UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended ~~September 30,~~December 31, 2009


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

Commission File Number 0-11250

DIONEX CORPORATION

(Exact Name of Registrant as Specified in its Charter)


Delaware		94-2647429

(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)


1228 Titan Way, Sunnyvale, California		94085

(Address of principal executive offices)		(Zip Code)

(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. YESþ NOo

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). YESo NOo

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):


Large accelerated filerþ	Accelerated filero	Non-accelerated filero	Smaller reporting companyo
		(Do not check if a smaller reporting company)	~~Smaller reporting company~~o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YESo NOþ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of ~~November 5, 2009:~~February 8, 2010:


CLASS		NUMBER OF SHARES

Common Stock		~~17,723,106~~17,678,505

DIONEX CORPORATION
INDEX


	Page (s)
PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements	3	3

Condensed Consolidated Balance Sheets as of ~~September 30,~~December 31, 2009 and June 30, 2009	3	3

Condensed Consolidated Statements of Income for the Three and Six Months Ended ~~September 30,~~December 31, 2009 and 2008	4	4

Condensed Consolidated Statements of Cash Flows for the ~~Three~~Six Months Ended ~~September 30,~~December 31, 2009 and 2008	6	5

Notes to Condensed Consolidated Financial Statements	7	6

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	17	16

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk	20	19

ITEM 4. Controls and Procedures		2021

PART II. OTHER INFORMATION

ITEM 1A. Risk Factors	22	20

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	25	23

ITEM 4. Submission of Matters to a Vote of Security Holders	26

ITEM 6. Exhibits	27	25

SIGNATURES		2728

Exhibit 10.2
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

Part I. Financial Information

Item 1. Financial Statements

DIONEX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)


	September 30,		June 30,		December 31,		June 30,
	2009		2009		2009		2009
ASSETS
Current assets:
Cash and cash equivalents	$	78,234	$	69,684	$	81,386	$	69,684
Short-term investments		460		641		467		641
Accounts receivable (net of allowance for doubtful accounts of $443 at September 30, 2009 and $560 at June 30, 2009)		70,267		70,535
Accounts receivable (net of allowance for doubtful accounts of $596 at December 31, 2009 and $560 at June 30, 2009)						86,000		70,535
Inventories		37,679		31,274		38,990		31,274
Deferred taxes		12,255		12,171		11,356		12,171
Prepaid expenses and other current assets		18,957		21,917		19,890		21,917

Total current assets		217,852		206,222		238,089		206,222
Property, plant and equipment, net		78,312		71,927		78,620		71,927
Goodwill		36,375		29,354		36,192		29,354
Intangible assets, net		15,548		8,506		14,962		8,506
Other assets		13,891		13,975		13,038		13,975

	$	361,978	$	329,984	$	380,901	$	329,984

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable	$	15,137	$	64
Short-term borrowings					$	13,616	$	64
Accounts payable		18,003		16,545		17,726		16,545
Accrued liabilities		31,203		31,222		35,218		31,222
Deferred revenue		24,246		22,559		28,719		22,559
Income taxes payable		9,101		4,581		8,492		4,581
Accrued product warranty		2,987		3,028		2,764		3,028

Total current liabilities		100,677		77,999		106,535		77,999
Deferred and other income taxes payable		25,627		24,348		23,230		24,348
Other long-term liabilities		3,685		3,707		6,386		3,707
Commitments and other contingencies (Note 13)
Stockholders’ equity:
Dionex Corporation stockholders’ equity
Preferred stock (par value $.001 per share; 1,000,000 shares authorized; none outstanding)		—		—		—		—
Common stock (par value $.001 per share; 80,000,000 shares authorized; issued and outstanding:
17,647,678 shares at September 30, 2009 and 17,759,690 shares at June 30, 2009)		189,674		186,649
Common stock (par value $.001 per share; 80,000,000 shares authorized; issued and outstanding: 17,638,964 shares at December 31, 2009 and 17,759,690 shares at June 30, 2009)						196,779		186,649
Retained earnings		22,385		21,459		31,440		21,459
Accumulated other comprehensive income		18,268		14,306		15,095		14,306

Total Dionex Corporation stockholders’ equity		230,327		222,414		243,314		222,414
Noncontrolling interest		1,662		1,516
Noncontrolling interests						1,436		1,516

Total stockholders’ equity		231,989		223,930		244,750		223,930

	$	361,978	$	329,984	$	380,901	$	329,984

See notes to condensed consolidated financial statements.

DIONEX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended
	December 31,
	2009			2008
Net sales	$	109,164		$	103,041
Cost of sales		36,975			33,471

Gross profit		72,189			69,570

Operating expenses:
Selling, general and administrative		40,503			36,206
Research and product development		7,654			7,451

Total operating expenses		48,157			43,657

Operating income		24,032			25,913
Interest income		32			426
Interest expense		(36	)		(160	)
Other income (expense), net		(494	)		123

Income before taxes		23,534			26,302
Taxes on income		6,614			9,176

Net income		16,920			17,126
Less: Net income attributable to noncontrolling interests		338			100

Net income attributable to Dionex Corporation	$	16,582		$	17,026


Basic earnings per share attributable to Dionex Corporation	$	0.94		$	0.95

Diluted earnings per share attributable to Dionex Corporation	$	0.92		$	0.93

Shares used in computing per share amounts:
Basic		17,654			17,912
Diluted		18,025			18,217

See notes to condensed consolidated financial statements.

DIONEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)


	Three Months Ended						Six Months Ended
	September 30,						December 31,
	2009			2008			2009			2008
Net sales	$	90,664		$	93,435		$	199,828		$	196,476
Cost of sales		31,041			30,724			68,015			64,195

Gross profit		59,623			62,711			131,813			132,281

Operating expenses:
Selling, general and administrative		35,983			36,197			76,487			72,403
Research and product development		7,172			7,029			14,825			14,480

Total operating expenses		43,155			43,226			91,312			86,883

Operating income		16,468			19,485			40,501			45,398
Interest income		83			403			115			828
Interest expense		(36	)		(218	)		(72	)		(377	)
Other income (expense), net		40			(403	)
Other expense, net								(454	)		(280	)

Income before taxes		16,555			19,267			40,090			45,569
Taxes on income		5,969			7,241			12,583			16,417

Net income		10,586			12,026			27,507			29,152
Less: Net income attributable to noncontrolling interest		250			210
Less: Net income attributable to noncontrolling interests								588			310

Net income attributable to Dionex Corporation	$	10,336		$	11,816		$	26,919		$	28,842


Basic earnings per share attributable to Dionex Corporation	$	0.58		$	0.65
Basic earnings per share							$	1.52		$	1.60

Diluted earnings per share attributable to Dionex Corporation	$	0.57		$	0.64
Diluted earnings per share							$	1.49		$	1.57

Shares used in computing per share amounts:
Basic		17,712			18,068			17,678			17,990
Diluted		18,050			18,547			18,032			18,382

See notes to condensed consolidated financial statements.

