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our cash and cash equivalents and short-term investment balances and the variances from year to year are due to<br />
fluctuations in those balances and changes in interest rates. Interest expense primarily relates to interest for the<br />
1.25 percent Convertible Senior Notes (the “Notes”) and our revolving credit facility and amortization of debt<br />
issuance costs. The decrease in interest expense from fiscal year 2009 compared to fiscal year 2008 is due to a<br />
decrease in short-term LIBOR rates coupled with the fact that fiscal year 2008 includes only a partial year of<br />
interest expense for the Notes, partially offset by fiscal year 2009 including higher interest expense on the<br />
revolving credit facility beginning in the fourth quarter of fiscal year 2009. The increase in interest expense in<br />
fiscal year 2008 compared to the prior year was due to the issuance of the Notes in October 2007.<br />
We had average borrowings outstanding of $521.0 million in fiscal year 2009 compared to $401.0 million in<br />
fiscal year 2008 and $170.2 million in fiscal year 2007. Our weighted average interest rate was 2.6 percent, 3.5<br />
percent and 5.6 percent in fiscal years 2009, 2008 and 2007, respectively.<br />
The interest rate on our old revolving credit facility was based on LIBOR plus 37 to 90 basis points, plus a<br />
commitment fee of 8 to 22.5 basis points. The interest rate spread and commitment fee were determined based<br />
upon our interest coverage ratio and senior unsecured debt rating. Interest rates for borrowings under the<br />
Amended Credit Agreement increased to three percent above the applicable base rate and four percent over<br />
LIBOR for Eurocurrency loans. We expect interest expense to increase due to both the increase in interest rates<br />
and the increase in borrowings under the Amended Credit Agreement.<br />
Miscellaneous Expenses, net<br />
We recorded miscellaneous expenses, net, of $3.5 million in fiscal year 2009, compared to $5.4 million and<br />
$2.7 million in fiscal year 2008 and 2007, respectively, primarily consisting of bank charges. Bank charges were<br />
$3.7 million, $3.3 million and $2.6 million in fiscal years 2009, 2008 and 2007, respectively.<br />
Income Taxes<br />
Our fiscal year 2009 effective tax rate was a benefit of 18.8 percent. The effective tax rate was lower than<br />
the U.S. Federal statutory rate of 35 percent due to a significant portion of the goodwill impairment charge being<br />
non-deductible for tax purposes or approximately $82.6 million in lost tax benefit. The effective tax rates in<br />
fiscal years 2008 and 2007 were 13.8 percent and 18.4 percent, respectively.<br />
Financial Condition<br />
Liquidity and Capital Resources<br />
We primarily finance our working capital requirements through borrowings under our revolving credit<br />
facility, cash generated by operations, and trade credit. In fiscal year 2009, we also received additional financing<br />
to fund our working capital requirements with the net proceeds from the public offering of our common stock.<br />
Cash and cash equivalents were $590.6 million and $223.1 million at June 30, 2009 and 2008, respectively.<br />
During fiscal year 2009, cash was primarily used to make investments in our manufacturing facilities, fund<br />
product development and restructuring programs and meet the working capital needs of our business segments.<br />
We will continue to have cash requirements to support seasonal working capital needs, investments in our<br />
manufacturing facilities, interest and principal payments and restructuring payments. We intend to use cash on<br />
hand and cash generated by operations to meet these requirements. The credit markets have recently experienced<br />
adverse conditions. Our existing cash and cash equivalents may decline and our financial condition may be<br />
adversely affected in the event of continued volatility in the credit markets or further economic deterioration. We<br />
expect that credit market and industry conditions will continue to be weak in the near future. However, we<br />
believe that in this difficult environment our cash on hand of $590.6 million as of June 30, 2009 and our<br />
operating cash flows will be adequate to meet our cash requirements for operations, restructuring and necessary<br />
capital expenditures over the next 12 months. Below is a more detailed discussion of our cash flow activities<br />
during the year ended June 30, 2009.<br />
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