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Dionex 10-Q 2009 Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 10-Q
For the quarterly period ended September 30, 2009
OR
Commission File Number 0-11250
DIONEX CORPORATION
(Exact Name of Registrant as Specified in its Charter)
(408) 737-0700
(Registrant’s Telephone Number, including Area Code) 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 þ NO o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files). YES o NO o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act) YES o NO þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of
November 5, 2009:
DIONEX CORPORATION
INDEX
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Part I. Financial Information
Item 1. Financial Statements
DIONEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) (Unaudited)
See notes to condensed consolidated financial statements.
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DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited)
See notes to condensed consolidated financial statements.
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See notes to condensed consolidated financial statements
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1. Basis of Presentation
The condensed consolidated financial statements included herein have been prepared by Dionex
Corporation, 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. These condensed
consolidated financial statements should be read in conjunction with the condensed consolidated
financial statements and the notes thereto included in our Annual Report on Form 10-K for the
fiscal year ended June 30, 2009. Unless the context otherwise requires, the terms “Dionex,” “we,”
“our” and “us” and words of similar import as used in these notes to condensed consolidated
financial statements include Dionex Corporation and its consolidated subsidiaries.
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,
2010. Separate line item disclosure of the change in prepaid income taxes has been provided in the
condensed consolidated statement of cash flows for the three months ended September 30, 2008 to
conform to the fiscal 2010 presentation. Net operating results have not been affected by this
re-classification.
2. New Accounting Pronouncements
In May 2009, the Financial Accounting Standards Board (FASB) issued an Accounting Standard Update
related to subsequent events. This accounting standard is intended to establish general standards
of the accounting for and disclosures of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. It requires the disclosure of the
date through which an entity has evaluated subsequent events and the basis for selecting that date,
that is, whether that date represents the date the financial statements were issued or were
available to be issued. The accounting standard is effective for interim or annual financial
periods ending after June 15, 2009 and was adopted by us during the quarter ended June 30, 2009.
Additional disclosures are provided in Note 17.
In April 2009, the FASB issued an Accounting Standard Update related to the accounting for assets
acquired and liabilities assumed in a business combination that arise from contingencies, which
amends the business combination accounting standard to require contingent assets acquired and
liabilities assumed to be recognized at fair value on the acquisition date if fair value can be
reasonably estimated during the measurement period. If fair value cannot be reasonably estimated
during the measurement period, the contingent asset or liability would be recognized in accordance
with the accounting standard related to contingencies and the estimation of the amount of a loss.
Further, this eliminated the specific subsequent accounting guidance for contingent assets and
liabilities from the application of the business combination accounting standard. However,
contingent consideration arrangements of an acquiree assumed by the acquirer in a business
combination would still be initially and subsequently measured at fair value. This accounting
guidance is effective for all business acquisitions occurring on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008, which began on July 1, 2009
for us. Effective July 1, 2009, we adopted the accounting standard related to assets acquired and
liabilities assumed in a business combinations.
In April 2009, the FASB issued two Accounting Standard Updates related to disclosures about the
fair value of financial instruments in interim period financial statements of publicly traded
companies and in summarized financial information required by another Accounting Standard Update.
These updates are effective for interim and annual reporting periods ending after June 15, 2009.
Effective July 1, 2009, we adopted the accounting guidance related to the fair value disclosure of
financial instruments.
In April 2009, the FASB issued two Accounting Standard Updates related to the recognition and
presentation of other-than-temporary impairments (“OTTI”), which provides operational guidance for
determining OTTI for debt securities. These updates are effective for interim and annual periods
ending after June 15, 2009. Effective July 1, 2009, we adopted the accounting guidance related to
the recognition and presentation of OTTI. The adoption of this accounting guidance did not have an
impact on our condensed consolidated financial statements.
In December 2007, the FASB issued an Accounting Standard Update related to noncontrolling interests
in subsidiaries to establish
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accounting and reporting standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary, which
is sometimes referred to as a minority interest, is a third-party ownership interest in the
consolidated entity that should be reported as a component of equity in the condensed consolidated
financial statements. Among other requirements, the new guidance requires the consolidated
statement of income to be reported at amounts that include the amounts attributable to both the
parent and the noncontrolling interest. The new guidance also requires disclosure on the face of
the consolidated statement of income of the amounts of consolidated net income attributable to the
parent and to the noncontrolling interest. This accounting standard is effective for financial
statements issued for fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008. Effective July 1, 2009, we adopted the accounting standard related to
noncontrolling interests in subsidiaries. In addition, the presentation and disclosure requirements
of the Accounting Standard Update have been applied retrospectively to our condensed consolidated
balance sheet as of June 30, 2009, our condensed consolidated statements of income and cash flows,
and our comprehensive income disclosure in Note 7 for the three months ended September 30, 2008.
In December 2007, the FASB issued a revision to a previous Accounting Standard Update related to
business combinations. The revised accounting standard expands the definition of a business
combination and requires the fair value of the purchase price of an acquisition, including the
issuance of equity securities, to be determined on the acquisition date. It also requires that all
assets, liabilities, contingent consideration and contingencies of an acquired business be recorded
at fair value at the acquisition date. In addition, the revised accounting standard now requires
that acquisition costs generally be expensed as incurred, restructuring costs generally be expensed
in periods subsequent to the acquisition date, and changes in accounting for deferred tax asset
valuation allowances and acquired income tax uncertainties after the measurement period that
impacts income tax expense. The effect of this revision applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008 with early adoption prohibited, which
began on July 1, 2009 for us. Effective July 1, 2009, we adopted the revised accounting standard
related to business combinations.