~~DIONEX CORPORATION~~
~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~
~~(In thousands)~~
~~(Unaudited)~~

Three Months Ended
September 30,
2009 2008
Cash flows from operating activities:
Net income $ 10,586 $ 12,026
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 2,478 2,320
Stock-based compensation 1,578 1,485
Provision (benefit) for bad debts (155 ) 43
Loss on disposal of fixed assets 29 34
Tax benefit related to stock transactions (165 ) (111 )
Deferred income taxes (5 ) (85 )
Changes in assets and liabilities, net of acquired assets and assumed liabilities:
Accounts receivable 2,435 978
Inventories (1,656 ) (3,960 )
Prepaid expenses and other assets 753 578
Prepaid income taxes 2,521 13
Accounts payable 783 110
Accrued liabilities (1,685 ) (3,360 )
Deferred revenue 1,101 76
Income taxes payable 4,457 (1,476 )
Accrued product warranty (173 ) 10

Net cash provided by operating activities 22,882 8,681

Cash flows from investing activities:
Purchase of marketable securities — (2,713 )
Proceeds from sale of marketable securities 232 —
Purchase of property, plant and equipment (2,751 ) (4,581 )
Purchase of business (21,100 ) (952 )

Net cash used for investing activities (23,619 ) (8,246 )

Cash flows from financing activities:
Net change in notes payable 15,075 3,265
Proceeds from issuance of common stock 3,261 1,657
Tax benefit related to stock transactions 165 111
Repurchase of common stock (11,175 ) (13,332 )
Dividends paid to noncontrolling interests (104 ) —

Net cash provided by (used for) financing activities 7,222 (8,299 )

Effect of exchange rate changes on cash 2,065 (4,712 )

Net increase (decrease) in cash and cash equivalents 8,550 (12,576 )
Cash and cash equivalents, beginning of period 69,684 75,624

Cash and cash equivalents, end of period $ 78,234 $ 63,048

Supplemental disclosures of cash flow information:
Income taxes paid $ 1,803 $ 8,325
Interest expense paid 28 202
Supplemental schedule of non-cash investing and financing activities:
Accrued purchases of property, plant and equipment 588 526
Accrued consideration of business purchase — 592
Elimination of equity interest associated with step-acquisition of business — 760

~~See notes to condensed consolidated financial statements~~

DIONEX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended
	December 31,
	2009			2008
Cash flows from operating activities:
Net income	$	27,507		$	29,152
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		5,787			4,504
Stock-based compensation		3,275			3,206
Provision for bad debts		16			92
Unrealized gain on securities		—			(2	)
Loss on disposal of fixed assets		207			133
Tax benefit related to stock transactions		(992	)		(159	)
Deferred income taxes		5			(355	)
Changes in assets and liabilities, net of acquired assets and assumed liabilities:
Accounts receivable		(14,198	)		(2,575	)
Inventories		(3,651	)		(2,795	)
Prepaid expenses and other assets		55			1,615
Prepaid income taxes		2,616			(535	)
Accounts payable		1,463			731
Accrued liabilities		5,388			1,476
Deferred revenue		5,735			711
Income taxes payable		4,742			(2,851	)
Accrued product warranty		(361	)		(224	)

Net cash provided by operating activities		37,594			32,124

Cash flows from investing activities:
Purchase of marketable securities		—			(499	)
Proceeds from sale of marketable securities		233			—
Purchase of property, plant and equipment		(6,880	)		(6,938	)
Purchase of business		(21,100	)		(5,976	)

Net cash used for investing activities		(27,747	)		(13,413	)

Cash flows from financing activities:
Net change in short-term borrowings		13,553			(293	)
Proceeds from issuance of common stock		9,514			1,951
Tax benefit related to stock transactions		992			159
Repurchase of common stock		(22,024	)		(19,269	)
Dividends paid to noncontrolling interests		(453	)		—

Net cash provided by (used for) financing activities		1,582			(17,452	)

Effect of exchange rate changes on cash		273			(5,488	)

Net increase (decrease) in cash and cash equivalents		11,702			(4,229	)
Cash and cash equivalents, beginning of period		69,684			75,624

Cash and cash equivalents, end of period	$	81,386		$	71,395

Supplemental disclosures of cash flow information:
Income taxes paid	$	8,179		$	18,219
Interest expense paid		58			351
Supplemental schedule of non-cash investing and financing activities:
Accrued purchases of property, plant and equipment		665			840
Accrued consideration of business purchase		—			657
Elimination of equity interest associated with step-acquisition of business		—			760

See notes to condensed consolidated financial statements.

DIONEX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The condensed consolidated financial statements included herein have been prepared by Dionex Corporation, 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 and six months ended ~~September 30, 2008~~December 31, 2009 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~~standard 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~~update 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

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 for the three and six months ended December 31, 2008, our condensed consolidated statement of cash flows for the six months ended December 31, 2008, and our comprehensive income disclosure in Note 7 for the three and six months ended ~~September 30,~~December 31, 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 ~~relat~~edrelated 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~~standard 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~~standard 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~~standard on our consolidated financial position, results of operations and cash flow.

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. Restricted stock units issued to non-employee directors and employees, except officers, generally vest over four years from the date of grant. Restricted stock units issued to officers generally vest over five years from the date of grant.

Stock option activity under our Equity Incentive Plan during the ~~three~~six months ended ~~September 30,~~December 31, 2009 was as follows:


						Weighted									Weighted
						Average									Average
				Weighted		Remaining		Aggregate					Weighted		Remaining		Aggregate
				Average		Contractual		Intrinsic					Average		Contractual		Intrinsic
	Options			Exercise		Term		Value		Options			Exercise		Term		Value
	Outstanding			Price		(Years)		(in 000’s )		Outstanding			Price		(Years)		(in 000’s )
Balance at June 30, 2009		1,699,640		$	53.02						1,699,640		$	53.02
Options granted		—		$	—						181,165		$	64.71
Options exercised		(52,105	)	$	42.23						(198,956	)	$	42.49
Options forfeited/canceled/expired		(13,375	)	$	69.48						(41,874	)	$	70.15

Balance at September 30, 2009		1,634,160		$	53.23		5.97	$	23,373
Balance at December 31, 2009											1,639,975		$	55.16		6.29	$	30,846

Options vested and expected to vest at September 30, 2009		1,625,535		$	53.17		5.95	$	23,329
Options vested and expected to vest at December 31, 2009											1,626,171		$	55.08		6.26	$	30,712

Exercisable at September 30, 2009		1,150,427		$	47.89		4.96	$	21,282
Exercisable at December 31, 2009											1,057,729		$	49.39		4.95	$	25,960

The aggregate intrinsic values in the table above represent the total pretax intrinsic values based on our closing stock price of ~~$64.97~~$73.88 at ~~September 30,~~December 31, 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 was $6.3 million and $8.5 million during the three and six months ended ~~September 30,~~December 31, 2009.

In October 2009, we granted a total of 16,625 restricted stock units to our nine executive officers, excluding our Chief Executive Officer. The fair value of each share on the grant date was ~~$2.2 million.~~$64.71. These restricted stock units vest over a five-year period.

