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, ~~2006~~2007


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~~Name of ~~registrant~~Registrant as ~~specified~~Specified in its ~~charter)~~Charter)


Delaware		94-2647429

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

1228 Titan Way, Sunnyvale, California		94085

(Address of principal executive offices)		(Zip Code)

~~Registrant’s telephone number, including area code~~ (408) 737-0700
(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 is a large accelerated filer, an accelerated filer or non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange ~~Act).~~Act. (Check One)

Large accelerated filerþ Accelerated Filero Non-accelerated filero

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 ~~8, 2006:~~7, 2007:


CLASS		NUMBER OF SHARES

Common Stock		~~19,225,192~~18,653,660

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,		September 30,		June 30,
	2006		2006		2007		2007
ASSETS
Current assets:
Cash and cash equivalents	$	43,065	$	43,524	$	69,577	$	54,938
Short-term investments		502		7,490		—		124
Accounts receivable (net of allowance for doubtful accounts of $674 at September 30, 2006 and June 30, 2006)		61,562		63,008
Accounts receivable (net of allowance for doubtful accounts of $686 at September 30, 2007 and $610 at June 30, 2007)						64,527		65,990
Inventories		28,001		27,702		31,001		28,626
Deferred taxes		9,941		9,915		9,164		8,983
Prepaid expenses and other		5,698		5,791		11,501		12,113

Total current assets		148,769		157,430		185,770		170,774
Property, plant and equipment, net		61,392		58,700		63,297		62,366
Goodwill		24,940		24,982		25,823		25,443
Intangible assets, net		4,623		4,522		6,650		6,955
Other assets		4,070		4,768		16,967		6,231

	$	243,794	$	250,402	$	298,507	$	271,769

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable	$	3,066	$	—	$	18,246	$	231
Accounts payable		10,064		9,395		12,663		12,293
Accrued liabilities		37,939		39,673		28,108		30,329
Deferred revenue						17,813		18,617
Income taxes payable		9,466		7,100		6,920		13,068
Accrued product warranty		3,229		3,493		2,954		2,875

Total current liabilities		63,764		59,661		86,704		77,413
Deferred taxes		3,771		3,952
Deferred and other income taxes payable						22,455		5,060
Other long-term liabilities		1,500		1,407		4,102		3,588
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: 19,221,718 shares at September 30, 2006 and 19,624,839 shares at June 30, 2006)		147,612		148,214
Common stock (par value $.001 per share; 80,000,000 shares authorized; issued and outstanding: 18,646,591 shares at September 30, 2007 and 18,845,802 shares at June 30, 2007)						163,493		161,409
Retained earnings		19,016		28,589		5,571		13,223
Accumulated other comprehensive income		8,131		8,579		16,182		11,076

Total stockholders’ equity		174,759		185,382		185,246		185,708

	$	243,794	$	250,402	$	298,507	$	271,769

DIONEX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

~~(unaudited)~~(Unaudited)


	Three Months Ended						Three Months Ended
	September 30,						September 30,
	2006			2005			2007			2006
Cash flows from operating activities:
Net income	$	8,671		$	9,014		$	10,150		$	8,671
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,635			1,702			2,149			1,635
Stock based compensation		1,230			1,677
Stock-based compensation								1,443			1,230
Allowance for bad debts								47			135
Loss on disposal of fixed assets		74			—			9			74
Excess tax benefit related to stock option plans		(109	)		(1,927	)
Tax benefit related to stock transactions								(487	)		(109	)
Deferred income taxes		(33	)		2,734			238			(33	)
Changes in assets and liabilities:
Accounts receivable		1,088			2,126			3,515			953
Inventories		(488	)		(59	)		(876	)		(488	)
Prepaid expenses and other assets		623			(1,982	)		1,606			623
Accounts payable		(206	)		(1,961	)		143			(206	)
Deferred revenue								(438	)		(1,281	)
Accrued liabilities		(2,502	)		(2,360	)		(1,657	)		(1,221	)
Income taxes payable		2,430			1,649			(2,748	)		2,430
Accrued product warranty		(238	)		(162	)		(28	)		(238	)

Net cash provided by operating activities		12,175			10,451			13,066			12,175


Cash flows from investing activities:
Proceeds from sale of marketable securities		9,700			12,141			—			9,700
Purchase of marketable securities		(2,600	)		(9,614	)		—			(2,600	)
Purchase of property, plant and equipment		(2,471	)		(3,051	)		(854	)		(2,471	)
Purchase of intangible assets		(423	)		(3,056	)		(1,572	)		(423	)
Other		—			29

Net cash provided by (used for) investing activities		4,206			(3,551	)		(2,426	)		4,206


Cash flows from financing activities:
Net change in revolving line of credit		3,066			711
Proceeds from issuance of common stock		1,302			6,856
Excess tax benefit related to stock option plans		109			1,927
Net change in notes payable								18,012			3,066
Proceeds from issuance of common stock pursuant to stock-based compensation plans								2,361			1,302
Tax benefit related to stock transactions								487			109
Repurchase of common stock		(21,491	)		(18,769	)		(18,587	)		(21,491	)

Net cash used for financing activities		(17,014	)		(9,275	)
Net cash provided by (used for) financing activities								2,273			(17,014	)


Effect of exchange rate changes on cash		174			(1,017	)		1,726			174


Net decrease in cash and cash equivalents		(459	)		(3,392	)
Net increase (decrease) in cash and cash equivalents								14,639			(459	)
Cash and cash equivalents, beginning of period		43,524			42,679			54,938			43,524

Cash and cash equivalents, end of period	$	43,065		$	39,287		$	69,577		$	43,065


Supplemental disclosures of cash flow information:
Income taxes paid		56			3,769		$	7,721		$	56
Interest expense paid		3			13			135			3

Other non-cash activities:
Property and equipment purchased (but not paid for)		1,891			5
Supplemental schedule of non-cash investing and financing activities:
Accrued purchases of property, plant and equipment								328			1,891

DIONEX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The condensed consolidated financial statements included herein have been prepared by Dionex Corporation, ~~(the “Company”),~~ without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. ~~It is suggested that these~~These condensed consolidated financial statements should be read in conjunction with the ~~condensed~~ consolidated financial statements and the notes thereto included in ~~the Company’s~~our Annual Report on Form 10-K for the fiscal year ended June 30, ~~2006.~~2007. 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, ~~2007.~~2008.

2. New Accounting Pronouncements

In ~~June 2006,~~February 2007, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. (“FIN”) 48, “Accounting for Uncertainty in Income Taxes”, effective for fiscal years beginning after December 15, 2006. FIN-48 clarifies the accounting for uncertainty in income taxes by prescribing rules for recognition, measurement, classification and disclosure in the Company’s financial statements of tax positions taken or expected to be taken in a tax return. The Company is currently evaluating the provisions in FIN 48, and has not yet determined its expected impact. The Company plans to adopt this new standard on July 1, 2007.

~~In February 2006, the FASB~~ issued Statement of Financial Accounting Standards (“SFAS”) No. ~~155, “Accounting~~159,The Fair Value Option for ~~Certain Hybrid~~ Financial ~~Instruments – an amendment of FASB Statements~~Assets and Financial Liabilities(“SFAS No. ~~133 and 140”~~159”). ~~This standard~~SFAS No. 159 permits entities to choose, at specified election dates, to measure eligible items at fair value ~~remeasurement~~(or “fair value option”) and to report in earnings unrealized gains and losses on those items for ~~any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation; clarifies~~ which ~~interest-only strips and principal-only strips are not subject to~~ the ~~requirements of~~fair value option has been elected. SFAS No. ~~133;~~159 also requires ~~evaluation~~entities to display the fair value of ~~interests in securitized financial assets; clarifies~~those assets and liabilities on the face of the balance sheet. SFAS No. 159 establishes presentation and disclosure requirements designed to facilitate comparisons between entities that ~~concentrations~~choose different measurement attributes for similar types of ~~credit risk in the form of subordination are not embedded derivatives;~~assets and eliminates the prohibition of a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest of another derivative financial instrument. This standardliabilities. SFAS No. 159 is effective for all financial instruments acquired or issued after fiscal years beginning after September 15, 2006. The Company does not believe that adoption of SFAS No. 155 will have a material effect on its financial position, results of operations or cash flows.