In April 2008, the FASB released an Accounting Standard Update to determine the useful life of
intangible assets, which amends the factors that should be considered in developing renewal or
extension assumptions used to determine the useful life of a recognized intangible asset under the
previously issued standard on goodwill and other intangible assets. The intent of the statement is
to improve the consistency between the useful life of a recognized intangible asset under the
accounting standard and the period of expected cash flows used to measure the fair value of the
asset under the accounting standard for business combinations and other U.S. generally accepted
accounting principles. Effective July 1, 2009, we adopted the accounting guidance related to the
useful life of certain intangible assets. The adoption did not have an impact on our condensed
consolidated financial statements.
In March 2008, the FASB issued an Accounting Standard Update related to disclosures about
derivative instruments and hedging activities. The accounting standard enhances financial
disclosure by requiring that objectives for using derivative instruments be described in terms of
underlying risk and accounting designation in the form of tabular presentation, requiring
transparency with respect to the entity’s liquidity from using derivatives, and cross-referencing
an entity’s derivative information within its financial footnotes. Effective July 1, 2009, we
adopted the accounting standard related to the disclosures about derivative instruments and hedging
activities.
In February 2007, the FASB issued an Accounting Standard Update related to the fair value option
for financial assets and financial liabilities. It permits entities to choose, at specified
election dates, to measure eligible items at fair value (or “fair value option”) and to report in
earnings unrealized gains and losses on those items for which the fair value option has been
elected. The standard also requires entities to display the fair value of those assets and
liabilities on the face of the balance sheet and establishes presentation and disclosure
requirements designed to facilitate comparisons between entities that choose different measurement
attributes for similar types of assets and liabilities. The accounting standard was effective for
us as of the first quarter of fiscal 2009. Currently, we have elected not to adopt the fair value
option under this update.
In October 2009, the FASB issued an Accounting Standard Update for revenue recognition with
multiple deliverables. This guidance eliminates the residual method under the current guidance and
replaces it with the “relative selling price” method when allocating revenue in a multiple
deliverable arrangement. The selling price for each deliverable shall be determined using vendor
specific objective evidence of selling price, if it exists, otherwise third-party evidence of
selling price. If neither exists for a deliverable, the vendor shall use its best estimate of the
selling price for that deliverable. After adoption, this guidance will also require expanded
qualitative and quantitative disclosures. This accounting guidance is effective for revenue
arrangements entered into or materially modified in fiscal years beginning on or after June 15,
2010, although early adoption is permitted. We are currently evaluating the potential impact, if
any, of the adoption of the accounting guidance on our consolidated financial position, results of
operations and cash flow.
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3. Stock-Based Compensation
We account for our stock plans by measuring the cost of employee services received in exchange for
an award of equity instruments based on the grant date fair value of the award. We have a
stock-based compensation plan (“Equity Incentive Plan”) and an employee stock purchase plan
(“ESPP”). Pursuant to the Equity Incentive Plan, we issue stock options and restricted stock units.
Generally, stock options granted to employees and non-employee directors fully vest four years from
the grant date and have a term of ten years. We recognize stock-based compensation expense over the
requisite service period of the individual grants, generally, equal to the vesting period.
Stock option activity under our Equity Incentive Plan during the three months ended September 30,
2009 was as follows:
The aggregate intrinsic values in the table above represent the total pretax intrinsic values based
on our closing stock price of $64.97
at September 30, 2009, which would have been received by the option holders had all option holders
exercised their options as of that date.
The total pre-tax intrinsic value of options exercised during the three months ended September 30,
2009 was $2.2 million.
Under our ESPP, eligible employees are permitted to have salary withholdings to purchase shares of
common stock at a price equal to 85% of the lower of the market value of the stock at the beginning
or end of each six-month offer period, subject to certain annual limitations.
Our stock-based compensation expense for the three ended September 30, 2009 and 2008 was as follows
(in thousands):
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The fair value of each option on the date of grant was estimated using the Black-Scholes-Merton
option-pricing model using a single option approach for options granted after June 30, 2005, with
the following weighted-average assumptions:
As of September 30, 2009, the unrecorded deferred stock-based compensation balance related to stock
options was $9.6 million after estimated forfeitures and will be recognized over an estimated
weighted average amortization period of 2.4 years. We did not issue any options under the Equity
Incentive Plan during the first quarter of fiscal 2010.
Determining Fair Value
Valuation and amortization method — We estimate the fair value of stock options granted using the
Black-Scholes-Merton option pricing formula and a single option award approach. This fair value is
then amortized on a straight-line basis over the requisite service periods of the awards, which is
generally the vesting period.
Expected Term — The expected term represents the period that our stock-based awards are expected
to be outstanding and was determined based on historical experience of similar awards, giving
consideration to the contractual terms of the stock-based awards, vesting schedules and
expectations of future employee behavior as influenced by changes to the terms of our stock-based
awards.
Expected Volatility — Our computation of expected volatility for the three months ended September
30, 2009 and 2008 is based on a combination of historical and market-based implied volatility.
Risk-Free Interest Rate — The risk-free interest rate used in the Black-Scholes-Merton valuation
method is based on the implied yield currently available on U.S. Treasury zero-coupon issues with
an equivalent remaining term.
Expected Dividend — The expected dividend assumption is based on our current expectations about
our anticipated dividend policy.
4. Inventories
Inventories consisted of (in thousands):
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5. Property, Plant and Equipment, Net
Property, Plant and Equipment, Net consisted of (in thousands):
6. Short-term Investments
Short-term investments are recorded at their fair value. The difference between the fair value and
amortized cost of short-term investments classified as “available-for-sale” securities is recorded
in other comprehensive income, net of deferred taxes. We do not hold any auction-rate securities.
As of September 30, 2009, short-term investments included an equity indexed derivative totaling
$452,000.