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 and six months ended ~~September 30,~~December 31, 2009 and 2008 was as follows (in thousands):


	Three Months Ended						Three Months Ended						Six Months Ended
	September 30,						December 31,						December 31,
	2009			2008			2009			2008			2009			2008
Cost of sales	$	158		$	185		$	221		$	174		$	379		$	359
Selling, general and administrative expenses		1,041			864			1,124			1,111			2,165			1,975
Research and development expenses		379			436			352			436			731			872

Total stock-based compensation expenses		1,578			1,485			1,697			1,721			3,275			3,206
Tax effect on stock-based compensation		(506	)		(487	)		(584	)		(622	)		(1,090	)		(1,109	)

Net effect on net income	$	1,331		$	998		$	1,113		$	1,099		$	2,185		$	2,097

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:


	Three Months Ended						Six Months Ended
	September 30,						December 31,
	2009			2008			2009	2008
Volatility for Equity Incentive Plan		—			29	%	34%	29% – 31%
Volatility for ESPP		36	%		24	%	36%	24%
Risk-free interest rate for Equity Incentive Plan		—			3.3	%	2.5%	2.7% – 3.3%
Risk-free interest rate for ESPP		0.3	%		2.0	%	0.3	2.0%
Expected life of Equity Incentive Plan		—		4.70 years			4.70 years	4.70 years
Expected life of ESPP	6 months			6 months			6 months	6 months
Expected dividend	$	0.00		$	0.00		$0.00	$0.00

During the six months ended December 31, 2009, we granted options to purchase 181,165 shares of our common stock with an estimated fair value of $3.9 million after estimated forfeitures (with a weighted average exercise price per share of $64.71).

As of ~~September 30,~~December 31, 2009, the unrecorded deferred stock-based compensation balance related to stock options was ~~$9.6~~$16.4 million after estimated forfeitures and will be recognized over an estimated weighted average amortization period of ~~2.4~~2.7 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~~six months ended ~~September 30,~~December 31, 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):


	September 30,		June 30,		December 31,		June 30,
	2009		2009		2009		2009
Finished goods	$	23,817	$	19,070	$	25,041	$	19,070
Work in process		1,564		1,119		1,994		1,119
Raw materials		12,298		11,085		11,955		11,085

	$	37,679	$	31,274	$	38,990	$	31,274

5. Property, Plant and Equipment, Net

Property, Plant and Equipment, Net consisted of (in thousands):


	September 30,			June 30,			December 31,			June 30,
	2009			2009			2009			2009
Land	$	28,141		$	24,533		$	25,801		$	24,533
Buildings and improvements		48,298			47,060			49,350			47,060
Machinery, equipment and tooling		42,872			40,960			49,091			40,960
Furniture and fixtures		11,450			10,884			11,198			10,884
Construction-in-progress		3,897			2,408			151			2,408

		134,658			125,845			135,591			125,845
Accumulated depreciation and amortization		(56,346	)		(53,918	)		(56,971	)		(53,918	)

Property, plant and equipment, net	$	78,312		$	71,927		$	78,620		$	71,927

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~~June 30, 2009 and December 31, 2009, short-term investments included an equity indexed derivative totaling ~~$452,000.~~$633,000 and $459,000, respectively.

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):

Gross
Unrealized Fair
Cost Losses Value
September 30, 2009, Certificate of deposits $ 8 $ — $ 8
June 30, 2009, Certificate of deposits $ 8 $ — $ 8


			Gross
			Unrealized		Fair
	Cost		Losses		Value
December 31, 2009, Certificates of deposit	$	8	$	—	$	8
June 30, 2009, Certificates of deposit	$	8	$	—	$	8

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~~components of comprehensive income, other than net income, isare the foreign currency translation ~~adjustments.~~adjustments and unrealized gain (loss) on net investment hedge. The components of comprehensive income attributable to Dionex Corporation were as follows (in thousands):


	Three Months Ended						Three Months Ended						Six Months Ended
	September 30,						December 31,						December 31,
	2009			2008			2009			2008			2009			2008
Net income, as reported	$	10,336		$	11,816		$	16,582		$	17,026		$	26,918		$	28,842
Foreign currency translation adjustments, net of taxes		4,862			(10,201	)		(2,095	)		387			2,767			(9,813	)
Unrealized loss on net investment hedge		(901	)		(110	)
Unrealized gain (loss) on net investment hedge								359			(1,799	)		(542	)		(1,909	)
Unrealized gain on securities available for sale, net of taxes		1			—			—			(2	)		1			(2	)

Comprehensive income		14,298			1,505		$	14,846		$	15,612		$	29,144		$	17,118
Comprehensive income (loss) attributable to the noncontrolling interests		250			210
Comprehensive income attributable to noncontrolling interests								338			100			588			310
Dividend attributable to noncontrolling interests		(319	)		(459	)		(349	)		—			(668	)		(459	)

Comprehensive income attributable to Dionex Corporation	$	14,229		$	1,256		$	14,835		$	15,712		$	29,064		$	16,969

8. Common Stock Repurchases

During the three and six months ended ~~September 30,~~December 31, 2009, we repurchased ~~188,253~~155,565 and 343,818 shares of our common stock, respectively, on the open market for approximately ~~$11.2~~$10.9 million and $22.0 million (at an average repurchase price of $59.36 and $64.06, respectively per share), compared with ~~201,584~~120,462 and 322,046 shares ~~repurchased~~of our common stock, respectively, on the open market for approximately ~~$13.3~~$5.9 million and $19.3 million (at an average repurchase price of ~~$66.14~~$49.30 and $59.84, respectively 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

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):


	Three Months Ended				Three Months Ended				Six Months Ended
	September 30,				December 31,				December 31,
	2009		2008		2009		2008		2009		2008
Numerator:
Net income attributable to Dionex Corporation	$	10,336	$	11,816
Net income					$	16,582	$	17,026	$	26,919	$	28,842
Denominator:
Weighted average shares used to compute net income per common share — basic		17,712		18,068		17,654		17,912		17,678		17,990
Effect of dilutive stock options		338		479		371		305		354		392

Weighted average shares used to compute net income per common share — diluted		18,050		18,547		18,025		18,217		18,032		18,382

Basic earnings per share attributable to Dionex Corporation	$	0.58	$	0.65
Basic earnings per share					$	0.94	$	0.95	$	1.52	$	1.60

Diluted earnings per share attributable to Dionex Corporation	$	0.57	$	0.64
Diluted earnings per share					$	0.92	$	0.93	$	1.49	$	1.57

Antidilutive common equivalent shares related to stock options are excluded from the calculation of diluted shares. Approximately ~~622,493~~492,970 and ~~455,710~~896,878 shares were excluded at ~~September 30,~~December 31, 2009 and 2008, respectively because they were antidilutive.

10. Acquisition

On September 22, 2009, we entered into aan purchase agreement with ESA Biosciences, Inc. and related subsidiaries to acquire certain assets and liabilities of its Life Science Tools (“LST”) and Laboratory Services business divisions. The acquisition ~~increased~~was completed in order to increase 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. In three months ended December 31, 2009, the sales of ESA products were $4.1 million. In the three months ended December 31, 2009, we recorded additional $1 million in cost of sales related to the write-up of inventory. The impact on our ~~result of operations~~earnings for the three and six months ended December, 2009 as a result of ~~this acquisition for~~ the ~~quarter and since the~~ESA acquisition is immaterial to our condensed consolidated financial ~~statements..~~statements.

The following table summarizes the fair value of the assets acquired and liabilities assumed at the date of acquisition (in thousands):


Accounts receivable and prepaid assets	$	110
Inventory		3,190
Other assets		26
Property, plant, equipment		3,986
Identifiable intangible assets		7,290
Goodwill		6,984

Total assets acquired		21,586
Accounts payable and accrued liabilities		(197	)
Deferred revenue		(254	)
Warranty obligations		(35	)

Total liabilities assumed		(486	)

Total purchase price, net of liabilities assumed	$	21,100

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.

The change in the carrying amount of goodwill for the ~~three~~six months ended ~~September 30,~~December 31, 2009 was as follows (in thousands):


	Total		Total
Balance as of July 1, 2009	$	29,354	$	29,354
Translation adjustments		443		260
Additions		6,578		6,578

Balance as of September 30, 2009	$	36,375
Balance as of December 31, 2009			$	36,192

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,~~December 31, 2009.