In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB 108”). SAB 108 provides interpretive guidance on how the effects of prior-year uncorrected misstatements should be considered when quantifying misstatements in the current year financial statements. SAB 108 requires registrants to quantify misstatements using both an income statement (“rollover”) and balance sheet (“iron curtain”) approach and evaluate whether either approach results in a misstatement that, when all relevant quantitative and qualitative factors are considered, is material. If prior year’s errors that had been previously considered immaterial now are considered material based on either approach, no restatement is required so long as management properly applied its previous approach and all relevant facts and circumstances were considered. If prior years are not restated, the cumulative effect adjustment is recorded in opening accumulated earningsus as of the ~~beginning~~first quarter of fiscal 2009. We are currently evaluating the ~~fiscal year~~impact of ~~adoption. SAB 108 is effective for fiscal years ending after November 15, 2006. The Company does not believe that the adoption of the provisions of SAB108 will materially impact its~~this pronouncement on our financial ~~position and results of operations.~~statements.

In September 2006, the FASB issued ~~Statement of Financial Accounting Standards (“SFAS”)~~SFAS No. 157,Fair Value ~~Measurements.~~Measurements(“SFAS No. 157”). SFAS No. 157 establishes a framework for measuring fair value and expands disclosures about fair value measurements. The changes to current practice resulting from the application of ~~this Statement~~SFAS No. 157 relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. ~~The Statement~~SFAS No. 157 is effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. ~~The Company does~~We do not believe that the adoption of the provisions of SFAS No. 157 will materially impact ~~its~~our financial position and results of operations.

Determining Fair Value

Valuation and amortization method ~~– The Company estimates~~— We estimate the fair value of stock options granted using the Black-Scholes-Merton ~~option–~~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 ~~the Company’s~~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 ~~its~~our stock-based awards.

Expected Volatility – ~~Expected volatilities~~Our computation of expected volatility for the three months ended September 30, 2007 and 2006 is based on a combination of historical and ~~2005 were based mainly on the historical volatility of the Company’s stock price.~~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 ~~the Company~~our current expectations about ~~the Company’s~~our anticipated dividend policy.

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.

Stock option activity under ~~the Company~~our plans during the three months ended September 30, ~~2006~~2007 was as follows:

Weighted
Average Aggregate
Weighted Remaining Intrinsic
Options Average Contractual Value
Outstanding Exercise Price Term (Years) (in 000’s )
Balance at June 30, 2006 1,736,593 $ 37.43
Options granted 300,250 53.38
Options exercised (16,471 ) 28.05
Options forfeited/cancelled/expired (6,316 ) 45.08

Balance at September 30, 2006 2,014,056 $ 39.86 6.90 $ 23,109

Exercisable at September 30, 2006 1,174,427 $ 33.58 5.64 $ 20,402

In August 2006, the Board of Directors approved an amendment to the Company’s Option Plan to increase the number of shares authorized for issuance by 1,500,000 shares. The amendment was approved by the Company’s stockholders at the Annual Meeting of Stockholders.


						Weighted
						Average		Aggregate
				Weighted		Remaining		Intrinsic
	Options			Average		Contractual		Value
	Outstanding			Exercise Price		Term (Years)		(in 000’s )
Balance at June 30, 2007		1,694,471		$	41.91
Options granted		321,250			72.56
Options exercised		(42,248	)		35.15
Options forfeited/cancelled/expired		(10,627	)		50.81
Balance at September 30, 2007		1,962,846		$	47.02		6.87	$	63,672
Options vested and expected to vest at September 30, 2007		1,922,246		$	46.77		6.83	$	62,829
Exercisable at September 30, 2007		1,132,040		$	37.75		5.42	$	47,223

The aggregate intrinsic values in the table above ~~represents~~represent the total pretax intrinsic values based on ~~the Company’s~~our closing stock price of ~~$50.94~~$79.46 at September 30, ~~2006,~~2007, 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 were $1.5 million and $353,000 during the three months ended September 30, ~~2006.~~2007 and 2006, respectively.

8. Earnings Per Share

Basic earnings per share are determined by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is 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
~~(in~~ (in thousands, except per share data):


	Three Months Ended				Three Months Ended
	September 30,				September 30,
	2006		2005		2007		2006
Numerator:
Net income	$	8,671	$	9,014	$	10,150	$	8,671

Denominator:
Weighted average shares used to compute net income per common share — basic		19,441		20,114
Weighted average shares used to compute net income per common share – basic						18,765		19,441
Effect of dilutive stock options		414		573		529		414

Weighted average shares used to compute net income per common share — diluted		19,855		20,687
Weighted average shares used to compute net income per common share – diluted						19,294		19,855

Basic earnings per share	$	0.45	$	0.45	$	0.54	$	0.45

Diluted earnings per share	$	0.44	$	0.44	$	0.53	$	0.44

9. Goodwill and Other Intangible Assets

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

~~Change~~The change in the carrying amount of goodwill for the three months ended September 30, ~~2006 is~~2007 was as follows (in thousands):

Total
Balance as of June 30, 2006 $ 24,982
Translation adjustments (42 )

Balance as of September 30, 2006 $ 24,940


	Total
Balance as of July 1, 2007	$	25,443
Translation adjustments		380

Balance as of September 30, 2007	$	25,823

Our reporting units represent our operating segments. All goodwill has been assigned to one reporting unit. The ~~Company~~evaluation of goodwill is based upon the fair value of this reporting unit. Pursuant to the provisions of SFAS No. 142,Goodwill and Other Intangible Assets, we performed an annual impairment ~~test of~~tests on goodwill in April ~~2006~~2007 and determined that goodwill was not impaired.

Information regarding ~~the Company’s~~our other intangible assets follows (in thousands):


	As of September 30, 2006							As of June 30, 2006							As of September 30, 2007							As of June 30, 2007
	Carrying		Accumulated					Carrying		Accumulated					Carrying		Accumulated					Carrying		Accumulated
	Amount		Amortization			Net		Amount		Amortization			Net		Amount		Amortization			Net		Amount		Amortization			Net
Patents and trademarks	$	2,958	$	(462	)	$	2,496	$	3,337	$	(735	)	$	2,602	$	5,958	$	(925	)	$	5,033	$	5,958	$	(779	)	$	5,179
Developed technology		9,680		(8,936	)		744		9,695		(8,773	)		922		10,265		(10,235	)		30		10,013		(9,805	)		208
Other		1,839		(456	)		1,383		1,411		(413	)		998		2,297		(710	)		1,587		2,205		(637	)		1,568

Total	$	14,477	$	(9,854	)	$	4,623	$	14,443	$	(9,921	)	$	4,522	$	18,520	$	(11,870	)	$	6,650	$	18,176	$	(11,221	)	$	6,955
													��

12. Business Segment Information

SFAS No. 131 ~~“Disclosures~~Disclosures about Segments of an Enterprise and Related ~~Information”~~ Informationestablishes standards for reporting information about operating segments in annual and interim financial statements of public business enterprises. It also establishes standards for related disclosure about products and service, geographic areas and major customers.