The aggregate market value, cost basis, and gross unrealized gains and losses of short-term
investments classified as “available-for-sale” securities were as follows (in thousands):
7. Comprehensive Income
Comprehensive income is the change in stockholders’ equity arising from transactions other than
investments by owners and distributions to owners. The significant component of comprehensive
income, other than net income, is the foreign currency translation adjustments. The components of
comprehensive income attributable to Dionex Corporation were as follows (in thousands):
8. Common Stock Repurchases
During the three months ended September 30, 2009, we repurchased 188,253 shares of our common stock
on the open market for approximately $11.2 million (at an average repurchase price of $59.36 per
share), compared with 201,584 shares repurchased for approximately $13.3 million (at an average
repurchase price of $66.14 per share) in the same period of the prior fiscal year.
9. Earnings per Share
Basic earnings per share attributable to Dionex Corporation are determined by dividing net income
by the weighted average number of
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common shares outstanding during the period. Diluted earnings per share attributable to Dionex
Corporation are determined by dividing net income by the weighted average number of common shares
used in the basic earnings per share calculation, plus the number of common shares that would be
issued assuming conversion of all potentially dilutive securities outstanding under the treasury
stock method.
The following table is a reconciliation of the numerators and denominators used in computing basic
and diluted earnings per share attributable to Dionex Corporation (in thousands, except per share
data):
Antidilutive common equivalent shares related to stock options are excluded from the calculation of
diluted shares. Approximately 622,493 and 455,710 shares were excluded at September 30, 2009 and
2008, respectively because they were antidilutive.
10. Acquisition
On September 22, 2009, we entered into a purchase agreement with ESA Biosciences, Inc. to acquire
certain assets and liabilities of its Life Science Tools (“LST”) and Laboratory Services business
divisions. The acquisition increased our portfolio of High Performance Liquid Chromatography
(“HPLC”) solutions and expanded our presence in the life sciences market, particularly in clinical
research applications. The purchase consideration totaled $21.6 million, consisting of $21.1
million in cash and $486,000 in assumed liabilities. The purchase price has been preliminarily
allocated to assets and liabilities acquired based upon our estimate of their fair values. Through
the date that we finalize our purchase price allocation, any changes to the preliminary fair value
estimates will be reflected in goodwill. The acquired goodwill is deductible for tax purposes and
it reflects the value that is attributable primarily to operating synergy benefits unique to us.
The impact on our result of operations as a result of this acquisition for the quarter and since
the acquisition is immaterial to our condensed consolidated financial statements..
The following table summarizes the fair value of the assets acquired and liabilities assumed at the
date of acquisition (in thousands):
Acquisition related costs totaling approximately $350,000 were charged to selling, general and
administrative expense for the three months ended September 30, 2009.
11. Goodwill and Other Intangible Assets
Information regarding our goodwill and other intangible assets reflects current foreign exchange
rates.
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The change in the carrying amount of goodwill for the three months ended September 30, 2009 was as
follows (in thousands):
Our reporting units consist of our operating segments, the Chemical Analysis Business Unit (CABU)
and the Life Sciences Business Unit (LSBU). Except for goodwill associated with the AutoTrace
acquisition that was assigned to the CABU reporting unit, all goodwill has been assigned to the
LSBU reporting unit. The evaluation of goodwill is based upon the fair value of this reporting
unit. We performed annual impairment tests on goodwill in April 2009 and determined that goodwill
was not impaired. Additionally, there was no occurrence of events indicating a possible impairment
of recorded goodwill as of September 30, 2009.
Information regarding our other intangible assets follows (in thousands):
Except for the amount allocated to acquired tradenames, which was $2.8 million as of September 30,
2009 and is not amortizable, we amortize patents and trademarks over a period of seven to sixteen
years and the remaining weighted average amortization period for this category is approximately
eleven years.
We amortize developed technology over a period of seven years based on experiences from our
historical product cycles.
We amortize customer lists over a period of two to ten years and the remaining weighted average
amortization period for this category is approximately seven years.
Amortization expense related to intangible assets was $331,553 and $284,479 for the three months
ended September 30, 2009 and 2008, respectively. The remaining estimated amortization for each of
the five fiscal years subsequent to September 30, 2009 is as follows (in thousands):
12. Warranty
Product warranties are recorded at the time revenue is recognized for certain product shipments.
Warranty expense 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 estimates, revisions to the warranty liability would be required.
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Details of the change in accrued product warranty for the three months ended September, 2009 and
2008 were as follows (in thousands):
13. Commitments and Other Contingencies
Revenues generated from international operations are generally denominated in foreign currencies.
We have entered into forward foreign exchange contracts to hedge against fluctuations of
intercompany account balances. Market value gains and losses on these hedge contracts are
substantially offset by fluctuations in the underlying balances being hedged, and the net financial
impact is not expected to be material in future periods. At September 30, 2009, we had forward
exchange contracts to sell foreign currencies totaling $18.1 million (including approximately $11.2
million in Euros, $5.2 million in Japanese yen, $0.9 million in Australian dollars and $0.8 million
in Canadian dollars). The foreign exchange contracts outstanding at the end of the period mature
within one month. Consequently, contract values and fair market values are the same. In March 2007,
we entered into a $10.0 million cross-currency swap arrangement for Japanese Yen that matures in
March 2010. Starting January 2008, we determined that this cross-currency swap qualified as a net
investment hedge. As a result, during the three months ended September 30, 2009 and 2008, we marked
to market decreases in value of $901,000 and $110,000, respectively, in accumulated other
comprehensive income as part of the foreign currency translation adjustment.
We have unsecured credit agreements with domestic and international financial institutions. The
agreements provide for revolving unsecured lines of credit that we utilize primarily for our
general corporate purposes, including stock repurchases and working capital needs. As of September
30, 2009, we had a total of $14.0 million in available lines of credit with outstanding borrowings
of $15.1 million maturing on December 31, 2009.
