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 August 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 0-19095
 SOMANETICS CORPORATION
  Michigan
    
    38-2394784(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 1653 East Maple Road
Troy, Michigan
48083-4208
 (248) 689-3050
 N/A
  þ o
  o o
  Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller-reporting company o  o þ
 12,088,962




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##### 



PART
I FINANCIAL INFORMATION
 SOMANETICS CORPORATION
 ITEM 1.
    
    FINANCIAL STATEMENTS
 BALANCE SHEETS
 August 31,
    
    
    November 30,2009
    
    
    2008(Unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    20,724,822
    
    
    $
    37,166,141Marketable securities
    
    
    28,988,437
    
    
    
    19,992,545Accounts receivable
    
    
    7,924,399
    
    
    
    7,862,103Inventory
    
    
    3,665,636
    
    
    
    2,960,422Prepaid expenses
    
    
    363,007
    
    
    
    597,460Accrued interest receivable
    
    
    184,409
    
    
    
    16,667Deferred tax asset  current
    
    
    164,615
    
    
    
    164,615Total current assets
    
    
    62,015,325
    
    
    
    68,759,953PROPERTY AND EQUIPMENT (at cost):Demonstration and no capital cost sales equipment at customers
    
    
    4,322,125
    
    
    
    3,919,296Machinery and equipment
    
    
    1,923,695
    
    
    
    1,638,597Furniture and fixtures
    
    
    545,796
    
    
    
    504,485Leasehold improvements
    
    
    197,450
    
    
    
    197,450Total
    
    
    6,989,066
    
    
    
    6,259,828Less accumulated depreciation and amortization
    
    
    (4,021,496
    )
    
    
    (3,418,697
    )Net property and equipment
    
    
    2,967,570
    
    
    
    2,841,131OTHER ASSETS:Long-term investments
    
    
    28,002,534
    
    
    
    12,837,710Deferred tax asset  non-current
    
    
    1,782,977
    
    
    
    1,587,977Intangible assets, net
    
    
    237,081
    
    
    
    246,318Goodwill
    
    
    1,679,713
    
    
    
    1,679,713Other
    
    
    15,000
    
    
    
    15,000Total other assets
    
    
    31,717,305
    
    
    
    16,366,718TOTAL ASSETS
    
    $
    96,700,200
    
    
    $
    87,967,802LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    1,045,984
    
    
    $
    1,271,058Accrued liabilities
    
    
    1,275,659
    
    
    
    1,848,672Total current liabilities
    
    
    2,321,643
    
    
    
    3,119,730COMMITMENTS AND CONTINGENCIESSHAREHOLDERS EQUITY:Preferred shares; authorized, 1,000,000 shares of $.01 par value;
no shares issued or outstanding
    
    
    
    
    
    
    Common shares; authorized, 20,000,000 shares of $.01 par value;
issued and outstanding, 12,088,962 shares at August 31, 2009,
and 12,034,074 shares at November 30, 2008
    
    
    120,890
    
    
    
    120,341Additional paid-in capital
    
    
    95,551,450
    
    
    
    91,330,305Accumulated deficit
    
    
    (1,293,783
    )
    
    
    (6,602,574
    )Total shareholders equity
    
    
    94,378,557
    
    
    
    84,848,072TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    96,700,200
    
    
    $
    87,967,802
  2




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##### 



SOMANETICS CORPORATION
 STATEMENTS OF OPERATIONS
(Unaudited)
 Three Months
    
    
    Nine MonthsEnded August 31,
    
    
    Ended August 31,2009
    
    
    2008
    
    
    2009
    
    
    2008NET REVENUES
    
    $
    12,513,135
    
    
    $
    12,367,988
    
    
    $
    35,500,049
    
    
    $
    33,801,326COST OF SALES
    
    
    1,542,901
    
    
    
    1,717,858
    
    
    
    4,727,137
    
    
    
    4,413,939Gross Margin
    
    
    10,970,234
    
    
    
    10,650,130
    
    
    
    30,772,912
    
    
    
    29,387,387OPERATING EXPENSES:Research, development and engineering
    
    
    476,184
    
    
    
    332,236
    
    
    
    1,395,926
    
    
    
    894,574Selling, general and administrative
    
    
    7,277,898
    
    
    
    6,155,551
    
    
    