~~The Company has~~We have two operating segments, the Chemical Analysis Business Unit (“CABU”) and the Life Sciences Business Unit (“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.

~~The Company’s~~Our sales of products, installation and training services and maintenance within this reportable segment ~~are~~were detailed as follows (in thousands):


	Three Months Ended				Three Months Ended
	September 30,				September 30,
	2006		2005		2007		2006
Products	$	64,210	$	59,941	$	71,946	$	64,210
Installation and Training Services		1,917		1,972		2,493		1,917
Maintenance		6,730		6,187		7,984		6,730

	$	72,857	$	68,100	$	82,423	$	72,857

13. Income Taxes

Effective July 1, 2007, we adopted the provisions of the Financial Accounting Standards Board’s interpretation of FIN 48,Accounting for Uncertainty in Income Taxes(“FIN No. 48”). FIN No. 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in a company’s income tax return, and also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN No. 48 utilizes a two-step approach for evaluating uncertain tax positions accounted for in accordance with SFAS No. 109.

The first step is to determine whether it is more likely than not that each income tax position would be sustained upon audit. The second step is to estimate and measure the tax benefit as the amount that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority. Estimating these amounts requires us to determine the probability of various possible outcomes. We evaluate these uncertain tax positions on a quarterly basis. This evaluation is based on the consideration of several factors, including changes in facts or circumstances, changes in applicable tax law, settlement of issues under audit, and new exposures. If we later determine that our exposure is lower or that the liability is not sufficient to cover our revised expectations, we adjust the liability and effect a related change in our tax provision during the period in which we make such determination. The cumulative effect of adopting FIN No. 48 on July 1, 2007 is recognized as a change in accounting principle, recorded as an adjustment to the opening balance of accumulated deficit on the adoption date.

Our total amount of unrecognized tax benefits as of July 1, 2007 was $14.4 million, of which $3.3 million, if recognized, would affect our effective tax rate. The liability for income taxes associated with uncertain tax positions is classified in deferred and other income taxes payable. There have been no significant changes in these amounts during the quarter ended September 30, 2007.

We record interest and penalties related to unrecognized tax benefits in income tax expense. At July 1, 2007, we had approximately $1.7 million accrued for estimated interest and penalties related to uncertain tax positions. During the quarter, we accrued an additional $240,000 in interest on these uncertain tax positions.

We are subject to audit by the Internal Revenue Service and California Franchise Tax Board for the fiscal years 2003 through the fiscal year 2007. 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 and Hong Kong. The years open to adjustment for Germany, UK and Hong Kong are for the fiscal years 2002 through the fiscal year 2007. The years open to adjustment for Japan are the fiscal years 2001 through the fiscal year 2007.

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 settlement of ongoing litigation, the completion of ongoing examinations, the expiration of the statute of limitations, or other circumstances. At this time, an estimate of the range of the reasonably possible change cannot be made.

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 ~~the Company’s~~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, 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. ~~The Company undertakes~~We undertake no obligation to update these forward-looking statements.

~~The Company~~Overview

Dionex ~~(the “Company”)~~Corporation designs, manufactures, markets and services analytical instrumentation and related accessories and chemicals. ~~The Company’s~~Our products are used to analyze chemical substances in the environment and in a broad range of industrial and scientific applications. ~~The Company’s~~Our systems are used in environmental analysis and by the pharmaceutical, life sciences, chemical, petrochemical, power generation, and food and electronics industries in a variety of applications. ~~The Company sells into six markets which are Life Sciences, Chemicals, Food Beverage, Electronics, Power~~Unless the context otherwise requires, the terms “Dionex,” “we,” “our” and ~~Environmental.~~“us” and words of similar import as used in these notes to condensed consolidated financial statements include Dionex Corporation and its consolidated subsidiaries.

~~The Company’s~~Our liquid chromatography systems are currently focused in ~~several~~two product areas: ion chromatography (IC), and high performance liquid chromatography (HPLC) ~~and capillary-/nano-liquid chromatography (capillary-/nano-LC)~~. ~~The Company also offers~~We offer a mass spectrometer coupled with either an IC or HPLC system. For sample preparation, ~~the Company provides~~we provide automated solvent extraction systems. In addition, ~~the Company develops~~we develop and ~~manufactures columns,~~manufacture consumables, detectors, ~~data collection~~automation and analysis systems for use in or with liquid chromatographs.

~~Geographically, the Company currently markets~~We market and ~~distributes its~~distribute our products and services through ~~its~~our own sales force in Austria, Australia, Brazil, Canada, China, Singapore, Denmark, France, Germany, India, Ireland, Italy, Japan, Korea, Netherlands, Switzerland, Taiwan, United Kingdom, and the United States. In each of these countries, ~~the Company maintains~~we maintain one or more local sales offices in order to support and service ~~the Company~~our customers in the regions. ~~The Company manufactures its~~We manufacture our products based upon ~~its~~a forecast of customer demand and ~~maintains~~we generally try to maintain adequate inventories of completed modules or finished goods in advance of receipt of firm orders. System or instrument orders are generally placed by the customer on an as-needed basis, and instruments are usually shipped within ~~four~~two to six weeks after receipt of an order.

~~The Company~~Results of Operations

We reported the highest first quarter sales in ~~its~~our history with $82.4 million for the first quarter of fiscal 2008, which reflects a growth of 13% compared with $72.9 million ~~which is a~~in the same period last year. Operating income for the quarter was $16 million or 16% growth over operating income for the first quarter of 7%fiscal 2007 of $13.7 million. Cash flow from operations during the quarter was strong at $13.1 million. Our gross profit margin for the quarter was 65.2% compared to 65.7% reported in the same period last year. Selling, general and administrative expenses were 37.8% of sales, compared with ~~$68.1 million~~39.0% reported in the same period last year. Research and product development expenses for the quarter were 8.0% of sales, up slightly from the 7.9% reported in the same period last year. Diluted earnings per share ~~were $0.44~~grew 20% to $0.53 for the first quarter, compared to $0.44 reported in the same period last year. Net income in the first quarter ~~this year~~of fiscal 2008 included costs of approximately $650,000, net of tax, or $0.03 per diluted share, related to ~~the company~~our initiative to centralize some of ~~its~~our field related technical, administrative and support functions inwithin North America and Europe. Net income in the first quarter of fiscal 2006 included other income of $1.0 million, net of tax, or $0.05 per share, related primarily to a one-time gain from the favorable settlement of a patent litigation. Cash flow from operations during the quarter was strong at $12 million. The Company’s gross profit margin for the quarter as $65.8% compared to 65.1% reported in the same period last year. SG&A expenses were 39.0% of sales, compared with 39.2% reported in the same period last year. R&D expenses for the quarter were 7.9% of sales, down compared with 8.1% reported in the same period last year.

In the three months ended September 30, 2006, approximately 74% of total net sales were from IC/ASE products and 26% were from HPLC/Nano products. The Company is recognized as an innovation leader in the global LC market.