On July 1, 2008, we acquired a 100% ownership interest in a Swedish company, in which we previously
held a 30% equity interest with a carrying amount of $760,000 at June 30, 2008, using a combination
of cash and earn-out payment arrangements. The total purchase consideration for the incremental 70%
ownership interest was approximately $1.5 million, excluding contingent earn-out payments based on
a percentage of net income in 2009 through 2011. This acquisition allowed us to take control of our
Swedish distributor for the purpose of further expanding the business. Approximately $952,000 of
the purchase consideration was paid during the quarter ended September 30, 2008, with the remaining
$580,000 payable on July 1, 2011 and included within other long-term liabilities at September 30,
2009. There were no earn-out payments recorded for the fiscal year ending June 30, 2009.
We enter into standard indemnification agreements with many of our customers and certain other
business partners in the ordinary course of business. These agreements include provisions for
indemnifying the customer against any claim brought by a third party to the extent any such claim
alleges that our product infringes a patent, copyright or trademark, or violates any other
proprietary rights of that third party. The maximum potential amount of future payments we could be
required to make under these indemnification agreements is not estimable, however, we have not
incurred any costs to defend lawsuits or settle claims related to these indemnification agreements.
No material claims for such indemnifications were outstanding as of September 30, 2009. We have not
recorded any liabilities for these indemnification agreements at September 30, 2009 or June 30,
2009.
14. Business Segment Information
We have two operating segments, CABU and LSBU. CABU sells ion chromatography and accelerated
solvent extraction products, services and related consumables. LSBU sells high performance liquid
chromatography products, services and related consumables. These two operating segments are
aggregated into one reportable segment for financial statement purposes.
Our sales of products, installation and training services and maintenance within this reportable
segment were detailed as follows (in thousands):
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Long-lived assets consist principally of property and equipment. No single customer contributed to
more than 10% of revenue during the three months ended September 30, 2009, and revenue from
services was less than 10% of revenue during the same periods.
15. Income Taxes
As part of the process of preparing the condensed consolidated financial statements, we are
required to estimate our income taxes in each of the jurisdictions in which we operate. This
process involves estimating our actual current tax exposure and assessing changes in temporary
differences resulting from differing treatment of items, such as depreciation, amortization and
inventory reserves, for tax and accounting purposes. These differences result in deferred tax
assets and liabilities, which are included within the condensed consolidated balance sheets.
Accounting standard relating to income taxes requires that we continually evaluate the necessity of
establishing or changing a valuation allowance for deferred tax assets, depending on whether it is
more likely than not that actual benefit of those assets will be realized in future periods. We
have evaluated our deferred tax assets and concluded that it is more likely than not that the
deferred tax assets will be benefited in the future; therefore, valuation allowance is not
required. In addition, we adopted the provisions of the FASB’s accounting guidance related to the
accounting for uncertainty in income taxes. The accounting standard requires financial statement
reporting of the expected future tax consequences of uncertain tax return reporting positions on
the presumption that all relevant tax authorities possess full knowledge of those tax reporting
positions, as well as all of the pertinent facts and circumstances, but it prohibits any
discounting of any of the related tax effects for the time value of money.
Our total amount of unrecognized tax benefits as of June 30, 2009 was $14.1 million, of which $3.2
million, if recognized, would affect our effective tax rate. The liability for income taxes
associated with uncertain tax positions is classified in deferred and other income taxes payable.
For the three months ended September 30, 2009, we have recorded an increase of $668,000 in
unrecognized tax benefits as a result of our ongoing evaluation of uncertain tax positions of which
$120k if recognized would affect our effective tax rate.
We record interest and penalties related to unrecognized tax benefits in income tax expense. At
June 30, 2009, we had approximately $2.0 million accrued for estimated interest related to
uncertain tax positions. During the three months ended September 30, 2009 and 2008, we accrued a
total of $385,000 and $261,000, respectively in interest on these uncertain tax positions.
We are subject to audit by the Internal Revenue Service and the California Franchise Tax Board for
the fiscal year 2005 through the fiscal year 2008. As we have operations in most other US states,
other state tax authorities may assess deficiencies related to prior year activities; however, the
years open to assessment vary with each state. We also file income tax returns for non-US
jurisdictions; the most significant of which are Germany, Japan, the UK and Hong Kong. The years
open to adjustment for Germany, UK and Hong Kong are fiscal years 2003 through 2008. The years open
to adjustment for Japan are fiscal years 2002 through 2008.
A number of years may elapse before an uncertain tax position is audited and ultimately settled. It
is difficult to predict the ultimate outcome or the timing of resolution for uncertain tax
positions. It is reasonably possible that the amount of unrecognized tax benefits could
significantly increase or decrease within the next twelve months. These changes could result from
the completion of ongoing examinations, the expiration of the statute of limitations, or other
circumstances. At this time, an estimate of the range of reasonably possible changes cannot be
made.
16. Fair Value Measurements
Effective July 1, 2008, we adopted an Accounting Standard Update for fair value measurements for
all financial assets and liabilities. Fair value are defined as the price that would be received
from selling an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. As such, fair value is a market-based measurement that should
be determined based on assumptions that market participants would use in pricing assets or
liabilities. When determining the fair value measurements
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for assets and liabilities required or permitted to be recorded at fair value, we consider the
principal or most advantageous market in which these assets and liabilities would be transacted.
Fair value hierarchy prioritizes the inputs to fair value measurement into three levels:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities
that the reporting entity has the ability to access at the measurement date.
Level 2 inputs are those other than quoted prices included within Level 1 that are observable for
the asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for the asset or liability.