    21,765,806
    
    
    
    19,423,534Total operating expenses
    
    
    7,754,082
    
    
    
    6,487,787
    
    
    
    23,161,732
    
    
    
    20,318,108OPERATING INCOME
    
    
    3,216,152
    
    
    
    4,162,343
    
    
    
    7,611,180
    
    
    
    9,069,279OTHER INCOME:Interest income
    
    
    312,271
    
    
    
    562,178
    
    
    
    912,493
    
    
    
    2,197,280Total other income
    
    
    312,271
    
    
    
    562,178
    
    
    
    912,493
    
    
    
    2,197,280INCOME BEFORE INCOME TAXES
    
    
    3,528,423
    
    
    
    4,724,521
    
    
    
    8,523,673
    
    
    
    11,266,559INCOME TAX EXPENSE
    
    
    (1,299,377
    )
    
    
    (1,678,067
    )
    
    
    (3,214,882
    )
    
    
    (4,139,424
    )NET INCOME
    
    $
    2,229,046
    
    
    $
    3,046,454
    
    
    $
    5,308,791
    
    
    $
    7,127,135NET INCOME PER COMMON
SHARE  BASIC
    
    $
    0.18
    
    
    $
    0.25
    
    
    $
    0.44
    
    
    $
    0.55NET INCOME PER COMMON
SHARE  DILUTED
    
    $
    0.17
    
    
    $
    0.23
    
    
    $
    0.41
    
    
    $
    0.51WEIGHTED AVERAGE SHARES
OUTSTANDING  BASIC
    
    
    12,088,962
    
    
    
    12,079,089
    
    
    
    12,061,559
    
    
    
    12,889,638WEIGHTED AVERAGE SHARES
OUTSTANDING  DILUTED
    
    
    12,957,120
    
    
    
    13,247,953
    
    
    
    12,926,752
    
    
    
    13,919,212
  3




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##### 



SOMANETICS CORPORATION
 STATEMENTS OF CASH FLOWS
(Unaudited)
 For the Nine-MonthPeriods EndedAugust 31,
    
    
    August 31,2009
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    5,308,791
    
    
    $
    7,127,135Adjustments to reconcile net income to net cash provided by operations:Income tax expense
    
    
    2,898,049
    
    
    
    3,837,802Depreciation and amortization
    
    
    798,029
    
    
    
    702,601Stock compensation expense
    
    
    1,198,528
    
    
    
    954,993Changes in assets and liabilities:Accounts receivable (increase)
    
    
    (62,296
    )
    
    
    (248,966
    )Accrued interest income (increase) decrease
    
    
    (167,742
    )
    
    
    297,951Inventory (increase)
    
    
    (1,284,318
    )
    
    
    (1,183,438
    )Deferred income tax benefit (increase)
    
    
    (195,000
    )
    
    
    (172,488
    )Prepaid expenses decrease
    
    
    234,453
    
    
    
    298,144Accounts payable (decrease)
    
    
    (225,074
    )
    
    
    (61,451
    )Accrued liabilities (decrease)
    
    
    (573,013
    )
    
    
    (359,741
    )Net cash provided by operating activities
    
    
    7,930,407
    
    
    
    11,192,542CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of marketable securities and long-term investments
    
    
    (58,496,804
    )
    
    
    Proceeds from maturities of marketable securities and
long-term investments
    
    
    34,336,088
    
    
    
    27,641,147Acquisition of property and equipment
    
    
    (336,128
    )
    
    
    (592,633
    )Net cash (used in) provided by investing activities
    
    
    (24,496,844
    )
    
    
    27,048,514CASH FLOWS FROM FINANCING ACTIVITIES:Repurchase of common shares
    
    
    
    
    
    
    (31,449,420
    )Proceeds from issuance of common shares due to exercise of stock options
    
    
    125,118
    
    
    
    1,238,078Net cash provided by (used in) financing activities
    
    
    125,118
    
    
    
    (30,211,342
    )NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    (16,441,319
    )
    
    
    8,029,714CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    37,166,141
    
    
    
    33,172,977CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    20,724,822
    
    
    $
    41,202,691Supplemental Disclosure of Non cash investing activities:Demonstration and no capital cost sales equipment capitalized
from inventory (Note 2)
    