Percentage ~~change~~changes in net sales over the ~~prior year~~first quarter of fiscal 2007 were as indicated in the table below:


		Three Months
		Ended
		September 30, ~~2006~~2007
Percentage change in net sales
Total:		7%13%
By geographic region:
North America		2%15%
Europe		~~13%~~12%
Asia/Pacific		4%14%

Percentage of change in net sales excluding currency fluctuations were as indicated in the table below:


		Three Months
		Ended
		September 30, ~~2006~~2007
Percentage change in net sales excluding currency fluctuations
Total:		5%10%
By geographic region:
North America		1%15%
Europe		9% 4%
Asia/Pacific		5%15%

Net sales in North America increased ~~slightly~~15% in the first quarter of fiscal 2008, reflecting an increase in demand from our customers, principally in the ~~still challenging business conditions in certain regions of the country, predominantly regions with large pharmaceutical customers.~~environmental and life science markets. Net sales in Europe increased ~~double-digits due to good sales growth~~by 12% for the three months ending September 30, 2007, driven by currency fluctuations and strong results in ~~all countries particularly in France~~Italy, Switzerland and ~~Germany.~~Denmark. Net sales in the Asia/Pacific region ~~continued to increase primarily due to strong~~grew by 14% in the first fiscal quarter of 2008 as a result of increased sales in China, Korea, India, Australia and in our new subsidiaries in Brazil and Taiwan.

We achieved growth in ~~China~~the life sciences, environmental, chemical/petrochemical and ~~Japan.~~food markets and a saw a slight decline in the power and electronics markets.

Gross margin for the first quarter of fiscal ~~2007~~2008 was 65.2%, down slightly from the 65.7% ~~compared to 65.1%~~reported in the first quarter last year. The ~~improvement~~decrease in gross margin was ~~primarily~~ due to ~~higher~~a greater proportion of revenue attributable to the Asia/Pacific region and relatively slower growth in consumable products which generally have higher margins than our instrumentation, lower production costs for our ICS-3000 systems, offset by slightly higher cost associated with the Company’s new UltiMate 3000 product. The Company has initiated a series of cost reduction projects related to the UltiMate 3000 systems. The Company believes that these projects will allow the margin to improve sequentially throughout the course of the year.Europe.

Operating expenses of ~~$34.2~~$37.8 million for the first quarter of fiscal ~~2007~~2008 increased ~~$2.0~~by $3.6 million, or 6%11% from the ~~$32.2~~$34.2 million reported in the same quarter last year. As a percentage of sales, operating expenses ~~remained constant at~~were 46% for the first quarter of fiscal 2008 down from the 47% of sales reported in the first quarter of fiscal ~~2007 compared to~~2007. The effects of foreign currency increased total operating expenses by three percentage points for the ~~same period last year.~~quarter.

Selling, general and administrative (SG&A) expenses increased ~~$1.7~~by $2.8 million or 7%10% to ~~$28.4~~$31.2 million in the first quarter of fiscal ~~2007~~2008 compared to ~~$26.7~~$28.4 million for the ~~same~~first quarter ~~last year. The increase in SG&A expenses was due primarily to the incremental costs~~ of approximately $1.0 million related to the Company’s centralization initiatives in North America and Europe and higher selling and marketing costs of approximately $1.0 million. The increase was partially offset by a decrease of $350,000 in stock based compensation primarily due to a sequential decrease in stock-based compensation expense related to options granted prior to adoption of SFAS 123R.fiscal 2007. As a percentage of net sales SG&A expenses ~~remained constant at 37%~~were 37.8% and 39.0% in the first quarter of fiscal 2008 and 2007, respectively. Effects of foreign currency fluctuations increased SG&A by $920,000, or three percentage points in the first quarter of fiscal 2008 compared with the first quarter of fiscal 2007. SG&A expenses grew by $1.2 million due to the ~~same period last year.~~addition of our two new subsidiaries, Brazil and Taiwan in October 2006 and July 2007 and the continued expansion in our Asia/Pacific region. The remaining increase was due to additional headcount resulting in increased salaries and expenses.

Research and ~~Product~~product development (R&D) expenses of ~~$5.7~~were $6.6 million for the first quarter of fiscal ~~2007 increased $214,000~~2008, an increase of $900K or 4%15% from ~~the $5.5~~$5.7 million reported in the ~~same period last year.~~first quarter of fiscal 2007. As a percentage of net sales, R&D expenses ~~remained constant at 8% in the first quarter of both fiscal 2007 and 2006.~~

~~Other expense was $331,000~~increased slightly from 7.9% in the first quarter of fiscal 2007 ~~compared~~ to ~~income of $1.5 million for the same period in the prior year. Other expenses~~8% in the first quarter ofin fiscal ~~2007 were primarily due~~2008. The increase is partially attributable to ~~the losses on the Company’s hedging activities. Other income~~salaries for increased personnel and project materials related to new products in ~~the first quarter of fiscal 2006 resulted primarily from a gain on a settlement of a patent litigation.~~our product development pipeline.

The effective tax rate in the first quarter of fiscal ~~2007~~2008 was ~~36.7%~~35.3%, ~~compared to 35.1%~~reflecting a decrease from 36.7% reflected for the first quarter of fiscal 2007. The decrease in ~~the same period last year. The increase in the Company’s~~our tax rate was due to the ~~expiration~~favorable settlement of ~~research~~a tax credits for federal income tax purposes and the phase out of Extra Territorial Income Deductions. If, as expected, legislation extending the research tax credits is passed by congress and signed into law, the Company will recognize the benefits in its tax rate. The Company anticipates itsaudit. We anticipate our tax rate will be in the range of ~~36-37%~~36% to 37% for the ~~rest~~remainder of fiscal year ~~2007 including the effects of stock-based compensation.~~2008.

Net income in the first quarter of fiscal ~~2007 decreased 4%~~2008 increased 17% to ~~$8.7~~$10.2 million compared with ~~$9.0~~$8.7 million reported for the same period last year. ~~Basic and diluted~~Diluted earnings per share ~~where $0.45~~were $0.53 and $0.44 in the first quarter of ~~both~~ fiscal ~~years~~2008 and 2007, ~~and 2006,~~ respectively.

Liquidity and Capital Resources

At September 30, ~~2006, the Company~~2007, we had cash and ~~cash~~ equivalents and short-term investments of ~~$43.6~~$69.6 million. ~~The Company’s~~Our working capital was ~~$85.0~~$96 million, ~~a decrease~~an increase of ~~$12.8~~$11 million from the ~~$97.8~~$85 million reported at ~~June~~September 30, 2006. The ~~decrease~~increase was primarily attributable to ~~the Company’s repurchases of common stock offset partially by~~an increase in cash, ~~generated from operating activities.~~ inventory and prepaid expenses, other.

Cash generated by operating activities for the three months ended September 30, ~~2006~~2007 was ~~$12.2~~$13.1 million compared with ~~$10.5~~$12.2 million for the same period last year. The increase in operating cash flow was primarily due to ~~lower amounts~~an increase in operating results and better cash collections on accounts receivable partially offset by higher income tax payments.

Cash used for investing activities was $2.4 million in the first three months of ~~payments made for tax payments during the quarter.~~

~~Cash~~fiscal 2008 compared to cash provided by investing activities ~~was~~of $4.2 million in first three months of fiscal 2007. Purchases of intangible assets were $1.6 million for the first quarter of fiscal ~~2007 compared~~2008. Capital expenditures for the first three months of fiscal 2008 were $0.9 million which included purchases related to our general operations.