The following table summarizes our financial assets and liabilities measured at fair value on a
recurring basis as of September 30, 2009 (in thousands):
Reported as:
17. Subsequent Events
We have evaluated subsequent events through November 6, 2009, the day our condensed consolidated
financial statements for the quarter ended September 30, 2009 were issued and concluded there are
no additional adjustments to the condensed consolidated financial statements or disclosures
required.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-Looking Statements
Except for historical information contained herein, the discussion below and in the footnotes to
our financial statements contained in this Report on Form 10-Q contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), 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, uncertainties and other factors that may cause actual
results, performance or achievements, or industry results, to be materially different from any
future results, performance or achievements, or industry results, expressed or implied by such
forward-looking statements. Such risks and uncertainties include, among other things: general
economic conditions, foreign currency fluctuations, risks associated with international sales,
credit risks, fluctuations 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 under the
heading “Risk Factors.” Readers are cautioned not to place undue reliance on these forward-looking
statements that reflect management’s analysis only as of the date hereof. We undertake no
obligation to update these forward-looking statements.
Overview
During the last three quarters, we saw some decline in customer demand mainly driven by weaker
economic conditions in some countries and/or specific end-user markets. We believe our second
quarter will continue to be affected. Despite the weakness caused by the current economic
conditions, we are very pleased with our results for the first quarter. We exceeded our internal
expectations and guidance for both sales and earnings per share for the first quarter. Our gross
margin was in line with our expectations and we closely managed our operating expenses. We were
also able to complete the acquisition of certain HPLC products line from ESA Biosciences, Inc.,
which further strengthened our HPLC portfolio. We believe the acquisition expanded our life
sciences market opportunities, particularly in clinical research applications. Looking at our end
customers markets, net sales in our life sciences market were up in the first quarter compared to
the first quarter of fiscal 2009, showing growth in all of our major geographic regions. Net sales
in our environmental and food and beverage markets were flat for the quarter compared to the first
quarter of fiscal 2009, with mixed results on a geographic basis. Finally, net sales in our
chemical/petrochemical and our high purity water markets (electronics and power) were down in the
first quarter compared to the first quarter of fiscal 2009.
Looking at sales by major geographic region, net sales in North America were down slightly for the
quarter compared to the first quarter of fiscal 2009. We believe this performance in our North
American business represents a stabilization of our business in this region compared with the last
two quarters. In Europe, first quarter sales declined in both reported dollars and local currency
compared to the first quarter of fiscal 2009. We saw weakness in all of our markets except life
sciences which continued to grow. Our Asia Pacific region continued its strongest performance as
sales in this region grew in both reported dollars and local currency for the first quarter.
Results of Operations
Summary
Net sales for the first quarter of fiscal 2010 were $90.7 million, compared with $93.4 million
reported for the same period in the prior year, reflecting a decrease of 3%. Operating income for
the quarter was $16.5 million, a decrease of 15.4% over operating income for the first quarter of
fiscal 2009 of $19.5 million. Cash flow from operating activities during the quarter was $22.9
million compared with $8.7 million for the first quarter of fiscal 2009, reflecting an increase of
162%. Our gross profit margin for the quarter was 65.8%, a decrease compared to 67.1% for the same
period last year. Selling, general and administrative expenses were 39.7% of net sales during the
quarter, compared to 38.7% reported in the same period last year. Research and product development
expenses for the quarter were 7.9% of net sales, up slightly from the 7.5% reported in the same
period last year. Diluted earnings per share decreased 10.9% to $0.57 for the first quarter,
compared to $0.64 reported in the same period last year.
Net sales
Net sales for the first quarter of fiscal 2010 were $90.7 million, compared with $93.4 million
reported for the same period in the prior year, reflecting a decrease of 3%, including a $1.9
million adverse currency effect. Net sales in North America decreased by 0.4% in the first quarter
of fiscal 2010 to $25.0 million, compared to $25.1 million during the same period in the prior year
primarily due to
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lower demand from our environmental and food and beverage customers. However, this performance
showed stabilization in demand compared with the previous two quarters. Net sales in Europe
decreased by 12% to $35.1 million in the first quarter of fiscal 2010, compared to $39.9 million
during the same period in the prior year due to the challenging economic environment and adverse
currency fluctuations of $2.2 million. Excluding the impact of currency fluctuations, net sales in
Europe decreased by 7% to $37.3 million in the first quarter of fiscal 2010 due to weaknesses in
all of our markets except life sciences which continue to grow. The Asia/Pacific region continued
its strong performance as it grew 8% in reported dollars and 6% in local currency for the first
quarter compared to the first quarter of fiscal 2009. Sales growth was driven by a strong
performance in China. We saw weaker sales results in Japan and Korea compared to previous quarters,
though order flows improved in the last month of the quarter.
We are subject to the effects of foreign currency fluctuations that have an impact on net sales.
Overall, currency fluctuations decreased reported net sales for the three months ended September
30, 2009 by $1.9 million, or 2.0% compared to the same quarter last year.
Percentage changes in net sales over the corresponding period in the prior year were as indicated
in the table below:
Percentage change in net sales excluding currency fluctuations over the corresponding period in the
prior year were as indicated in the table below:
Gross margin
Gross margin for the first quarter of fiscal 2010 was 65.8%, a decrease from the 67.1% gross profit
margin reported in the first quarter last year. The difference was due to a number of factors,
including a change in the geographical mix with a weaker performance in Europe, faster HPLC sales
growth and higher deferred revenue. We expect our gross margin to be in the range of 66% to 67% for
the fiscal year 2010.
Operating expenses
Operating expenses for the first quarter of fiscal 2010 were $43.2 million, unchanged compared to
the same quarter last year. As a percentage of net sales, operating expenses were 47.6% for the
first quarter of fiscal 2010, an increase from the 46.3% of sales reported in the first quarter of
fiscal 2009. The effects of foreign currency fluctuations decreased total operating expenses by
$1.4 million, or 3.2%, for the quarter ended September 30, 2009, compared to an increase of 5.0%
during the same period in the prior year.