    $
    579,104
    
    
    $
    378,661Supplemental Disclosure of Taxes paid:Federal and state income taxes (Note 3)
    
    $
    541,833
    
    
    $
    474,110
  4




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##### 



SOMANETICS CORPORATION
 Notes to Financial Statements
(Unaudited)
 August 31, 2009
 1. FINANCIAL STATEMENT PRESENTATION
   2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Marketable Securities and Long-Term Investments
 Inventory
 August 31,
    
    
    November 30,2009
    
    
    2008Purchased components
    
    $
    2,660,275
    
    
    $
    2,141,050Finished goods
    
    
    835,020
    
    
    
    587,808Work in process
    
    
    170,341
    
    
    
    231,564Total
    
    $
    3,665,636
    
    
    $
    2,960,422
 Property and Equipment
 Intangible Assets and Goodwill
 5




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##### 



SOMANETICS CORPORATION
 Notes
to Financial Statements  Continued
(Unaudited)
 August 31, 2009
 August 31,
    
    
    November 30,2009
    
    
    2008Technology acquisition costs
    
    $
    246,318
    
    
    $
    246,318Less: accumulated amortization
    
    
    (9,237
    )
    
    
    Total
    
    $
    237,081
    
    
    $
    246,318
  Stock Compensation
   6




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##### 



SOMANETICS CORPORATION
 Notes
to Financial Statements  Continued
(Unaudited)
 August 31, 2009
   Net Income Per Common Share  basic and diluted
 2009Three Months
    
    Nine MonthsWeighted average shares  basic
    
    
    12,088,962
    
    
    
    12,061,559Add: effect of dilutive common
shares
    
    
    868,158
    
    
    
    865,193Weighted average shares  diluted
    
    
    12,957,120
    
    
    
    12,926,752
 2008Three Months
    
    Nine MonthsWeighted average shares  basic
    
    
    12,079,089
    
    
    
    12,889,638Add: effect of dilutive common
shares
    
    
    1,168,864
    
    
    
    1,029,574Weighted average shares  diluted
    
    
    13,247,953
    
    
    
    13,919,212
  3. INCOME TAXES
   7




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##### 



SOMANETICS CORPORATION
 Notes
to Financial Statements  Continued
(Unaudited)
 August 31, 2009
   4. ACCRUED LIABILITIES
  August 31,
    
    
    November 30,2009
    
    
    2008Incentive Compensation
    
    $
    772,942
    
    
    $
    978,520Sales Commissions
    
    
    296,176
    
    
    
    637,516Professional Fees
    
    
    134,520
    
    
    
    39,500Clinical Research
    
    
    51,671
    
    
    
    51,671Warranty
    
    
    20,350
    
    
    
    19,440Taxes
    
    
    
    
    
    
    121,683401(k) Match
    
    
    
    
    
    
    342Total
    
    $
    1,275,659
    
    
    $
    1,848,672
 5. COMMITMENTS AND CONTINGENCIES
 th
  8




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##### 



SOMANETICS CORPORATION
 Notes
to Financial Statements  Continued
(Unaudited)
 August 31, 2009
 Year ending November 30,2009
    
    $
    43,2002010
    
    
    365,1002011
    
    
    450,1002012
    
    
    461,4002013
    
    
    472,9002014
    
    
    484,7002015
    
    
    497,0002016
    
    
    509,6002017
    
    
    171,200Total
    
    $
    3,455,200
 ®
  6. SEGMENT INFORMATION
  7. SUBSEQUENT EVENTS
  9




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##### 



SOMANETICS CORPORATION
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 August 31, 2009
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 Forward-Looking Statements
 You should read the following discussion and analysis of our financial condition and results
of operations together with our financial statements and the related notes and other financial data
included elsewhere in this report. Some of the information contained in this discussion and
analysis or set forth elsewhere in this report, including information with respect to our plans and
strategy for our business, includes forward-looking statements that involve risks and
uncertainties. You should review the Risk Factors section of our Annual Report on Form 10-K for
a discussion of important factors that could cause actual results to differ materially from the
results described in or implied by the forward-looking statements contained in the following
discussion and analysis. See also Forward-Looking Statements in Item 1A of our Annual Report on
Form 10-K.
 Overview
   
    
    The measurement of regional cerebral oxygen saturation (rSO2) is an indication
of whether oxygen delivery to the brain is adequate. Prolonged declines in rSO2
are indicative of, or may result in, potential brain injury.
    