Information regarding our other intangible assets follows (in thousands):


	As of September 30, 2009							As of June 30, 2009							As of December 31, 2009							As of June 30, 2009
	Carrying		Accumulated					Carrying		Accumulated					Carrying		Accumulated					Carrying		Accumulated
	Amount		Amortization			Net		Amount		Amortization			Net		Amount		Amortization			Net		Amount		Amortization			Net
Patents and trademarks	$	5,958	$	(2,129	)	$	3,829	$	7,088	$	(1,978	)	$	5,110	$	5,958	$	(2,279	)	$	3,679	$	7,088	$	(1,978	)	$	5,110
Developed technology		15,738		(10,613	)		5,125		11,054		(10,327	)		1,177		15,635		(10,742	)		4,893		11,504		(10,327	)		1,177
Tradenames		2,830		—			2,830		—		—			—
Trade names																2,830		—			2,830		—		—			—
Customer lists		5,121		(1,357	)		3,764		3,391		(1,172	)		2,219		5,125		(1,565	)		3,560		3,391		(1,172	)		2,219

Total	$	29,647	$	(14,099	)	$	15,548	$	21,983	$	(13,477	)	$	8,506	$	29,548	$	(14,586	)	$	14,962	$	21,983	$	(13,477	)	$	8,506

Except for the amount allocated to acquired ~~tradenames,~~trade names, which was $2.8 million as of ~~September 30,~~December 31, 2009, which has an indefinite life and thus is not ~~amortizable,~~amortized, 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~~$911,701 and ~~$284,479~~$545,511 for the ~~three~~six months ended ~~September 30,~~December 31, 2009 and 2008, respectively. The remaining estimated amortization for each of the five fiscal years subsequent to ~~September 30,~~December 31, 2009 is as follows (in thousands):


	Remaining		Remaining
	Amortization		Amortization
	Expense		Expense
2010 (remaining nine months)	$	1,984
2010 (remaining six months)			$	1,690
2011		2,681		2,682
2012		2,407		2,440
2013		1,727		1,795
2014		1,217		1,214
Thereafter		2,702		2,311

Total	$	12,718	$	12,132

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.

Details of the change in accrued product warranty for the ~~three~~six months ended ~~September,~~December 31, 2009 and 2008 were as follows (in thousands):

Actual
Balance Provision Other Warranty Balance
Beginning For Adjustments Costs End of
Of Period Warranties Accounts (1) Incurred Period
Accrued Product Warranty
Three Months Ended:
September 30, 2009 $ 3,028 $ 881 $ 98 $ (1,020 ) $ 2,987
September 30, 2008 $ 3,444 $ 1,342 $ (206 ) $ (1,325 ) $ 3,255


								Actual
	Balance		Provision		Other			Warranty			Balance
	Beginning		For		Adjustments			Costs			End of
	Of Period		Warranties		Accounts (1)			Incurred			Period
Accrued Product Warranty
Six Months Ended:
December 31, 2009	$	3,028	$	1,595	$	61		$	(1,920	)	$	2,764
December 31, 2008	$	3,444	$	2,337	$	(269	)	$	(2,517	)	$	2,995


(1)		Effects of exchange rate changes

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,~~December 31, 2009, we had forward exchange contracts to sell foreign currencies totaling ~~$18.1~~$17.1 million (including approximately ~~$11.2~~$8.6 million in Euros, ~~$5.2~~$6.5 million in Japanese yen, ~~$0.9~~$1.0 million in Australian dollars and ~~$0.8~~$1.0 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~~was originally scheduled to mature in March 2010. The arrangement was extended to March 2012 in December 2009. Starting January 2008, we determined that this cross-currency swap qualified as a net investment hedge. As a result, during the three and six months ended ~~September 30,~~December 31, 2009, we marked to market an increase in value of $359,000 and a decrease in value of $542,000, respectively, in accumulated other comprehensive income as part of the foreign currency translation adjustment. During the three and six months ended December 31, 2008, we marked to market ~~decreases~~a decrease in value of ~~$901,000~~$1.8 million and ~~$110,000,~~$1.9 million, respectively, which is reported 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,~~December 31, 2009, we had a total of ~~$14.0~~$15.4 million in available lines of credit with outstanding borrowings of ~~$15.1~~$13.6 million maturing on December 31, 2011 at an annual interest rate of 1.73%. In addition, we also had $435,000 in standby lines of credit as of Decemeber 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~~$1.4 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,~~December 31, 2008, with the remaining ~~$580,000~~$448,000 payable on July 1, 2011 and included within other long-term liabilities at ~~September 30,~~December 31, 2009. There were no earn-out payments recorded for the fiscal year ~~ending~~ended June 30, 2009 or the six months ended December 31, 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~~indemnification were outstanding as of ~~September 30,~~December 31, 2009. We have not recorded any liabilities for these indemnification agreements at ~~September 30,~~December 31, 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):


	Three Months Ended				Six Months Ended				Three Months Ended
	September 30,				December 31,				December 31,
	2009		2008		2009		2008		2009		2008
Products	$	79,282	$	81,834	$	172,892	$	172,092	$	93,610	$	90,258
Installation and Training Services		2,480		2,608		6,170		5,877		3,691		3,269
Maintenance		8,902		8,993		20,766		18,507		11,863		9,514

	$	90,664	$	93,435	$	199,828	$	196,476	$	109,164	$	103,041

Long-lived assets consist principally of property and equipment. No single customer contributed to more than 10% of revenue during the three and six months ended ~~September 30,~~December 31, 2009 and 2008, and revenue from services was less than 10% of revenue during the same ~~periods.~~period.

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~~standards relating to income taxes ~~requires~~require 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 as of December 31, 2009 and concluded that it is more likely than not that the deferred tax assets will be ~~benefited~~realized in the future; therefore, the establishment or modification of a valuation allowance is not required. In addition, we adopted the provisions of the FASB’s accounting ~~guidance~~standard 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 December 31, 2009 was $12.2 million, of which $2.2 million, if recognized, would affect our effective tax rate compared to $14.1 million on June 30, 2009, ~~was $14.1 million,~~ of which $3.2 million, if recognized, would ~~affect~~have affected 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,~~December 31, 2009, we had approximately ~~$2.0~~$2.1 million accrued for estimated interest related to uncertain tax ~~positions.~~positions compared to approximately $2.0 million on June 30, 2009. During the ~~three~~six months ended ~~September 30,~~December 31, 2009 and 2008, we accrued a total of ~~$385,000~~$401,000 and ~~$261,000,~~$495,000, respectively in interest on these uncertain tax positions. At December 31, 2009, we had approximately $98,000 accrued for estimated penalties related to uncertain tax positions compared to approximately $78,000 on June 30, 2009. During the six months ended December 31, 2009, we accrued a total of $29,000 in penalties on these uncertain tax positions. During the three months ended December 31, 2009, we recognized tax benefits of $900,000 in our income tax expense as a result of a favorable tax audit settlement.

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 are for the fiscal years 2002 through 2008, fiscal years 2003 through 2008 for the UK and Hong Kong ~~are fiscal years 2003 through 2008. The years open to adjustment for Japan are~~and fiscal years 2002 through ~~2008.~~2008 for Japan.