Selling, general and administrative (SG&A) expenses were $36.0 million for the first quarter of
fiscal 2010, compared with $36.2 million for the same quarter of fiscal 2009. As a percentage of
net sales, SG&A expenses were 39.7% in the first quarter of fiscal 2010, compared to 38.7% the same
period in fiscal 2009. Effects of foreign currency fluctuations decreased SG&A expenses by $1.2
million, or 3.3%, in the first quarter of fiscal 2010. SG&A expenses, excluding currency effects,
grew by $0.9 million, or 2.7%, compared to the first quarter of fiscal 2009, due to our continued
expansion in the Asia/Pacific region and certain one-time expenses related to our acquisition
during the quarter.
Research and product development (R&D) expenses were $7.2 million for the first quarter of fiscal
2010, an increase of $0.2 million,
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or 2.0%, from $7.0 million reported in the first quarter of fiscal 2009. As a percentage of net
sales, R&D expenses increased marginally to 7.9% in the first quarter of fiscal 2010 when compared
to the 7.5% in the first quarter of fiscal 2009.
Income taxes
The effective tax rate in the first quarter of fiscal 2010 was 36.6%, reflecting a decrease from
38.0% reported for the first quarter of fiscal 2009. The relative decrease in our tax rate was
primarily due to lower research tax credits in last fiscal year, as the federal statute had
expired. We anticipate that our tax rate for the rest of the fiscal year will be in the range of
34.0% to 35.0%.
Net income
Net income attributable to Dionex Corporation in the first quarter of fiscal 2010 decreased 12.7%
to $10.3 million, compared with $11.8 million reported for the same period last year.
Liquidity and Capital Resources
At September 30, 2009, we had cash and equivalents and short-term investments of $78.7 million. Our
working capital was $117.2 million, an increase of $21.2 million from $96.0 million reported at
September 30, 2008.
Cash generated by operating activities for the three months ended September 30, 2009 was $22.9
million, compared with $8.7 million for the same period last year. A lower level of prepaid income
taxes due to a refund of the taxes, an increase in deferred revenues due to a higher level of
uninstalled systems and software, a decrease in accounts receivable due to lower sales and higher
income taxes payable due to lower tax payments contributed to higher operating cash flows. These
changes were partially offset by a decrease to operating cash from an increase in inventory as we
prepared for higher shipments in the second quarter and a decrease in accrued liabilities for
employee compensation.
Cash used for investing activities was $23.6 million in the first three months of fiscal 2010.
Capital expenditures for the three months of fiscal 2010 were $2.8 million which included purchases
related to our general operations, expansion of our IT platform and refurbishment of a building in
Sunnyvale. Additionally, $21.1 million was paid in connection with the acquisition of the assets
and liabilities of the LST and Laboratory Services business of ESA Biosciences Inc, of which
approximately $3M was for the building in which they currently operate.
Cash provided by financing activities was $7.3 million in the three months of fiscal 2010. The cash
generated was primarily attributable to the repurchase of 188,253 shares of our common stock for
$11.2 million, offset by $3.3 million in proceeds from issuance of common stock, and $15.1 million
in proceeds from increased borrowing related to the acquisition of the assets and liabilities of
the LST and Laboratory Services business of ESA Biosciences Inc.
At September 30, 2009, we had utilized $15.1 million of our $29.1 million in committed bank lines
of credit. The borrowings were used to finance our asset acquisition from ESA Biosciences, Inc.
We believe that our cash flow from operating activities, current cash, cash equivalents and
short-term investments and the remainder of our bank lines of credit will be adequate to meet our
cash requirements for at least the next twelve months.
Contractual Obligations and Commercial Commitments
The following table summarizes our contractual obligations at September 30, 2009, and the payments
due in future periods (in thousands):
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There have been no material changes to our operating lease obligations outside ordinary business
activities since June 30, 2009. Our outstanding borrowings under our lines of credit increased to
$15.1 million at September 30, 2009 from $0.6 million at June 30, 2009. These amounts are due in a
period of less than one year.
The amounts above exclude liabilities recorded under the accounting provision related to income tax
uncertainties, as we are unable to reasonably estimate the ultimate amount or timing of settlement.
New Accounting Pronouncements
Refer to Note 2 in the Notes to Condensed Consolidated Financial Statements section.
Critical Accounting Policies and Estimates
The preparation of consolidated financial statements requires us 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 net sales and
expenses during the reporting period. We evaluate our estimates, including those related to product
returns and allowances, bad debts, inventory valuation, goodwill and other intangible assets,
income taxes, warranty and installation provisions, and contingencies on an ongoing basis.
We base our 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.
There have been no significant changes during the three months ended September 30, 2009 to the
items that we disclosed as our critical accounting policies and estimates in the Management’s
Discussion and Analysis of Financial Condition and Results of Operations section of our Annual
Report on Form 10-K for the fiscal year ended June 30, 2009.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
We are exposed to financial market risks from fluctuations in foreign currency exchange rates,
interest rates and stock prices of marketable securities. With the exception of the stock price
volatility of our marketable equity securities, we manage our exposure to these and other risks
through our regular operating and financing activities and, when appropriate, through our hedging
activities. Our policy is not to use hedges or other derivative financial instruments for
speculative purposes. We deal with a diversified group of major financial institutions to limit the
risk of nonperformance by any one institution on any financial instrument. Separate from our
financial hedging activities, material changes in foreign exchange rates, interest rates and, to a
lesser extent, commodity prices could cause significant changes in the costs to manufacture and
deliver our products and in customers’ buying practices. We have not substantially changed our risk
management practices during fiscal 2009 or the first three months of fiscal 2010 and we do not
currently anticipate significant changes in financial market risk exposures in the near future that
would require us to change our current risk management practices.