    When used as an indication of compromised cerebral oxygenation, interventions to return the
patients rSO2 to baseline using the INVOS System have been shown to improve
outcomes after surgery.
    
    In neonates, infants and children, cerebral and somatic rSO2 provide noninvasive
indications of oxygen changes in the cerebral and peripheral circulatory systems and may
provide an early indication of oxygen deficits associated with impending shock states and
anaerobiosis.
  10




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##### 



SOMANETICS CORPORATION
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 August 31, 2009
  Net Revenues and Cost of Sales
   Operating Expenses
  
    
    salaries, wages and related expenses of our employees and consultants;
    
    sales and marketing expenses, such as employee sales commissions, commissions to
independent sales representatives, travel, entertainment, advertising, education and
training expenses, depreciation of demonstration monitors and attendance at selected
medical conferences;
    
    clinical research expenses, such as costs of supporting clinical trials; and
    
    general and administrative expenses, such as the cost of corporate operations,
professional services, stock compensation, insurance, warranty and royalty expenses,
investor relations, depreciation and amortization, facilities expenses and other general
operating expenses.
  11




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##### 



SOMANETICS CORPORATION
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 August 31, 2009
   
    
    salaries, wages and related expenses of our research and development personnel and
consultants;
    
    costs of various development projects; and
    
    costs of preparing and processing applications for FDA clearance of new products.
  Results of Operations
 Three Months Ended August 31, 2009 Compared to Three Months Ended August 31, 2008
 Net Revenues.
     12




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##### 



SOMANETICS CORPORATION
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 August 31, 2009
 Three Months Ended August 31,Product
    
    2009
    
    2008Sensors
    
    
    84
    %
    
    
    75
    %INVOS System Monitors
    
    
    16
    %
    
    
    25
    %Total
    
    
    100
    %
    
    
    100
    %
  Gross Margin.
 Research, Development and Engineering Expenses.
 Selling, General and Administrative Expenses.
 
    
    a $557,210 increase in salaries, wages and related expenses, primarily as a result of an
increase in the number of employees, principally in sales and marketing (from an average of
105 employees for the three months ended August 31, 2008 to an average of 126 employees for
the three months ended August 31, 2009) and an increase in employee insurance premiums;
    
    a $406,841 increase in professional service fees, primarily due to increased legal and
accounting fees associated with the establishment of Somanetics International BV and the
related branches and operations, and legal fees associated with corporate and intellectual
property matters;
    
    a $216,305 increase in travel, marketing and selling-related expenses as a result of our
increased sales personnel and increased sales and marketing activities, including trade
shows, sales training and advertising expenses;
    
    a $86,797 increase in office and administrative expenses, primarily due to the addition
of new employees during fiscal 2009 and the establishment of Somanetics International BV
and the hiring of employees in the related branches and operations; and
 13




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##### 



SOMANETICS CORPORATION
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 August 31, 2009
 
    
    a $35,516 increase in stock compensation expense due to stock compensation issued to our
officers, employees, directors and one of our consultants in fiscal 2009.
   Other Income.
 Income Taxes.
 Nine Months Ended August 31, 2009 Compared to Nine Months Ended August 31, 2008
 Net Revenues.
 
    
    an increase in U.S. sales of $1,374,911, or 5%, from $27,060,617 in the first nine
months of fiscal 2008 to $28,435,528 in the first nine months of fiscal 2009. The increase
was primarily due to an increase in sales of the disposable sensors of $3,428,090, or 15%,
primarily as a result of an 11% increase in sensor unit sales. This increase was partially
offset by a decrease in sales of the INVOS System monitor in the United States of
$2,011,502, or 42%, primarily as a result of the current economic downturn in the United
States that is affecting hospital budget spending and lengthening the sales cycle for our
INVOS System monitor; and
    
    an increase in international sales of $323,812, or 5%, from $6,740,709 in the first nine
months of fiscal 2008 to $7,064,521 in the first nine months of fiscal 2009. The increase
in international sales was primarily due to increased sales of our disposable sensors of
$837,600, or 29%, primarily as a result of purchases by Covidien in Europe. This increase
was partially offset by a decrease in sales of the INVOS System monitor internationally of
$513,788, or 13%, primarily due to reduced purchases by Covidien in Europe as a result of
the current economic downturn internationally that is affecting hospital budget spending
and lengthening the sales cycle for our INVOS System monitor. In the first nine months of
fiscal 2009 and 2008, international sales represented 20% of our net revenues. Purchases
by Covidien accounted for 13% of net revenues in the first nine months of fiscal 2009,
compared to 14% of our net revenues in the same period of fiscal 2008.
 14