Cash provided by financing activities was $2.3 million and cash used ~~for investing~~by financing activities ~~of $3.6~~was $18.6 million in the first ~~quarter~~three months of fiscal ~~2006. The net proceeds of $7.1 million from the sale of marketable securities were partially offset by approximately $2.9 million of capital expenditures~~2008 and ~~intangibles in fiscal 2007. Capital expenditures in fiscal~~at June 30, 2007, ~~included additional molded parts, information technology expansion costs and purchases related to the general operation of the Company.~~

~~Cash used for financing activities was $17.0 million and $9.3 million in the first quarter of fiscal 2007 and 2006,~~ respectively. The increase was primarily attributable to the repurchase of ~~437,000~~257,825 shares of ~~the Company’s~~our common stock for $18.6 million in fiscal 2008 compared with 437,000 shares for $21.5 million in fiscal 2007, ~~compared with 385,900 shares for $18.8 million in fiscal 2006 and reduced~~increased proceeds from issuance of common stock ($~~1.3~~2.3 million for fiscal ~~2007~~2008 compared to ~~$6.9~~$1.3 million for fiscal ~~2006).~~2007) and increased tax benefit related to stock option plans of $0.5 million for fiscal 2008. The increase was partially offset by net proceeds of ~~$3.1~~$18 million received from short term borrowings in fiscal ~~2007~~2008 as compared to ~~$711,000~~$3.1 million in fiscal ~~2006. The increase in short-term borrowings was due to the Company’s repurchases of common stock activities.~~2007.

At September 30, ~~2006, the Company~~2007, we had utilized ~~$3.1~~$18.3 million in committed bank lines of ~~credit.~~credit in the United States. The ~~Company believes~~borrowings were used to repurchase shares of our common stock and other corporate activities.

We believe that ~~its~~our cash flow from operations, current cash, cash equivalents and ~~cash~~short-term investments and the remainder of ~~its~~our bank lines of credit will be adequate to meet ~~its~~our cash requirements for at least the next twelve months.

Contractual Obligations and Commercial Commitments

The following table summarizes ~~the Company’s~~our contractual obligations at ~~June~~September 30, ~~2006,~~2007, and the effect that such obligations are expected to have on ~~its~~our liquidity and cash flows 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
Operating Lease Obligations	$	17,717	$	4,505	$	6,304	$	4,054	$	2,854	$	17,750	$	4,864	$	6,546	$	3,465	$	2,875

~~New Accounting Pronouncements~~

In June 2006, the FASB issued Interpretation No. (“FIN”) 48, “Accounting for Uncertainty in Income Taxes”, effective for fiscal years beginning after December 15, 2006. FIN-48 clarifies the accounting for uncertainty in income taxes by prescribing rules for recognition, measurement, classification and disclosure in the Company’s financial statements of tax positions taken or expected to be taken in a tax return. The Company is currently evaluating the provisions in FIN 48, and has not yet determined its expected impact. The Company plans to adopt this new standard on July 1, 2007.

In February 2006, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 155, “Accounting for Certain Hybrid Financial Instruments – an amendment of FASB Statements No. 133 and 140”. This standard permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation; clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS No. 133; requires evaluation of interests in securitized financial assets; clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives; and eliminates the prohibition of a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest of another derivative financial instrument. This standard is effective for all financial instruments acquired or issued after fiscal years beginning after September 15, 2006. The Company does not believe that adoption of SFAS No. 155 will have a material effect on its financial position, results of operations or cash flows.

In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB 108”). SAB 108 provides interpretive guidance on how the effects of prior-year uncorrected misstatements should be considered when quantifying misstatements in the current year financial statements. SAB 108 requires registrants to quantify misstatements using both an income statement (“rollover”) and balance sheet (“iron curtain”) approach and evaluate whether either approach results in a misstatement that, when all relevant quantitative and qualitative factors are considered, is material. If prior year’s errors that had been previously considered immaterial now are considered material based on either approach, no restatement is required so long as management properly applied its previous approach and all relevant facts and circumstances were considered. If prior years are not restated, the cumulative effect adjustment is recorded in opening accumulated earnings as of the beginning of the fiscal year of adoption. SAB 108 is effective for fiscal years ending after November 15, 2006. The Company does not believe that the adoption of the provisions of SAB108 will materially impact its financial position and results of operations.

Critical Accounting Policies and Estimates

Summary

The preparation of consolidated financial statements requires ~~the Company~~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 ~~revenues~~net sales and expenses during the reporting period. ~~The Company evaluates its~~We evaluate our estimates, ~~on an ongoing basis,~~ 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.~~contingencies on an ongoing basis.

~~The Company bases its~~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. ~~The Company believes~~We believe the following critical accounting policies affect ~~its~~our more significant judgments and estimates used in the preparation of ~~its~~our consolidated financial statements.

~~Revenue Recognition Policy~~

~~The Company derives revenues from~~With the ~~sale~~exception of ~~products,~~ the ~~delivery~~adoption of services to its customers, including installation and training, and from maintenance, which includes product repair obligations under extended warranty, unspecified software upgrades, telephone support and time and material repairs.

~~The Company recognizes revenue~~FIN No. 48,Accounting for Uncertainty in ~~accordance with Staff Accounting Bulletin~~Income Taxes — an interpretation of FASB Statement No. ~~104 “Revenue Recognition” and Statement~~109, there have been no significant changes during the first quarter of Position 97-2, “Software Revenue Recognition,” as amended, when persuasive evidence of an arrangement exists, the product has been delivered, or service performed, the price is fixed or determinable, collection is probable and vendor specific objective evidence exists to allocate revenuefiscal 2008 to the ~~various elements of the arrangement. In all cases, the portion of revenue allocated to the undelivered elements is deferred until those~~ items ~~are delivered to the customer or the services are performed. Delivery of the product is generally considered to have occurred when shipped. Undelivered elements~~that we disclosed as our critical accounting policies and estimates in the ~~Company’s sales arrangements, which are not considered to be essential to~~Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K for the functionality of a product, generally include product accessories; installation services and/or training that are delivered after the related products have been delivered. Installation consists of system set-up, calibration and basic functionality training and generally requires one to three days depending on the product. Vendor specific objective evidence of fair value for product, product accessories and training services is based on the price charged when an element is sold separately or, if not sold separately, when the price is established by authorized management. The fair value of installation services is calculated by applying standard service billing rates to the estimate of the number of hours to install a specific product based on historical experience. These estimated hours for installation have historically been accurate and consistent from product to product. However, to the extent these estimates were to reflect unfavorable variability, the Company’s ability to maintain objective reliable evidence of fair value for such element could be impacted which in turn could delay the recognition of the revenue currently allocated to the delivered elements.

The Company recognizes revenue under extended warranty arrangements (maintenance fees) ratably over the period of the related maintenance contract and cost of the time and material repairs when incurred. Maintenance consists of product repair obligations under extended warranty, unspecified software upgrades, telephone support and time and material repairs. The Company’s equipment typically includes a one-year warranty. The estimated cost of product warranty claims is accrued at the time the sale is recognized, based on historical experience. While the Company believes its historical experience provides a reliable basis for estimating such warranty cost, unforeseen quality issues or component failure rates could result in future costs in excess of such estimates, or alternatively, improved quality and reliability in its products could result in actual expenses that are below those currently estimated.

~~The Company’s sales are typically not subject to rights of return and, historically, actual sales returns have not been significant.~~

~~Loss Provisions on Accounts Receivable and Inventory~~

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

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

~~Long-Lived Assets, Intangible Assets with Finite Lives and Goodwill~~

The Company assesses the impairment of long-lived assets, intangible assets with finite lives and goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable. In addition, the Company assesses goodwill for impairment at least annually. Factors the Company considers important that could trigger an impairment review include but are not limited to the following:

	•		~~significant underperformance relative to historical or projected future operating results;~~

	•		~~significant negative industry or economic trends; and~~

	•		~~significant changes or developments in strategic technology.~~

When the Company determines that the carrying value of long-lived assets or intangible assets with finite lives may not be recoverable based upon the existence of one or more of the above or other indicators, it measures any impairment based on a projected discounted cash flow method using a discount rate determined by the Company’s management to be commensurate with the risk inherent in the Company’s current business model. Goodwill is tested for impairment by comparing the fair values of related reporting units to their carrying values. The Company completed its annual review in April 2006 and no impairment was necessary.