Foreign Currency Exchange. Revenues generated from international operations are generally
denominated in foreign currencies. We have entered into forward foreign exchange contracts to hedge
against fluctuations of intercompany account balances. Market value gains and losses on these hedge
contracts are substantially offset by fluctuations in the underlying balances being hedged, and the
net financial impact is not expected to be material in future periods. At September 30, 2009, we
had forward exchange contracts to sell foreign currencies totaling $18.1million (including
approximately $11.2 million in Euros, $5.2 million in Japanese yen, $0.9 million in Australian
dollars and $0.8 million in Canadian dollars). At June 30, 2009, we had forward exchange contracts
to sell foreign currencies totaling $15.2 million (including approximately $9.8 million in Euros,
$3.9 million in Japanese yen, $0.9 million in Australian dollars and $0.6 million in Canadian
dollars). The foreign exchange contracts outstanding at the end of the period mature within one
month. Consequently, contract values and fair market values are the same. At September 30, 2009 and
June 30, 2009, we have $372,000 and $57,000, respectively, in other current liabilities in the
condensed consolidated balance sheets related to the foreign currency exchange contracts. For the
three months ended September 30, 2009, we recorded realized pre-tax losses of $661,000 related to
the closed foreign exchange forward contracts. For the three months ended September 30, 2008, we
recorded realized pre-tax gains of $979,000 related to the closed foreign exchange forward
contracts.
In March 2007, we entered into a $10.0 million cross-currency swap arrangement for Japanese Yen
that matures in March 2010.
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Starting January 2008, we determined that this cross-currency swap qualified as a net investment
hedge. This derivative instrument did not qualify for net investment hedge accounting and was
deemed to be an ineffective hedge instrument because, at the inception of the hedge transaction,
there was no formal documentation of the hedging relationship and our risk management objective and
strategy for undertaking the hedge. In January 2008, we completed our formal documentation of the
hedging relationship and determined that the cross-currency swap qualified as a net investment
hedge. As a result, during the three months ended September 30, 2009 and 2008, we marked to market
decreases in value of $901,000 and $110,000, respectively, in accumulated other comprehensive
income as part of the foreign currency translation adjustment.
Interest and Investment Income. Our interest and investment income is subject to changes in the
general level of U.S. interest rates. Changes in U.S. interest rates affect the interest earned on
our cash equivalents and short-term investments. A sensitivity analysis assuming a hypothetical 10%
movement in interest rates applied to our investment balances at September 30, 2009 and June 30,
2009 indicated that such market movement would not have a material effect on our business,
operating results or financial condition. Actual gains or losses in the future may differ
materially from this analysis, depending on our actual balances and changes in the timing and
amount of interest rate movements.
Debt and Interest Expense. At September 30, 2009, we had notes payable of $15.1 million. A
sensitivity analysis assuming a hypothetical 10% movement in interest rates applied to our
outstanding debt balance at September 30, 2009, indicated that such market movement would not have
a material effect on our business, operating results or financial condition. Actual gains or losses
in the future may differ materially from this analysis, depending on changes in the timing and
amount of interest rate movements and the level of borrowings maintained by us.
ITEM 4. CONTROLS AND PROCEDURES
We carried out an evaluation, under the supervision and with the participation of our Chief
Executive Officer and Chief Financial Officer, of the effectiveness of our “disclosure controls and
procedures” (as defined in rules promulgated under the Exchange Act Rules 13a-15(e) and 15d-15(e)).
Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded
that our disclosure controls and procedures as of September 30, 2009 were effective to ensure that
information required to be disclosed by us in reports that we file or submit under the Exchange Act
is (i) recorded processed, summarized and reported within the time periods specified in the SEC’s
rules and forms and (ii) accumulated and communicated to our management, including our principal
executive and principal financial officers, to allow timely decisions regarding required
disclosures. Our disclosure controls and procedures are designed to provide reasonable assurance of
achieving their objectives and our Chief Executive Officer and Chief Financial Officer have
concluded that these controls and procedures are effective at the “reasonable assurance” level. We
believe that a control system, no matter how well designed and operated, cannot provide absolute
assurance that the objectives of the control system are met, and no evaluation of controls can
provide absolute assurance that the objectives of the control system are met, and no evaluation of
controls can provide absolute assurance that all control issues and instances of fraud, if any,
within a Company have been detected.
There were no changes in our internal control over financial reporting (as defined in Rule
13a-15(f) and 15d-15(f) of the Securities Exchange Act) during the period covered by this quarterly
report on Form 10-Q that have materially affected, or are reasonably likely to materially affect
our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1A. RISK FACTORS
You should consider carefully the following risk factors as well as other information in this
report before investing in any of our securities. If any of the following risks actually occur, our
business operating results and financial condition could be adversely affected. This could cause
the market price for our common stock to decline, and you may lose all or part of your investment.
These risk factors include any material changes to, and supersede, the risk factors previously
disclosed in our most recent annual report on Form 10-K.
A downturn in economic conditions could affect our operating results.
Our business, financial condition and results of operations have been affected by weaker global
economic conditions. These conditions resulted in reduced sales of our products in the last
quarters. In a continued economic recession or under other adverse economic conditions, our
customers may be less likely to purchase our products and vendors may be more likely to fail to
meet
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contractual terms. A further downturn in economic conditions may make it more difficult for us to
maintain and continue our revenue growth and profitability performance resulting in a material
adverse effect on our business.
Foreign currency fluctuations related to international operations may adversely affect our
operating results.
We derived over 70% of our net sales from outside the United States in the first quarter of fiscal
2010 and expect to continue to derive the majority of net sales from outside the United States for
the foreseeable future. Most of our sales outside the United States are denominated in the local
currency of our 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. In recent periods,
our results of operations have been positively affected from the depreciation of the U.S. dollar
against the Euro, the yen and several other foreign currencies, but there can be no assurance that
this positive impact will continue. In the past, our results of operations have been negatively
impacted by the appreciation of the U.S. dollar against other currencies.
Economic, political and other risks associated with international sales and operations could
adversely affect our results of operations.