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

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,~~December 31, 2009 (in thousands):

Fair Value Measurements at September 30, 2009
Quoted Prices Significant
In Active Other Significant
Markets or Observable Unobservable
Identical Assets Inputs Inputs
Description Total (Level 1) (Level 2) (Level 3)
Assets:
Money market $ 7,151 $ 7,151 $ — $ —
Equity indexed derivatives 452 — 452 —

Total $ 7,603 $ 7,151 $ 452 $ —

~~Reported as:~~


			Fair Value Measurements at September 30, 2009								Fair Value Measurements at December 31, 2009
			Quoted Prices		Significant						Quoted Prices		Significant
			In Active		Other		Significant				In Active		Other		Significant
			Markets or		Observable		Unobservable				Markets or		Observable		Unobservable
			Identical Assets		Inputs		Inputs				Identical Assets		Inputs		Inputs
Description	Total		(Level 1)		(Level 2)		(Level 3)		Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents (1)	$	7,151	$	7,151	$	—	$	—
Short-term investments		452		—		452		—
Money market (reported as cash equivalents)									$	2,021	$	2,021	$	—	$	—
Equity indexed derivatives (reported as short-term investments)										459		—		459		—

Total	$	7,603	$	7,151	$	452	$	—	$	2,480	$	2,021	$	459	$	—

17. Subsequent Events

We have evaluated subsequent events through ~~November 6, 2009,~~February 9, 2010, the day our condensed consolidated financial statements for the quarter ended ~~September 30,~~December 31, 2009 were issued and concluded there are no additional adjustments to the condensed consolidated financial statements or disclosures required.

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.~~second quarter of fiscal 2010, especially given the current economic environment. We ~~exceeded our internal expectations and guidance~~reported the highest quarterly sales in the history of the Company. We also reported good earnings for ~~both~~the quarter, driven by solid gross margins, excluding the one-time charge in costs of sales, and ~~earnings per share for~~a discrete tax benefit. We managed operating expenses very effectively. An increase in operating expenses from the ~~first quarter. Our gross margin~~second quarter of fiscal 2009 to the second quarter of 2010 was ~~in line~~due primarily to the ongoing expenses associated with our ~~expectations and we closely managed our operating expenses. We were also able to complete the~~ acquisition of certain ~~HPLC products line~~assets and liabilities from ESA Biosciences, Inc. (“ESA”), ~~which further strengthened~~costs related to our ~~HPLC portfolio. We believe~~Oracle conversion in Europe and the ~~acquisition expanded our life sciences market opportunities, particularly in clinical research applications.~~effect of currency fluctuations. Looking at our end ~~customers~~customer markets, ~~net sales in~~global demand from our environmental, life sciences, ~~market were~~food and beverage and electronics customers was up ~~in the first~~this quarter as compared to the ~~first~~second quarter of fiscal 2009. Customer demand in our chemical/petrochemical and power markets was down this quarter as compared to the second quarter of fiscal 2009 ~~showing growth in all~~as a result of ongoing weaker end-customer demand reflecting current economic conditions. While we continue to experience the impact of global economic weakness on our ~~major geographic regions. Net sales in our environmental and food and beverage markets were flat for~~business, we believe that we will see some improvement as we enter the ~~quarter compared to the first quarter~~second half of fiscal ~~2009, with mixed results on a geographic basis. Finally, net sales~~2010 and expect to see an increase 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.~~organic revenue growth rates.

Looking at sales by major geographic region, net sales in North America were ~~down slightly~~up for the quarter with the contribution of ESA products compared to the ~~first~~second quarter of fiscal 2009. ~~We believe this performance in our~~Our North American business ~~represents a stabilization of~~continues to be affected by the economic weakness as certain customer delay purchases, in particular with our ~~business in this region compared with the last two quarters.~~chemical/petrochemical, food and beverage and power customers. In Europe, ~~first~~second quarter sales ~~declined~~increased in ~~both~~ reported dollars and declined in local currency compared to the ~~first~~second quarter of fiscal 2009. We saw weakness in all of our markets in Europe except life sciences which continued to grow. Our Asia Pacific region continued its ~~strongest~~solid performance as sales in this region grew in both reported dollars and local currency for the ~~first quarter.~~second quarter this year as compared to the second quarter of fiscal 2009.

Results of Operations

Summary

Net sales for the ~~first~~second quarter of fiscal 2010 were ~~$90.7~~$109.2 million, compared with ~~$93.4~~$103.0 million reported for the same period in the prior year, reflecting ~~a decrease~~an increase of 3%6.0%. Operating income for the quarter was ~~$16.5~~$24.0 million, a decrease of ~~15.4%~~7.3% over operating income for the ~~first~~second quarter of fiscal 2009 of ~~$19.5~~$25.9 million. Cash flow from operating activities ~~during~~for the ~~quarter~~six months ended December 31, 2009 was ~~$22.9~~$37.6 million compared with ~~$8.7~~$32.1 million for the ~~first~~second quarter of fiscal 2009, reflecting an increase of ~~162%~~17.1%. Our gross profit margin for the quarter was ~~65.8%~~66.1%, a decrease of 1.4% compared to ~~67.1%~~67.5% for the same period last year. Selling, general and administrative expenses were ~~39.7%~~37.1% of net sales during the quarter, compared to ~~38.7%~~35.1% reported in the same period last year. Research and product development expenses for the quarter were ~~7.9%~~7.0% of net sales, updown slightly from the ~~7.5%~~7.2% reported in the same period last year. Diluted earnings per share decreased ~~10.9%~~1.1% to ~~$0.57~~$0.92 for the ~~first~~second quarter, compared to ~~$0.64~~$0.93 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~~increased by ~~0.4%~~5.5% in the ~~first~~second quarter of fiscal 2010 to ~~$25.0~~$28.5 million, compared to ~~$25.1~~$27.0 million during the same period in the prior year primarily due to

~~lower~~ the sales contribution of ESA products. Net sales in North America increased by 2.7% in the six months ended December 31, 2009 to $53.5 million compared to $52.1 million during the six months ended December 31, 2008 due to the continuing weak customer demand offset by sales from ~~our environmental and food and beverage customers. However, this performance showed stabilization in demand compared with the previous two quarters.~~ESA products. Net sales in Europe ~~decreased~~increased by ~~12%~~3.9% to ~~$35.1~~$45.1 million in the ~~first~~second quarter of fiscal 2010, compared to ~~$39.9~~$43.4 million during the same period in the prior year due to the challenging economic environment ~~and adverse~~offset by favorable currency ~~fluctuations of $2.2 million.~~fluctuations. Excluding the impact of currency fluctuations, net sales in Europe decreased by ~~7% to $37.3 million~~7.9% in the ~~first~~second quarter of fiscal 2010 compared to the same period in the prior year due to weaknesses in all of our markets except life sciences which continue to grow. Net sales decreased 3.8% in the six months ended December 31, 2009 to $80.1 million compared to $83.4 million during the six months ended December 31, 2008, driven by continued weakness in all markets for the region partially offset by a favorable currency impact. The Asia/Pacific region continued its ~~strong~~solid performance as it grew 8%9.0% in reported dollars and 6%2.3% in local currency for the ~~first~~second quarter compared to the ~~first~~second quarter of fiscal 2009. Sales growth was driven by a strong performance in ~~China. We saw weaker~~Japan, Korea and India, specifically. Demand from our environmental and food and beverage customer was up for the quarter, partially offset by continued weakness in chemical/petrochemical and power markets demand. Net sales ~~results~~increased 8.5% in ~~Japan and Korea~~the six months ended December 31, 2008 to $66.2 million compared to ~~previous quarters, though order flows improved~~$61.0 million in the ~~last month~~six months ended December 31, 2008 as a result of ~~the quarter.~~strong sales growth in China, Japan, Korea and India.

