
taxes payable. Cash used for investing activities was $7.0 million and $5.5 million in the
nine months of fiscal 2004 and 2003, respectively. Capital
expenditures were $3.1 million and $2.7 million during the nine
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, as well as
$975,000 was used to purchase intangibles related to the acquisition of our
Korean subsidiary. Proceeds from the sale of marketable securities were
$728,000 for the nine months of fiscal 2003. 18




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Cash used for financing activities was $12.5 million and $10.5 million in the
nine months of fiscal 2004 and 2003, respectively. The increase in cash used
is primarily attributable to the repurchase of 652,700 shares of the Companys
common stock for $30.5 million in fiscal 2004 (at a average price of $46.66 per
share) compared with 526,400 shares for $15.8 million in fiscal 2003 (at an
average price of $30.09 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 $17.8 million in fiscal 2004 and $6.1
million in fiscal 2003. At March 31, 2004, the Company had utilized $2.3 million of the Companys $35.5
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. 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): Payments Due by PeriodLessThan 1
    
    1-3
    
    4-5
    
    After 5Contractual Obligations
    
    Total
    
    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. 19




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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 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. 20




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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 the Companys published product
specifications. When additional customer acceptance conditions apply, all
revenue related to the sale is deferred until acceptance is obtained. The
Companys 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. 21




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Installation and training services are not considered to be essential to the
functionality of the Companys products, and revenue related to these items is
recognized when the services are completed. The Company recognizes 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. The Company assesses 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 22




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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. 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, the Company showed continued growth in the European
market; however, a continuation of an economic downturn in any of our major
markets would likely harm its results of operations. 23




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Foreign currency fluctuations and other risks related to international
operations may adversely affect the Companys operating results. The Company derived approximately 71% of its net sales from outside North
America in the nine months ended March 31, 2004 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 its
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 the Companys 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 the
Companys results of operations. Fluctuations in the Companys quarterly operating results may cause the
Companys stock price to decline. A high proportion of the Companys costs are fixed due in part to its
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 the Companys quarterly operating results, which may in turn cause its
stock price to decline. If the Company does not introduce new products that are attractive to its
customers on a timely basis, the Companys 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 its
business plan. 24




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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 its 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 the Companys ability to ship products as needed. A prolonged
inability to obtain certain materials or components would likely reduce product
inventory, hinder sales and harm the Companys 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
Companys results of operations. The Companys executive officers and other key employees are critical to its
business, they may not remain with the Companys in the future and finding
talented replacements would be difficult. The operations of the Company 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, the Companys headquarters are located in Sunnyvale, California,
where the demand for qualified personnel is 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 the Company 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 the Companys ability to conduct its
business. 25




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The success of the Company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 the Company 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 the Company owns. In addition to the Companys patents, the Company has 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. 26




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##### Table of Contents



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 March 31, 2004, the Company had forward exchange contracts
to sell foreign currencies totaling $19.4 million dollars, including
approximately $8.1 million in Euros, $10.3 million in Japanese yen and $1.0
million 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 March 31, 2004 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 11% for the quarter and 8%
for the nine months ended March 31, 2004 compared to 10% for the quarter and 6%
for the nine months ended March 31, 2003. 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 March 31, 2004
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. 27




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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 its market exposure on these securities. A 50%
adverse change in the equity price would result in an approximate $830,000
decrease in the fair value of its marketable equity securities as of March 31,
2004. Debt and Interest ExpenseA sensitivity analysis assuming a hypothetical 10%
movement in interest rates applied to the Companys outstanding debt balance at
March 31, 2004, 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. 28




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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,
as amended), 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 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. 29




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PART II. OTHER INFORMATION 
 ITEM 2. ISSUER PURCHASES OF EQUITY SECURITIES Dionex repurchases shares of its common stock under a systematic program
to manage the dilution created by shares issued under employee stock plans and
for other purposes. This program authorizes repurchases in the open market or
in private transactions. Dionex started a series of repurchase programs in
1989, with the Board of Directors most recently authorizing in April 2002
future repurchases of an aggregate 1.5 million shares of common stock as well
as authorizing the repurchase of additional shares of common stock equal to the
number of common shares issued pursuant to the Companys employee stock plans. The following table indicates common shares repurchased and additional
shares added to the program during the three months ended March 31, 2004: ISSUER PURCHASES OF EQUITY SECURITIES Total
    
    
    
    
    
    MaximumShares
    
    
    
    
    
    Number ofPurchased
    
    Additional
    
    Shares thatTotal
    
    
    
    
    
    as Part of
    
    Shares
    
    May Yet BeNumber
    
    Avg.
    
    Publicly
    
    Authorized
    
    Purchasedof Shares
    
    Price Paid
    
    Announced
    
    for
    
    Under thePeriod
    
    Purchased
    
    per Share
    
    Program(1)
    
    Purchase (1)
    
    Program (1)at Dec. 31, 2003
    
    
    
    
    
    
    
    
    
    
    1,363,500
    
    
    
    1,178,552
    
    
    
    2,048,692Jan. 1 - 31, 2004
    
    
    33,400
    
    
    $
    52.80
    
    
    
    1,396,900
    
    
    
    100,126
    
    
    
    2,115,418Feb. 1 - 29, 2004
    
    
    191,000
    
    
    $
    53.86
    
    
    
    1,587,900
    
    
    
    138,057
    
    
    
    2,062,475Mar. 1 - 31, 2004
    
    
    92,300
    
    
    $
    52.37
    
    
    
    1,680,200
    
    
    
    23,646
    
    
    
    1,993,821
  (1)
    
    The current stock repurchase program was initiated in April
2002
with authorization to purchase 1.5 million shares plus that
number of common shares equal to the number issued pursuant to
employee stock plans subsequent to that date. 30




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##### Table of Contents



ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K  (a)
    
    Exhibits 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 April 20, 2004, the Company filed a current Report on
Form 8-K to furnish a press release announcing the financial
results for the quarter ended
March 31, 2004. 31




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##### Table of Contents



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: May 10, 2004
    
    By:
    
    /s/ Lukas BraunschweilerLukas BraunschweilerPresident, Chief Executive OfficerAnd DirectorBy:
    
    /s/ Craig A. McCollamCraig A. McCollamVice President, Finance andAdministration
 32




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##### Table of Contents



EXHIBIT INDEX ExhibitNumber
    
    Description31.1
    
    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.