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##### 



SOMANETICS CORPORATION
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 August 31, 2009
   Nine Months Ended August 31,Product
    
    2009
    
    2008Sensors
    
    
    83
    %
    
    
    74
    %INVOS System Monitors
    
    
    17
    %
    
    
    26
    %Total
    
    
    100
    %
    
    
    100
    %
 Gross Margin.
 Research, Development and Engineering Expenses.
 Selling, General and Administrative Expenses.
 
    
    a $1,577,350 increase in salaries, wages and related expenses, primarily as a result of
an increase in the number of employees, principally in sales and marketing (from an average
of 102 employees for the nine months ended August 31, 2008 to an average of 121 employees
for the nine months ended August 31, 2009) and an increase in employee insurance premiums;
    
    a $656,929 increase in travel, marketing and selling-related expenses as a result of our
increased sales personnel and increased sales and marketing activities, including sales
training, trade shows and advertising expenses;
    
    a $317,152 increase in professional service fees, primarily due to increased legal and
accounting fees associated with the establishment of Somanetics International BV and the
related branches and operations, and legal fees associated with corporate and intellectual
property matters;
    
    a $243,535 increase in stock compensation expense due to stock compensation issued to
our officers, employees, directors and one of our consultants in fiscal 2008 and 2009;
    
    a $242,607 increase in office and administrative expenses, primarily due to the addition
of new employees during fiscal 2009 and the establishment of Somanetics International BV
and the hiring of employees in the related branches and operations, and costs associated
with terminating our CorRestore license; and
    
    a $216,043 increase in recruiting and training, primarily as a result of an increase in
the number of employees, principally in sales and marketing.
 15




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##### 



SOMANETICS CORPORATION
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 August 31, 2009
  Other Income.
 Income Taxes.
 Liquidity and Capital Resources
 General
   ®
  Cash Flows From Operating Activities
  16




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##### 



SOMANETICS CORPORATION
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 August 31, 2009
 
    
    $10,203,397 of income before income taxes and non-cash depreciation, amortization and
stock compensation expense; and
    
    a $234,453 decrease in prepaid expenses, primarily due to the amortization of prepaid
insurance payments paid in fiscal 2008.
  
    
    an $1,284,318 increase in inventories, primarily due to lower than expected fiscal 2009
sales and the acquisition of components associated with our disposable sensors and our
INVOS System monitor due to anticipated sales; inventories on our balance sheet increased
less because we capitalized INVOS System monitors to property and equipment that are being
used as demonstration units and no capital cost sales equipment, as described below;
    
    a $573,013 decrease in accrued liabilities, primarily as a result of the payment of
year-end 2008 accruals, including incentive compensation, sales commissions and taxes,
partially offset by accruals in fiscal 2009 for legal and accounting, incentive
compensation and sales commissions as a result of year to date financial performance;
    
    a $225,074 decrease in accounts payable, primarily as a result of timing of payments
made to vendors, partially offset by increased inventories and operating expenses;
    
    an $195,000 increase in deferred income tax benefits as a result of payments made for
estimated alternative minimum tax that we expect will result in future tax credits when we
use our net operating loss carryforwards;
    
    an $167,742 increase in accrued interest income, primarily due to our increased
marketable securities and long-term investment balances, partially offset by decreased
interest rates; and
    
    a $62,296 increase in accounts receivable, primarily as a result of the timing of more
of the sales in the third quarter of fiscal 2009 towards the end of the quarter and less
timely collections in the third quarter of fiscal 2009, partially offset by lower third
quarter sales in fiscal 2009 than in the fourth quarter of fiscal 2008.
   Cash Flows From Investing Activities
  Cash Flows From Financing Activities
  17




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##### 



SOMANETICS CORPORATION
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 August 31, 2009
  Contractual Obligations
  Payments due by periodLess
    
    
    