We are subject to the effects of foreign currency fluctuations that have an impact on net sales. Overall, currency fluctuations ~~decreased~~increased reported net sales for the three months ended ~~September 30,~~December 31, 2009 by ~~$1.9~~$7.5 million, ~~or 2.0%~~ compared to a decrease of $4.1 million in 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:


	~~Three Months~~
	~~Ended~~
	~~September 30, 2009~~
~~Percentage change in net sales~~
~~Total:~~		~~-3.0~~	%
~~By geographic region:~~
~~North America~~		~~-0.4~~	%
~~Europe~~		~~-12.3~~	%
~~Asia/Pacific~~		~~7.9~~	%


	Three Months		Six Months
	Ended		Ended
	December 31, 2009		December 31, 2009
Percentage change in net sales
Total:		5.9%		1.7%
By geographic region:
North America		5.5%		2.7%
Europe		3.9%		-3.8%
Asia/Pacific		9.0%		8.5%

Percentage change in net sales excluding currency fluctuations over the corresponding period in the prior year were as indicated in the table below:


	~~Three Months~~
	~~Ended~~
	~~September 30, 2009~~
~~Percentage change in net sales excluding currency fluctuations~~
~~Total:~~		~~-1.0~~	%
~~By geographic region:~~
~~North America~~		~~0.5~~	%
~~Europe~~		~~-6.7~~	%
~~Asia/Pacific~~		~~5.8~~	%


	Three Months		Six Months
	Ended		Ended
	December 31, 2009		December 31, 2009
Percentage change in net sales excluding currency fluctuations
Total:		-1.3%		-1.2%
By geographic region:
North America		4.9%		2.8%
Europe		-7.9%		-7.3%
Asia/Pacific		2.3%		3.9%

Gross margin

Gross margin for the ~~first~~second quarter of fiscal 2010 was ~~65.8%~~66.1%, a decrease from the ~~67.1%~~67.5% gross profit margin reported in the ~~first~~second quarter last year. The difference was due to a number of factors, ~~including~~primarily a ~~change in~~$1 million charge from the ~~geographical mix~~inventory cost write-up associated with ~~a weaker performance in Europe, faster HPLC sales growth and higher deferred revenue.~~the ESA acquisition. We expect our gross margin to be in the range of 66% to 67% for the fiscal ~~year~~ 2010.

Operating expenses

Operating expenses of $48.2 million for the ~~first~~second quarter of fiscal 2010 ~~were $43.2~~increased by $4.5 million, ~~unchanged compared to~~or 10.3%, from the $43.7 million reported in the same quarter last year. As a percentage of net sales, operating expenses were ~~47.6%~~44.1% for the ~~first~~second quarter of fiscal 2010, an increase from the ~~46.3%~~42.4% of sales reported in the ~~first~~second quarter of fiscal 2009. The effects of foreign currency fluctuations ~~decreased~~increased total operating expenses by ~~$1.4~~$2.2 million, or ~~3.2%~~5.2%, for the quarter ended ~~September 30,~~December 31, 2009, compared to ~~an increase~~a decrease of ~~5.0%~~3.3% during the same period in the prior year. The $2.3 million increase in operating expenses, excluding currency effects, was attributable primarily to $1.6 million of additional cost in Europe primarily associated with the implementation of our European shared service center (“SSC”) and the Oracle Enterprise Resource Planning (“ERP”) system and the additional operating expenses related to our ESA business of $1.8 million partially offset by lower spending for sales and marketing and research and development. Operating expenses for the six months ended December 31, 2009 were $91.3 million, representing a 5.1% increase over the corresponding period during the prior year of $86.9 million mainly due to the SSC implementation efforts.

Selling, general and administrative (SG&A) expenses were ~~$36.0~~$40.5 million for the ~~first~~second 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%~~37.1% in the ~~first~~second quarter of fiscal 2010, compared to ~~38.7%~~35.1% the same period in fiscal 2009. Effects of foreign currency fluctuations ~~decreased~~increased SG&A expenses by ~~$1.2~~$2.3 million, or ~~3.3%~~6.4%, in the ~~first~~second quarter of fiscal 2010. SG&A expenses, excluding currency effects, grew by ~~$0.9~~$2.0 million, or ~~2.7%~~5.5%, compared to the ~~first~~second quarter of fiscal 2009, due to our ~~continued expansion~~implementation of the European SSC and ERP roll-out and ESA operating expenses. SG&A expenses for the six month period ended December 31, 2010 increased to $76.5 million compared to $72.4 million in the ~~Asia/Pacific region~~same period of fiscal 2009. The increase was due to currency fluctuations, the implementation of Oracle and ~~certain one-time~~the operating expenses ~~related to~~of our ~~acquisition during the quarter.~~ESA business.

Research and product development (R&D) expenses were ~~$7.2~~$7.7 million for the ~~first~~second quarter of fiscal 2010, an increase of $0.2 million,

or ~~2.0%~~2.7%, from ~~$7.0~~$7.5 million reported in the ~~first~~second quarter of fiscal 2009. As a percentage of net sales, R&D expenses ~~increased~~decreased marginally to ~~7.9%~~7.0% in the ~~first~~second quarter of fiscal 2010 when compared to the ~~7.5%~~7.2% in the ~~first~~second quarter of fiscal 2009. R&D expenses for the six months period ended December 31, 2009 increased 2.1% to $14.8 million from $14.5 million in the same period of fiscal 2009 mainly due to the increased project material costs of our new product pipeline.

Income taxes

The effective tax rate in the ~~first~~second quarter of fiscal 2010 was ~~36.6%~~28.1%, reflecting a decrease from ~~38.0%~~35.0% reported for the ~~first~~second quarter of fiscal 2009. The relative decrease in our tax rate was primarily due to ~~lower research~~the favorable settlement of a tax ~~credits~~audit of approximately $900,000 and changes in ~~last fiscal year, as~~mix of taxable income between the ~~federal statute had expired.~~various tax jurisdictions. We anticipate that our tax rate for the rest of the fiscal year will be in the range of ~~34.0%~~33.0% to ~~35.0%~~34.0%.

Net income

Net income ~~attributable to Dionex Corporation~~ in the ~~first~~second quarter of fiscal 2010 decreased ~~12.7%~~2.9% to ~~$10.3~~$16.5 million, compared with ~~$11.8~~$17.0 million reported for the same period last year.

Liquidity and Capital Resources

At ~~September 30,~~December 31, 2009, we had cash and equivalents and short-term investments of ~~$78.7~~$81.9 million. Our working capital was ~~$117.2~~$131.6 million, an increase of ~~$21.2~~$27.4 million from ~~$96.0~~$104.2 million reported at ~~September 30,~~December 31, 2008.

Cash generated by operating activities for the ~~three~~six months ended ~~September 30,~~December 31, 2009 was ~~$22.9~~$37.6 million, compared with ~~$8.7~~$32.1 million for the same period last year. A ~~lower~~higher level of ~~prepaid~~ income taxes payable due to ~~a refund of the taxes,~~lower payments made in fiscal 2010, an increase in deferred revenues due to a higher level of uninstalled systems and ~~software, a decrease~~service contracts sold at calendar year end, and an increase in accrued liabilities and accounts ~~receivable due to lower sales and higher income taxes~~ payable ~~due to lower tax payments~~ contributed to a higher operating cash ~~flows.~~flow. These changes were partially offset by ~~a decrease to operating cash from~~ an increase in ~~inventory as we prepared for~~accounts receivable due to higher ~~shipments in~~sales toward the ~~second quarter and a decrease in accrued liabilities for employee compensation.~~end of quarter.