Because we sell our products worldwide and have significant operations outside of the United
States, our business is subject to risks associated with doing business internationally. We
anticipate that revenue from international operations will continue to represent a majority of our
total net sales. In addition, we expect that the proportion of our employees, contract
manufacturers, suppliers, job functions and manufacturing facilities located outside the United
States will increase. Accordingly, our future results could be harmed by a variety of factors,
including:
Credit risks associated with our customers may adversely affect our financial position or result of
operations.
Because trade credit is extended to many of our customers, the current global economic condition
may adversely affect our ability to collect on accounts receivable that are owed to us. In general,
our customers are evaluated for their credit worthiness as part of our operating policy, and
letters of credit are utilized to mitigate credit risks when possible. We believe we have adopted
the appropriate operating policies to address the customer credit risk under a stable economic
environment. Nevertheless, given the current global economic situation we could experience delays
in collection on accounts receivable that are owed to us. As a result, this could adversely affect
our financial position or result of operations.
Fluctuations in worldwide demand for analytical instrumentation could affect our operating results.
The demand for analytical instrumentation products can fluctuate depending upon capital expenditure
cycles. Most companies consider our instrumentation products capital equipment and some 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.
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Fluctuations in our quarterly operating results may cause our stock price to decline.
A high proportion of our costs are fixed due in part to our significant sales, research and product
development and manufacturing costs. 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.
A significant portion of our cash position is maintained overseas.
Most of our short term debt is in the United States. While there is a substantial cash requirement
in the U.S. to fund operations and capital expenditures, service debt obligations, finance
potential acquisitions and continue authorized stock repurchases, a significant portion of our cash
is maintained and generated from foreign operations. Our financial condition and results of
operations could be adversely impacted if we are unable to maintain a sufficient level of cash flow
in the U.S. to address these requirements through cash from U.S. operations, efficient and timely
repatriation of cash from overseas and other sources obtained at an acceptable cost.
Our results of operations and financial condition will suffer if we do not introduce new products
that are attractive to our customers on a timely basis.
Our products are highly technical in nature. As a result, many of our products must be developed
months or even years in advance of the potential need by a customer. If we fail to introduce new
products and enhancements as demand arises or in advance of the competition, our products are
likely to become obsolete over time, which would harm operating results. Also, if the market is not
receptive to our newly-developed products, our results of operations would be adversely impacted
and we may be unable to recover the costs of research and product development and marketing
associated with such products.
The analytical instrumentation market is highly competitive, and our inability to compete
effectively in this market would adversely affect our results of operations and financial
condition.
The analytical instrumentation market is highly competitive and we compete with many companies on a
local and international level that are significantly larger than we are and have greater resources,
including larger sales forces and technical staff. Competitors may introduce more effective and
less costly products and, in doing so, may make it difficult for us to acquire and retain
customers. If this occurs, our market share may decline and operating results could suffer.
We may experience difficulties with obtaining components from sole- or limited-source suppliers, or
manufacturing delays, either of which could adversely affect our results of operations.
Most raw materials, components and supplies that we purchase are available from many suppliers.
However, certain items are purchased from sole or limited-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. Worldwide demand for certain components may cause the cost of
such components to rise or limit the availability of these components, which could have an adverse
effect on our results of operations.
We manufacture products in our facilities 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 equipment or other reasons, could also adversely affect
our results of operations.
Our executive officers and other key employees are critical to our business, they may not remain
with us in the future and finding talented replacements may be difficult.
Our operations require managerial and technical expertise. Each of the executive officers and key
employees is employed “at will” and may leave our employment at any time. In addition, we operate
in a variety of locations around the world where the demand for qualified personnel may be
extremely high and is likely to remain so for the foreseeable future. As a result, competition for
personnel can be intense and the turnover rate for qualified personnel may be 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. In April 2009, we hired a new President and Chief Executive Officer, Dr. Frank Witney, to
succeed Lukas Braunschweiler who had served as our President and Chief Executive Officer since
2002. The success of our business will depend in part on the
successful integration of Dr. Witney into our management team and the continued success of Dr. Witney and the
rest of our management team in developing and executing our strategic plans.
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We may be unable to protect our intellectual property rights and may face intellectual property
infringement claims.
Our success will depend, in part, on our ability to obtain patents, maintain trade secret
protection and operate without infringing the proprietary rights of third parties. We cannot be
certain that:
Furthermore, we cannot be certain that others have not or will not develop similar products,
duplicate any of our products or design around any patents issued, or that may be issued, in the
future to us or to our licensors. Whether or not patents are issued to us or to our licensors,
others may hold or receive patents which contain claims having a scope that covers products
developed by us. We could incur substantial costs in defending any patent infringement suits,
whether or not such suits have merit, or in asserting any patent rights, including those granted by
third parties. In addition, we may be required to obtain licenses to patents or proprietary rights
from third parties. There can be no assurance that such licenses will be available on acceptance
terms, if at all.
Our issued U.S. patents, and corresponding foreign patents, expire at various dates ranging from
2009 to 2029. When each of our patents expires, competitors may develop and sell products based on
the same or similar technologies as those covered by the expired patent. We have invested in
significant new patent applications, and we cannot be certain that any of these applications will
result in an issued patent to enhance our intellectual property rights.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Repurchases
We repurchased shares of our 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. We started a series of repurchase
programs in 1989 with the board of directors authorizing future repurchases of an additional 1.0
million shares of common stock in October 2008 as well as authorizing the repurchase of additional
shares of common stock equal to the number of shares of common stock issued pursuant to our
employee stock plans.
The following table indicates common shares repurchased and additional shares added to the
repurchase program during the three months ended September 30, 2009:
ISSUER PURCHASES OF EQUITY SECURITIES
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DIVIDENDS
As of September 30, 2009, we had paid no cash dividends on our common stock and we do not
anticipate doing so in the foreseeable future.
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EXHIBIT INDEX
Item 6. EXHIBITS
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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.
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EXHIBIT INDEX
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