~~Warranty~~

Product warranties are recorded at the time revenue is recognized for certain product shipments based on historical experience. While the Company engages in extensive product quality programs and processes, its warranty obligation is affected by product failure rates, material usage and service costs incurred in correcting a product failure. Should actual product failure rates, material usage or service costs differ from the Company’s previous estimates, revisions to the estimated warranty liability would be required.fiscal year ended June 30, 2007.

Income Taxes

As part of the process of preparing the consolidated financial statements, ~~the Company is required to~~we estimate ~~its~~our income taxes in each of the jurisdictions in which ~~it operates.~~we operate. The determination of our tax provision is subject to judgments and estimates due to the complexity of the tax laws that we are subject to in several tax jurisdictions. This process involves ~~the Company’s~~our estimate of ~~its~~our actual current tax exposure together with assessing temporary differences resulting from differing treatment of items, such as depreciation, amortization and inventory reserves for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included ~~within the Company’s~~with our consolidated balance sheets.

~~The Company must then assess the likelihood~~We account for income taxes in accordance with SFAS No. 109,Accounting for Income Taxes(“SFAS 109”).SFAS No. 109 requires that ~~its~~ deferred tax assets ~~will~~and liabilities be ~~recovered from future taxable~~recognized for the effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income ~~and to the extent the Company believes~~tax purposes. SFAS No. 109 also requires that ~~recovery is not likely, it must establish a valuation allowance. In the event that actual results differ from these estimates, the Company may need to establish~~deferred tax assets be reduced by a valuation allowance if it is more likely than not that ~~could materially impact its~~some or all of the deferred tax asset will not be realized.

On July 1, 2007, we adopted FIN No. 48,Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109(“FIN No. 48”). FIN No. 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with Statement of Financial Accounting Standards No. 109,Accounting for Income Taxes(“SFAS 109”). This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. As a result of the implementation of FIN No. 48, we recognize the tax liability for uncertain income tax positions on the income tax return based on the two-step process prescribed in the interpretation. The first step is to determine whether it is more likely than not that each income tax position would be sustained upon audit. The second step is to estimate and ~~results~~measure the tax benefit as the amount that has a greater than 50% likelihood of ~~operations.~~being realized upon ultimate settlement with the tax authority. Estimating these amounts requires us to determine the probability of various possible outcomes. We evaluate these uncertain tax positions on a quarterly basis. This evaluation is based on the consideration of several factors, including changes in facts or circumstances, changes in applicable tax law, settlement of issues under audit, and new exposures. If we later determine that our exposure is lower or that the liability is not sufficient to cover our revised expectations, we adjust the liability and effect a related change in our tax provision during the period in which we make such determination.

1816

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

~~The Company is~~We are exposed to financial market risks ~~including changes~~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, ~~as well as debt~~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 ~~expense.~~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 2007 or the first three months of fiscal 2008 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~~Exchange.Revenues generated from international operations are generally denominated in foreign currencies. ~~The Company enters~~We 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, ~~2006, the Company~~2007, we had forward exchange contracts to sell foreign currencies totaling ~~$11.8~~$15.5 million, including approximately ~~$5.6~~$8.5 million in Euros, ~~$4.1~~$4.7 million in Japanese yen, ~~and $1.2~~$1.5 million in ~~Canadian~~Australian dollars and ~~$900,000~~$0.8 million in ~~Australian~~Canadian dollars. The foreign exchange contracts at the end of each fiscal ~~quarter~~year mature within the first quarter of the following ~~quarter.~~fiscal year. Additionally, contract values and fair market values are the same.

In March 2007, we entered into a cross-currency swap of Japanese Yen for $10.0 million which matures in March 2010. This derivative instrument did not qualify for net investment hedge accounting and was deemed to be an ineffective hedge instrument, given that, 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. Therefore, we marked to market the decrease in value of approximately $698,000 for September 30, 2007 and this amount was recorded in other expense, net. A sensitivity analysis assuming a hypothetical 10% movement in foreign currency exchange rates applied to our hedging contracts and underlying balances being hedged at September 30, ~~2006~~2007 and June 30, 2007 indicated that these market movements would not have a material effect on ~~the Company’s~~our business, operating results or financial condition.

Foreign currency rate fluctuations can impact the U.S. dollar translation of ~~the Company’s~~our foreign operations in ~~its~~our consolidated financial statements. ~~Currency fluctuations increased reported sales by 2% for~~

Interest and Investment Income. Our interest and investment income is subject to changes in the ~~quarter ended September 30, 2006 compared to an increase~~general level of U.S. interest rates. Changes in ~~reported net sales of 1% for~~U.S. interest rates affect the ~~quarter ended September 30, 2005.~~

~~Debt~~interest earned on our cash equivalents and ~~Interest Expense~~short-term investments. A sensitivity analysis assuming a hypothetical 10% movement in interest rates applied to ~~the Company’s outstanding debt balance~~our investment balances at September 30, ~~2006,~~2007 and June 30, 2007 indicated that such market movement would not have a material effect on ~~its~~our business, operating results or financial condition. Actual gains or losses in the future may differ materially from this analysis, depending on ~~the level of the Company’s outstanding debt~~our actual balances and changes in the timing and amount of interest rate movements.

Debt and Interest Expense. At September 30, 2007, we had notes payable of $18.2 million. A sensitivity analysis assuming a hypothetical 10% movement in interest rates applied to our outstanding debt balance at September 30, 2007, 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

~~The Company~~We carried out an evaluation, under the supervision and with the participation of ~~the Company’s~~our Chief Executive Officer and Chief Financial Officer, of the effectiveness of ~~the Company’s~~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, the Chief Executive Officer and Chief Financial Officer have concluded that ~~the Company’s~~our disclosure controls and procedures as of September 30, ~~2006~~2007 were effective to ensure that information required to be disclosed by ~~the Company~~us in reports that ~~it files~~we file or ~~submits~~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 ~~the Company’s~~our management, including ~~its~~our principal executive and principal financial officers, to allow timely decisions regarding required disclosures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and our Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures are effective at the “reasonable assurance” level. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a Company have been detected.

There were no changes in ~~the Company’s~~our internal control over financial reporting ~~during~~ (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 ~~the Company’s~~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.

~~The continuation or spread~~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 ~~current economic uncertainty in key markets would likely harm the Company’s operating results.~~

~~The Company sells its products in many geographical regions throughout the world. If economic conditions in any of these regions decline or~~United States, our business is subject to risks associated with doing business internationally. We anticipate that revenue from international operations will continue to ~~decline,~~represent a majority of our total sales. In addition, we expect that the ~~demand for~~proportion of our employees, contract manufacturers, suppliers, job functions and manufacturing facilities located outside the ~~Company’s products is likely to~~United States may increase. Accordingly, our future results could be ~~reduced. An economic downturn in any~~harmed by a variety of ~~the Company’s major markets would likely harm the Company’s results of operations.~~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 political, economic 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.

Foreign currency fluctuations ~~and other risks~~ related to international operations may adversely affect ~~the Company’s~~our operating results.