    
    
    
    
    
    
    
    Morethan 1
    
    
    1-3
    
    
    3-5
    
    
    than 5Contractual Obligations
    
    Total
    
    
    year
    
    
    years
    
    
    years
    
    
    yearsLong-term debt obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Capital lease obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations
    
    $
    3,455,200
    
    
    $
    297,600
    
    
    $
    905,900
    
    
    $
    951,800
    
    
    $
    1,299,900Purchase obligations
    
    
    7,416,300
    
    
    
    7,416,300
    
    
    
    
    
    
    
    
    
    
    
    Other long-term liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
  Off-Balance Sheet Arrangements
  18




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##### 



SOMANETICS CORPORATION
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 August 31, 2009
 Critical Accounting Policies
  Stock Compensation
    Income Taxes
   19




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##### 



SOMANETICS CORPORATION
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
 August 31, 2009
   No Capital Cost Sales Revenue Recognition
  Technology Acquisition Costs Intangible Asset and Goodwill
    20




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##### 



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  August 31, 2009
Expected Maturity Dates By Fiscal Year
 2009
    
    2010
    
    2011
    
    2012
    
    2013
    
    Thereafter
    
    Total
    
    Fair ValueInvestments:Marketable Securities and Long-term Investments:Fixed Rate ($)
    
    
    13,983,007
    
    
    
    15,005,430
    
    
    
    21,998,000
    
    
    
    6,004,534
    
    
    
    
    
    
    
    
    
    
    
    56,990,971
    
    
    
    57,362,824Average interest rate
    
    
    0.45
    %
    
    
    1.30
    %
    
    
    1.79
    %
    
    
    4.60
    %
    
    
    N/A
    
    
    
    N/A
    
    
    
    1.63
    %
  21




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##### 



ITEM 4. CONTROLS AND PROCEDURES
    22




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##### 



PART II OTHER INFORMATION
 ITEM 1. LEGAL PROCEEDINGS
 ®
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  TotalNumber of
    
    
    ApproximateShares
    
    
    Dollar ValuePurchased
    
    
    of SharesTotal
    
    
    
    
    
    
    as Part of
    
    
    That May YetNumber of
    
    
    Average
    
    
    Publicly
    
    
    Be PurchasedShares
    
    
    Price Paid
    
    
    Announced Plans
    
    
    Under the PlansPeriod
    
    Purchased
    
    
    Per Share
    
    
    or Programs
    
    
    or ProgramsJune 1-30, 2009
    
    
    0
    
    
    
    
    
    
    
    0
    
    
    
    13,550,580July 1-31, 2009
    
    
    0
    
    
    
    
    
    
    
    0
    
    
    
    13,550,580August 1-31, 2009
    
    
    0
    
    
    
    
    
    
    
    0
    
    
    
    13,550,580Total
    
    
    0
    
    
    
    N/A
    
    
    
    0
  23




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##### 



ITEM 6. EXHIBITS
 10.1
    
    Lease, dated as of July 22, 2009, between Kirts Office Center
Associates, L.L.C. and Somanetics Corporation, incorporated by reference to
Exhibit 10.1 to the Companys Current Report on Form 8-K dated July 22, 2009
and filed on July 27, 2009.31.1
    
    Certifications of Chief Executive Officer Pursuant to Rule
13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.31.2
    
    Certifications of Chief Financial Officer Pursuant to Rule
13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.32.1
    
    Certifications of Chief Executive Officer and Chief Financial
Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
 24




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##### 



SIGNATURES
  Somanetics Corporation(Registrant)Date: September 28, 2009
    By:
    /s/ William M. IaconaWilliam M. IaconaVice President and Chief Financial Officer,
Controller and Treasurer (Duly Authorized and
Principal Financial Officer) 25




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##### 



EXHIBIT INDEX
 Exhibit
    
    Description10.1
    
    Lease, dated as of July 22, 2009, between Kirts Office Center Associates, L.L.C. and
Somanetics Corporation, incorporated by reference to Exhibit 10.1 to the Companys Current
Report on Form 8-K dated July 22, 2009 and filed on July 27, 2009.31.1
    
    Certifications of Chief Executive Officer Pursuant to Rule 13a-14(a), as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certifications of Chief Financial Officer Pursuant to Rule 13a-14(a), as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 26