Cash used for investing activities was ~~$23.6~~$27.7 million in the first ~~three~~six months of fiscal 2010. Capital expenditures for the ~~three~~first six months of fiscal 2010 were ~~$2.8~~$6.9 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~~$3.0 million was for the building in which they currently operate.

Cash provided by financing activities was ~~$7.3~~$1.6 million in the ~~three~~first six months of fiscal 2010. The cash generated was primarily attributable to the repurchase of ~~188,253~~343,818 shares of our common stock for ~~$11.2~~$22.0 million, offset by ~~$3.3~~$9.5 million in proceeds from issuance of common stock, and ~~$15.1~~$13.6 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.~~ESA.

At ~~September 30,~~December 31, 2009, we had utilized ~~$15.1~~$13.6 million of our ~~$29.1~~$29.0 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,~~December 31, 2009, and the payments due in future periods (in thousands):


	Payments Due by Period										Payments Due by Period
			Less										Less
			Than 1		1-3		4-5		After 5				Than 1		1-3		4-5		After 5
Contractual Obligations	Total		Year		Years		Years		Years		Total		Year		Years		Years		Years
Short-Term Borrowings	$	15,137	$	15,137	$	—	$	—	$	—	$	13,616	$	13,616	$	—	$	—	$	—
Long-Term Debt Associated with Business Purchase		580		—		580		—		—		448		—		448		—		—
Operating Lease Obligations		14,637		5,796		4,754		1,549		2,538		13,501		5,515		4,261		1,345		2,380

Total	$	30,354	$	20,933	$	5,334	$	1,549	$	2,538	$	27,565	$	19,131	$	4,709	$	1,345	$	2,380

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~~$13.6 million at ~~September 30,~~December 31, 2009 from ~~$0.6 million~~$64,000 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.~~contained elsewhere in this Quarterly Report on Form 10-Q.

Critical Accounting Policies and Estimates

The preparation of our condensed 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,~~December 31, 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~~six 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,~~December 31, 2009, we had forward exchange contracts to sell foreign currencies totaling ~~$18.1million~~$17.1 million (including approximately ~~$11.2~~$8.6 million in Euros, ~~$5.2~~$6.5 million in Japanese yen, ~~$0.9~~$1.0 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$1.0 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~~was originally scheduled to mature in March 2010.

The arrangement was extended to March 2012 in December 2009. 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 and six months ended ~~September 30,~~December 31, 2009, we marked to market an increase in value of $359,000 and a decrease of $542,000, respectively, in accumulated other comprehensive income as part of the foreign currency translation adjustment. During the three and six months ended December 31, 2008, we marked to market ~~decreases~~a decrease in value of ~~$901,000~~$1.8 million and ~~$110,000,~~$1.9 million, respectively, which is reported 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,~~December 31, 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,~~December 31, 2009, we had ~~notes payable~~short-term borrowings of ~~$15.1~~$13.6 million. A sensitivity analysis assuming a hypothetical 10% movement in interest rates applied to our outstanding debt balance at ~~September 30,~~December 31, 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,~~December 31, 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~~During the quarter ended December 31, 2009, we completed the European phase of our SSC and global ERP implementation. As a result, we implemented the central oversight of our European operations and corresponding changes into our overall 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~~10-Q. These changes had a material impact on 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.~~10-K and our quarterly report for the first quarter of fiscal 2010.

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 few 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

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.

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.

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~~second 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:

interruption to transportation flows for delivery of parts to us and finished goods to our customers;

changes in a specific country’s or region’s economic, political or other conditions;

trade protection measures and import or export licensing requirements;

negative consequences from changes in tax laws;

difficulty in staffing and managing widespread operations;

differing labor regulations;

	•		~~interruption to transportation flows for delivery of parts to us and finished goods to our customers;~~

	•		~~changes in a specific country’s or region’s economic, political or other conditions;~~

	•		~~trade protection measures and import or export licensing requirements;~~

	•		~~negative consequences from changes in tax laws;~~

	•		~~difficulty in staffing and managing widespread operations;~~

	•		~~differing labor regulations;~~

	•		~~differing protection of intellectual property;~~

	•		~~unexpected changes in regulatory requirements; and~~

	•		~~geopolitical turmoil, including terrorism and war.~~

differing protection of intellectual property;

unexpected changes in regulatory requirements; and

geopolitical turmoil, including terrorism and war.

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.~~

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.

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:

	•		~~any of our pending patent applications or any future patent applications will result in issued patents;~~

	•		~~the scope of our patent protection will exclude competitors or provide competitive advantages to us;~~

	•		~~any of our patents will be held valid if subsequently challenged; or~~

	•		~~others will not claim rights in or ownership of the patents and other proprietary rights held by us.~~

any of our pending patent applications or any future patent applications will result in issued patents;

the scope of our patent protection will exclude competitors or provide competitive advantages to us;

any of our patents will be held valid if subsequently challenged; or

others will not claim rights in or ownership of the patents and other proprietary rights held by us.

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,~~December 31, 2009:

ISSUER PURCHASES OF EQUITY SECURITIES

Total
Number of Maximum
Shares Number of
Purchased Additional Shares that
Total Avg. as Part of Shares May Yet Be
Number Price Publicly Authorized Purchased
of Shares Paid Announced for Under the
Period Purchased per Share Program Purchase (1) Program (2)
July 1 to July 31, 2009 — — 7,814,025 — 1,141,058
August 1 to August 31, 2009 101,586 $ 58.46 7,915,611 29,611 1,069,083
September 1 to September 30, 2009 86,667 $ 60.40 8,002,278 46,630 1,029,046

Total 188,253 $ 59.36 8,002,278 76,241 1,029,046


					Total
					Number of				Maximum
					Shares				Number of
					Purchased		Additional		Shares that
	Total		Avg.		as Part of		Shares		May Yet Be
	Number		Price		Publicly		Authorized		Purchased
	of Shares		Paid		Announced		for		Under the
Period	Purchased		per Share		Program		Purchase (1)		Program (2)
October 1 – 31, 2009		—		—		8,002,278		11,961		1,041,007
November 1 – 30, 2009		78,765	$	10.78		8,081,043		103,432		1,065,674
December 1 – 31, 2009		76,800	$	10.96		8,157,843		31,458		1,020,332

Total		155,565	$	11.16		8,157,843		146,851		1,020,332


(1)		The number of shares represents the number of shares issued pursuant to employee stock plans that are authorized for purchase.

(2)		The number of shares includes (i) 1.0 million shares of common stock approved for repurchases in October 2008, plus (ii) that


		number of shares of common stock equal to the number of shares issued pursuant to employee stock plans subsequent to October 2008 minus the number of shares repurchased, plus (iii) the number of shares remaining from the repurchase authorization in August 2006.

DIVIDENDS

As of ~~September 30,~~December 31, 2009, we had paid no cash dividends on our common stock and we do not anticipate doing so in the foreseeable future.