~~The Company~~We derived approximately ~~73%~~72% of ~~its~~our net sales from outside the United States in the first quarter ~~ended September 30, 2006~~of 2008 compared to 71% in all of fiscal 2007 and ~~expects~~expect to continue to derive the majority of net sales from outside the United States for the foreseeable future. Most of ~~the Company’s~~our sales outside the United States are denominated in the local currency of ~~its~~our customers. As a result, the U.S. dollar value of ~~the Company’s~~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 ~~the Company’s~~our results of operations. In recent periods, ~~the Company’s~~our results of operations have been ~~negatively~~positively affected from the ~~appreciation~~depreciation of the U.S. dollar against the Euro, the Japanese yen and other foreign ~~currencies. Tariffs and~~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 trade barriers, difficulties in staffing and managing foreign operations, changes in political environments, interruptions in overseas shipments and changes in tax laws may also impact international sales negatively.currencies.

Fluctuations in worldwide demand for analytical instrumentation could affect ~~the Company’s~~our operating results.

The demand for analytical instrumentation products can fluctuate depending upon capital expenditure cycles. Most companies consider ~~the Company’s~~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 ~~the Company’s~~our results of operations.

Fluctuations in ~~the Company’s~~our quarterly operating results may cause ~~the Company’s~~our stock price to decline.

A high proportion of ~~the Company’s~~our costs are fixed due in part to ~~the Company’s~~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 ~~the Company’s~~our quarterly operating results, which may in turn cause ~~the Company’s~~our stock price to decline.

~~The Company’s~~Our results of operations and financial condition will suffer if ~~the Company does~~we do not introduce new products that are attractive to ~~its~~our customers on a timely basis.

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

The analytical ~~instrument~~instrumentation market is highly competitive, and ~~the Company’s~~our inability to compete effectively in this market would adversely affect ~~its~~our results of operations and financial condition.

The analytical instrumentation market is highly competitive and ~~the Company competes~~we compete with many companies on a local and international level that are significantly larger than ~~Dionex~~us 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 ~~the Company~~us to acquire and retain customers. If this occurs, ~~the Company’s~~our market share may decline and operating results could suffer.

~~The Company~~We may experience difficulties with obtaining components from sole- or limited-source suppliers, or manufacturing delays, either of which could adversely affect ~~its~~our results of operations.

Most raw materials, components and supplies that ~~the Company purchases~~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 ~~the Company’s~~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 ~~the Company’s~~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 affect ~~on the Company’s~~our results of operations.

~~The Company manufactures~~We manufacture products in ~~its~~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 ~~the Company’s~~our results of operations.

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

~~The~~Our operations ~~of Dionex~~ require managerial and technical expertise. Each of the executive officers and key employees located in the United States is employed “at will” and may leave ~~the~~our employment ~~of the Company~~ at any time. In addition, ~~the Company operates~~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 ~~the Company’s~~our executive officers or key employees could cause ~~the Company~~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 ~~the Company’s~~our ability to conduct ~~its~~our business.

The success of Dionex’s business is dependent in part on protection of proprietary information and inventions. Obtaining and protecting the Company’s proprietary products, processes and technologies can be difficult and expensive.

Patent and trade secret protection is important to the Company because developing new technologies and products is time-consuming and expensive. The Company owns many U.S. and foreign patents and intends to apply for additional patents to cover its technology and products. The CompanyWe 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.

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 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 ~~any pending~~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 2008 to 2024. When each of our patents expires, competitors may develop and sell products based on the same or ~~future~~similar technologies as those covered by the expired patent. We have invested in significant new patent applications, and we cannot be certain that ~~it owns. The claims allowed under~~ any of these applications will result in an issued ~~patents may not be sufficiently broad~~patent to ~~protect the Company’s technology. Third parties may seek to challenge, circumvent or invalidate issued patents that the Company owns.~~

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

~~The Company may incur significant expense in any legal proceedings to protect its proprietary~~enhance our intellectual property rights.

The following table indicates common shares repurchased and additional shares added to the repurchase program during the three months ended September 30, ~~2006:~~2007:

ISSUER PURCHASES OF EQUITY SECURITIES

Total Maximum
Shares Number of
Purchased Additional Shares that
Total as Part of Shares May Yet Be
Number Avg. Publicly Authorized Purchased
of Shares Price Paid Announced for Under the
Period Purchased per Share Program(1) Purchase (1) Program (1)
July 1 — July 31, 2006 — — 4,909,277 506,207
August 1 — August 31, 2006 397,000 $ 49.11 5,306,277 1,530,817 1,640,024
September 1 — September 30, 2006 40,000 $ 50.16 5,346,277 3,062 1,603,086

Total

Number of

Maximum

Number of

Purchased

Additional

Shares that

Total

as Part of

May Yet Be

Number

Avg.

Publicly

Authorized

Purchased

of Shares

Price Paid

Announced

for

Under the

Period

Purchased

per Share

Program

Purchase (1)

Program (2)

July 1– 31, 2007

—

6,094,377

10,218

1,237,388

August 1– 31, 2007

231,025

72.10

6,325,402

42,704

1,049,067

September 1 – 30, 2007

26,800

72.01

6,352,202

5,692

1,027,959


(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 current repurchase of 1.5 million shares of common stock approved in August 2006 plus that number of shares of common stock equal to the number of shares issued pursuant to employee stock plans subsequent to ~~that date.~~August 2006 minus the number of shares purchased.

2221

EXHIBIT INDEX

Item 6. EXHIBITS


Exhibit					Exhibit
Number	Description	Reference			Number	Description	Reference

3.1	Restated Certificate of Incorporation, filed November 6, 1996		(2	)		Restated Certificate of Incorporation, filed December 12, 1988		(1	)

3.2	Bylaws, as amended on July 29, 2002		(5	)		Certificate of Amendment of Restated Certificate of Incorporation, filed December 1, 1999 (Exhibit 3.2)		(13	)

3.3						Bylaws, as amended on July 29, 2002 (Exhibit 3.2)		(4	)

3.4						Amendment to Bylaws, adopted on January 11, 2007 (Exhibit 3.1)		(10	)

4.1	Stockholder Rights Agreement dated January 21, 1999, between the Company and Bank Boston N.A.		(3	)		Stockholder Rights Agreement dated January 21, 1999, between Dionex Corporation and Bank Boston N.A.		(2	)

10.1	Medical Care Reimbursement Plan (Exhibit 10.17)		(1	)		Medical Care Reimbursement Plan as amended October 30, 2007

10.2	Credit Agreement dated November 13, 2000 between Wells Fargo Bank and the Company (Exhibit 10.15)		(4	)		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 the Company		(6	)		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 (Exhibit 99.1)		(8	)		Dionex Corporation 2004 Equity Incentive Plan, as amended October 2006 (Exhibit 10.1)		(14	)

10.5	Form of Stock Option Agreement for non-employee directors (Exhibit 99.2)		(8	)		Form of Stock Option Agreement for non-employee directors (Exhibit 99.2)		(7	)

10.6	Form of Stock Option Agreement for other than non-employee directors (Exhibit 99.3)		(8	)		Form of Stock Option Agreement for other than non-employee directors (Exhibit 99.3)		(7	)

10.7	Employee Stock Participation Plan (Exhibit 10.13)		(7	)		Form of Stock Unit Award Agreement (Exhibit 10.2)		(14	)

10.8	Second amendment to Credit Agreement dated November 13, 2000 between Wells Fargo Bank and the Company (Exhibit 10.1)		(9	)		Form of International Stock Option Agreement

10.9	Change in Control Severance Benefit Plan (Exhibit 10.15)		(10	)		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 (Exhibit 10.15)		(9	)

10.12						Third amendment to Credit Agreement dated December 1, 2006 between Wells Fargo Bank and Dionex Corporation (Exhibit 10.8)		(11	)

10.13						Executive Employment Agreement for Lukas Braunschweiler dated November 20, 2006 (Exhibit 10.1)		(12	)

24.1						Power of Attorney (reference is made to the signature page of this report on Form 10-K)

31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					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					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					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					Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