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

The 2009 Annual Meeting of Stockholders was held on October 26, 2009. The six persons named below were elected as proposed in the proxy statement pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, to serve as directors until our Annual Meeting of Stockholders in 2010 and until their successors are duly elected and qualified. There were 16,230,962 shares of Dionex common stock entitled to vote at the Annual Meeting of Stockholders. The voting regarding each nominee was as follows:


	For		Withheld
David L. Anderson		15,812,893		418,069
A. Blaine Bowman		15,800,382		430,580
Frank Witney		15,812,106		418,856
Roderick McGeary		12,138,813		4,092,149
Ricardo Pigliucci		15,826,277		404,685
Michael W. Pope		15,850,223		380,739

The other matter voted upon at the Annual Meeting and the results of the voting with respect to such matter were as follows:

1. To ratify the selection of Deloitte & Touche LLP as the independent auditors of Dionex for the fiscal year ending June 30, 2010.


For	Against	Abstained	Broker Non-votes
16,057,591	149,552	23,819	0

EXHIBIT INDEX

Item 6. EXHIBITS

Exhibit
Number Description Reference
3.1 Restated Certificate of Incorporation, filed December 12, 1988 (1 )

3.2 Certificate of Amendment of Restated Certificate of Incorporation, filed December 1, 1999 (Exhibit 3.2) (11 )

3.3 Amended and Restated Bylaws, dated August 6, 2008 (Exhibit 99.1) (4 )

*10.1 Medical Care Reimbursement Plan as amended October 30, 2007 (Exhibit 10.1) (7 )

10.2 Credit Agreement dated November 13, 2000 between Wells Fargo Bank and Dionex Corporation (Exhibit 10.15) (3 )

10.3 First amendment to Credit Agreement dated November 13, 2000 between Wells Fargo Bank and Dionex Corporation (Exhibit 10.17) (5 )

*10.4 Dionex Corporation 2004 Equity Incentive Plan, as amended October 2007 (Exhibit 10.1) (12 )

*10.5 Form of Stock Option Agreement for non-employee directors (Exhibit 10.5) (13 )

*10.6 Form of Stock Option Agreement for other than non-employee directors (Exhibit 10.6) (13 )

*10.7 Form of Stock Unit Award Agreement for non-employee directors (Exhibit 10.2) (12 )

*10.8 Form of International Stock Option Agreement (Exhibit 10.8) (7 )

*10.9 Employee Stock Participation Plan (Exhibit 10.13) (6 )

10.10 Second amendment to Credit Agreement dated November 13, 2000 between Wells Fargo Bank and Dionex Corporation (Exhibit 10.1) (8 )

*10.11 Change in Control Severance Benefit Plan, as amended October 26, 2009 (Exhibit 99.1) (2 )

10.12 Third amendment to Credit Agreement dated December 1, 2006 between Wells Fargo Bank and Dionex Corporation (Exhibit 10.8) (10 )

*10.13 Form of Stock Unit Award Agreement for U.S. employees (Exhibit 10.9) (9 )

*10.14 Form of Stock Unit Award Agreement for International employees (Exhibit 10.10) (9 )

*10.15 Form of Indemnification Agreement (Exhibit 10.1) (14 )

*10.16 Management Incentive Bonus Plan dated August 4, 2009 (Exhibit 99.1) (15 )

31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2 Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


Exhibit
Number		Description	Reference
	3.1	Restated Certificate of Incorporation, filed December 12, 1988	(1)
	3.2	Certificate of Amendment of Restated Certificate of Incorporation, filed December 1, 1999 (Exhibit 3.2)	(7)
	3.3	Amended and Restated Bylaws, dated August 6, 2008 (Exhibit 99.1)	(3)
	*10.1	Medical Care Reimbursement Plan as amended October 30, 2007 (Exhibit 10.1)	(5)
	10.2	Credit Agreement dated December 23, 2009 between Wells Fargo Bank and Dionex Corporation
	*10.3	Dionex Corporation 2004 Equity Incentive Plan, as amended October 2007 (Exhibit 10.1)	(8)
	*10.4	Form of Stock Option Agreement for non-employee directors (Exhibit 10.5)	(9)
	*10.5	Form of Stock Option Agreement for other than non-employee directors (Exhibit 10.6)	(9)
	*10.6	Form of Stock Unit Award Agreement for non-employee directors (Exhibit 10.2)	(8)
	*10.7	Form of International Stock Option Agreement (Exhibit 10.8)	(5)
	*10.8	Employee Stock Participation Plan (Exhibit 10.13)	(4)
	*10.9	Change in Control Severance Benefit Plan, as amended October 26, 2009 (Exhibit 99.1)	(2)
	*10.10	Form of Stock Unit Award Agreement for U.S. employees (Exhibit 10.9)	(6)
	*10.11	Form of Stock Unit Award Agreement for International employees (Exhibit 10.10)	(6)
	*10.12	Form of Indemnification Agreement (Exhibit 10.1)	(10)
	*10.13	Management Incentive Bonus Plan dated August 4, 2009 (Exhibit 99.1)	(11)
	31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32.1	Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	32.2	Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


(1)		Incorporated by reference to the corresponding exhibit in our Annual Report on Form 10-K filed September 20, 1989. (file no. 000-11250).

(2)		Incorporated by reference to the corresponding exhibit in our Quarterly Report on Form 8-K filed October 30, 2009.

(3)		Incorporated by reference to the indicated ~~exhibit in our Quarterly Report on Form 10-Q filed February 14, 2001. (file no. 000-11250).~~

~~(4)~~		~~Incorporated by reference to the indicated~~ Exhibit in our Form 8-K filed August 11, 2008.

~~(5)~~		~~Incorporated by reference to the indicated Exhibit in our Annual Report on Form 10-K filed September 24, 2003. (file no. 000-11250).~~

~~(6)~~(4)		Incorporated by reference to the indicated exhibit in our Annual Report on Form 10-K filed September 10, 2004.

~~(7)~~(5)		Incorporated by reference to the indicated exhibit in our Form 10-Q filed November 9, 2007.

~~(8)~~		~~Incorporated by reference to the indicated exhibit in our current Report on Form 8-K filed December 22, 2004.~~

~~(9)~~(6)		Incorporated by reference to the indicated exhibit in our Annual Report on Form 10-K filed August 29, 2008.

~~(10)~~		~~Incorporated by reference to the indicated exhibit in our Quarterly Report on Form 10-Q filed February 9, 2007.~~

~~(11)~~(7)		Incorporated by reference to the indicated exhibit in our Form 10-K filed August 29, 2007.


~~(12)~~(8)		Incorporated by reference to the indicated exhibit in our Form 8-K filed October 15, 2007.

~~(13)~~(9)		Incorporated by reference to the indicated exhibit in our Form 10-Q filed February 8, 2008.

~~(14)~~(10)		Incorporated by reference to the indicated exhibit in our Form 8-K filed November 3, 2008.

~~(15)~~(11)		Incorporated by reference to the indicated exhibit in our Form 8-K filed August 10, 2009.

*		Management contract or compensatory plan or agreement.

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.


~~Date: November 6, 2009~~	DIONEX CORPORATION (Registrant)
Date: February 9, 2010	By:	/s/ Craig A. McCollam
		Craig A. McCollam
		Executive Vice President and Chief Financial Officer ~~(Signing~~ (Signing as Principal Financial and Accounting Officer, and as Authorized Signatory of Registrant)

EXHIBIT INDEX


	10.2			Credit Agreement dated December 23, 2009 between Wells Fargo Bank and Dionex Corporation

	31.1			Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	31.2			Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	32.1			Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	32.2			Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002