	Page		~~Page~~
	PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements	~~FINANCIAL STATEMENTS~~

	~~CONDENSED CONSOLIDATED BALANCE SHEETS September 30, 2006 and June 30, 2006~~		3

	~~CONDENSED CONSOLIDATED STATEMENTS OF INCOME Three Months Ended September 30, 2006 and 2005~~		4

	~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended September 30, 2006 and 2005~~		5

	~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~		~~6-12~~

~~ITEM 2.~~Condensed Consolidated Balance Sheets as of September 30, 2007 and June 30, 2007	~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~		~~13-18~~3
Condensed Consolidated Statements of Income for the Three Months Ended September 30, 2007 and 2006		4
Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2007 and 2006		5
Notes to Condensed Consolidated Financial Statements		6-12
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		13-16
ITEM 3. Quantitative and Qualitative Disclosures about Market Risks	~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS~~		19
			17
ITEM 4. Controls and Procedures	~~CONTROLS AND PROCEDURES~~		1918

	PART II. OTHER INFORMATION

ITEM 1A. Risk Factors	~~RISK FACTORS~~		~~20-21~~
			18–20
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~		22
			20
ITEM 6. Exhibits	~~EXHIBITS~~		22–23

SIGNATURES			24

EXHIBITS
EXHIBIT 10.1
EXHIBIT 10.8
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2


	Three Months Ended						Three Months Ended
	September 30,						September 30,
	2006			2005			2007			2006
Net sales	$	72,857		$	68,100		$	82,423		$	72,857
Cost of sales		24,959			23,770			28,696			24,959

Gross profit		47,898			44,330			53,727			47,898

Operating expenses:
Selling, general and administrative		28,429			26,680			31,156			28,429
Research and product development		5,748			5,534			6,601			5,748

Total operating expenses		34,177			32,214			37,757			34,177

Operating income		13,721			12,116			15,970			13,721
Interest income		339			311			629			339
Interest expense		(30	)		(53	)		(162	)		(30	)
Other income (expense), net		(331	)		1,473
Other expense, net								(751	)		(331	)

Income before taxes		13,699			13,847			15,686			13,699
Taxes on income		5,028			4,833			5,536			5,028

Net income	$	8,671		$	9,014		$	10,150		$	8,671

Basic earnings per share	$	0.45		$	0.45		$	0.54		$	0.45

Diluted earnings per share	$	0.44		$	0.44		$	0.53		$	0.44

Shares used in computing per share amounts:
Basic		19,441			20,114			18,765			19,441

Diluted		19,855			20,687			19,294			19,855


	Three Months Ended
	September 30,
	2006			2005
Volatility for options		29	%		40	%
Volatility for employee stock purchase plan		28	%		29	%
Risk-free interest rate for options		4.9	%		4.0	%
Risk-free interest rate for employee stock purchase plan		4.9	%		3.6	%
Expected life of options	4.75 years			4.75 years
Expected life of employee stock purchase plan	6 months			6 months
Expected dividend	$	0.00		$	0.00


	Three Months Ended
	September 30,
	2007			2006
Volatility for option plan		28	%		29	%
Volatility for ESPP		23	%		28	%
Risk-free interest rate for option plan		4.6	%		4.9	%
Risk-free interest rate for ESPP		4.8	%		4.9	%
Expected life of ESPP		6	months		6	months
Expected life of option plan		4.75	years		4.75	years
Expected dividend	$	0.00		$	0.00


	September 30,		June 30,		September 30,		June 30,
	2006		2006		2007		2007
Finished goods	$	15,788	$	13,962	$	18,651	$	16,536
Work in process		1,568		1,840		1,227		1,328
Raw materials		10,645		11,900		11,123		10,762

	$	28,001	$	27,702	$	31,001	$	28,626


			Gross
	Cost		Unrealized Losses			Fair Value
September 30, 2006
Corporate debt securities⁽¹⁾	$	527	$	(25	)	$	502

	$	527	$	(25	)	$	502


June 30, 2006
Auction rate securities	$	7,100	$	—		$	7,100
Corporate debt securities⁽¹⁾		415		(25	)		390

	$	7,515	$	(25	)	$	7,490


~~(1)~~		~~These short-term investments have been in a loss position for greater than 12 months.~~


	Total
Balance as of June 30, 2006	$	24,982
Translation adjustments		(42	)

Balance as of September 30, 2006	$	24,940


	Remaining		Remaining
Year Ending	Amortization
June 30,	Expense
2007 (remaining nine months)	$	1,005
2008		835
Ending			Amortization
September 30,			Expense
2008 (remaining nine months)			$	660
2009		625		842
2010		585		821
2011		585		800
2012				800
Thereafter		988		2,727

Total	$	4,623	$	6,650


	Balance				Credited			Actual			Balance		Balance				Other			Actual			Balance
	Beginning		Provision		to Other			Warranty			End of		Beginning		Provision		Adjustments			Warranty			End of
	of Period		For Warranties		Accounts(1)			Costs Incurred			Period		of Period		For Warranties		Accounts (1)			Costs Incurred			Period
Accrued Product Warranty
Three Months Ended:

September 30, 2007													$	2,875	$	572	$	178		$	(671	)	$	2,954
September 30, 2006	$	3,493	$	684	$	(13	)	$	(935	)	$	3,229	$	3,493	$	684	$	(13	)	$	(935	)	$	3,229


September 30, 2005	$	3,514	$	1,137	$	(18	)	$	(1,297	)	$	3,336


(1)		~~Incorporated by reference to the indicated exhibit in Amendment No. 1 of the Company’s Registration Statement on Form S-1 filed December 7, 1982.~~

~~(2)~~		Incorporated by reference to the corresponding exhibit in ~~the Company’s~~our Annual Report on Form 10-Q filed ~~February 13, 1997.~~September 20, 1989.


~~(3)~~(2)		Incorporated by reference to the corresponding exhibit in ~~the Company’s~~our Quarterly Report on Form 10-Q filed February 16, 1999.


~~(4)~~(3)		Incorporated by reference to the indicated exhibit in ~~the Company’s~~our Quarterly Report on Form 10-Q filed February 14, 2001.


~~(5)~~(4)		Incorporated by reference to the indicated Exhibit 10.17 in ~~the Company’s~~our Annual Report on Form 10-K filed August 28, 2002.


~~(6)~~(5)		Incorporated by reference to the indicated Exhibit in ~~the Company’s~~our Annual Report on Form 10-K filed September 24, 2003.


~~(7)~~(6)		Incorporated by reference to the indicated exhibit in ~~the Company’s~~our Annual Report on Form 10-K filed September 10, 2004.


~~(8)~~(7)		Incorporated by reference to ~~the Company’s~~our Registration Statement on Form S-8 filed December 8, 2004.

(11)		Incorporated by reference to the ~~Company’s~~indicated exhibit in our Quarterly Report on Form 10-Q filed ~~May 10, 2005.~~February 9, 2007.

(12)		Incorporated by reference to the indicated exhibit in our Form 8-K filed November 21, 2006.

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

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


	DIONEX CORPORATION (Registrant)
Date: November 9, ~~2006~~2007	By:	/s/ Lukas Braunschweiler
		Lukas Braunschweiler
		President, Chief Executive Officer And Director


	By:	/s/ Craig A. McCollam
		Craig A. McCollam
		Vice President and Chief Financial Officer

~~/s/ Craig A. McCollam~~
~~Craig A. McCollam~~

Medical Care Reimbursement Plan, as amended October 30, 2007

~~Vice President, and Chief Financial Officer~~Form of International Stock Option Agreement