##### Table of Contents



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 June 30, 2007
 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 No. 000-30109
 LUMINEX CORPORATION
  DELAWARE
    
    74-2747608(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)12212 TECHNOLOGY BLVD., AUSTIN, TEXAS
    
    78727(Address of principal executive offices)
    
    (Zip Code)
 (512) 219-8020
 þ o
  o þ o
 o þ




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##### 



INDEX
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)Condensed Consolidated Balance Sheets as of June 30, 2007 and December 31, 2006
    
    
    1Condensed Consolidated Statements of Operations for the three and six months ended
June 30, 2007 and 2006
    
    
    2Condensed Consolidated Statements of Cash Flows for the three and six months ended
June 30, 2007 and 2006
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    26Item 4. Controls and Procedures
    
    
    26PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    27Item 1A. Risk Factors
    
    
    27Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    28Item 4. Submission of Matters to a Vote of Security Holders
    
    
    28Item 6. Exhibits
    
    
    29SIGNATURES and EXHIBITS
    
    
    S-1Ex-10.1 Amendment to 2000 Amended & Restated Long Term Incentive PlanEx-10.2 Amendment to 2001 Broad-Based Stock Option PlanEx-10.3 Amendment to 2006 Management Stock Purchase PlanEx-10.4 Amendment to 2006 Equity Incentive PlanEx-10.5 Form of Amendments to Equity Award AgreementsEx-31.1 Section 302 Certification for CEOEx-31.2 Sections 302 Certification of the CFOEx-32.1 Section 906 Certification for CEOEx-32.2 Sections 302 Certification of the CFO




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 LUMINEX CORPORATION
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (in thousands)
 June 30,
    
    
    December 31,2007
    
    
    2006(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    11,836
    
    
    $
    27,414Short-term investments
    
    
    3,314
    
    
    
    10,956Accounts receivable, net
    
    
    11,614
    
    
    
    8,237Inventory, net
    
    
    7,100
    
    
    
    4,571Other
    
    
    1,874
    
    
    
    1,917Total current assets
    
    
    35,738
    
    
    
    53,095Property and equipment, net
    
    
    10,189
    
    
    
    4,985Intangible assets, net
    
    
    24,583
    
    
    
    Long-term investments
    
    
    5,311
    
    
    
    7,346Goodwill
    
    
    34,132
    
    
    
    Other
    
    
    1,705
    
    
    
    1,270Total assets
    
    $
    111,658
    
    
    $
    66,696LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    3,687
    
    
    $
    3,255Accrued liabilities
    
    
    8,219
    
    
    
    2,905Deferred revenue and other
    
    
    3,073
    
    
    
    2,756Total current liabilities
    
    
    14,979
    
    
    
    8,916Long-term debt
    
    
    3,825
    
    
    
    Deferred revenue and other
    
    
    3,814
    
    
    
    3,621Total liabilities
    
    
    22,618
    
    
    
    12,537Stockholders equity:Common stock
    
    
    35
    
    
    
    32Additional paid-in capital
    
    
    186,059
    
    
    
    139,116Accumulated other comprehensive (loss) gain
    
    
    (80
    )
    
    
    65Accumulated deficit
    
    
    (96,974
    )
    
    
    (85,054
    )Total stockholders equity
    
    
    89,040
    
    
    
    54,159Total liabilities and stockholders equity
    
    $
    111,658
    
    
    $
    66,696




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LUMINEX CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except per share amounts)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(unaudited)
    
    
    (unaudited)Revenue
    
    $
    17,548
    
    
    $
    13,268
    
    
    $
    34,155
    
    
    $
    26,265Cost of revenue
    
    
    7,211
    
    
    
    5,608
    
    
    
    13,388
    
    
    
    10,346Gross profit
    
    
    10,337
    
    
    
    7,660
    
    
    
    20,767
    
    
    
    15,919Operating expenses:Research and development
    
    
    3,865
    
    
    
    1,790
    
    
    
    6,571
    
    
    
    3,987Selling, general and administrative
    
    
    10,716
    
    
    
    6,137
    
    
    
    18,812
    
    
    
    12,086In-process research and development expense
    
    
    8,000
    
    
    
    
    
    
    
    8,000
    
    
    
    Total operating expenses
    
    
    22,581
    
    
    
    7,927
    
    
    
    33,383
    
    
    
    16,073Income (loss) from operations
    
    
    (12,244
    )
    
    
    (267
    )
    
    
    (12,616
    )
    
    
    (154
    )Interest expense from long-term debt
    
    
    (334
    )
    
    
    
    
    
    
    (419
    )
    
    
    Other income, net
    
    
    421
    
    
    
    551
    
    
    
    1,028
    
    
    
    967Income taxes
    
    
    101
    
    
    
    (13
    )
    
    
    87
    
    
    
    (16
    )Net income (loss)
    
    $
    (12,056
    )
    
    $
    271
    
    
    $
    (11,920
    )
    
    $
    797Net income (loss) per share, basic
    
    $
    (0.34
    )
    
    $
    0.01
    
    
    $
    (0.36
    )
    
    $
    0.03Shares used in computing net income (loss)
per share, basic
    
    
    35,006
    
    
    
    31,386
    
    
    
    33,504
    
    
    
    31,288Net income (loss) per share, diluted
    
    $
    (0.34
    )
    
    $
    0.01
    
    
    $
    (0.36
    )
    
    $
    0.02Shares used in computing net income (loss)
per share, diluted
    
    
    35,006
    
    
    
    32,876
    
    
    
    33,504
    
    
    
    32,606
  2




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LUMINEX CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(unaudited)
    
    
    (unaudited)Operating activities:Net income (loss)
    
    $
    (12,056
    )
    
    $
    271
    
    
    $
    (11,920
    )
    
    $
    797Adjustments to reconcile net income to net cash
(used in) provided by operating activities:Depreciation and amortization
    
    
    1,837
    
    
    
    384
    
    
    
    2,377
    
    
    
    748In-process research and development expense
    
    
    8,000
    
    
    
    
    
    
    
    8,000
    
    
    
    Stock-based compensation and other
    
    
    1,593
    
    
    
    1,259
    
    
    
    3,100
    
    
    
    2,424Loss (gain) on disposal of assets
    
    
    34
    
    
    
    (2
    )
    
    
    88
    
    
    
    25Other
    
    
    4
    
    
    
    (7
    )
    
    
    4
    
    
    
    (9
    )Changes in operating assets and liabilities:Accounts receivable, net
    
    
    (580
    )
    
    
    (3,136
    )
    
    
    (1,657
    )
    
    
    (1,476
    )Inventory, net
    
    
    (689
    )
    
    
    460
    
    
    
    (721
    )
    
    
    138Prepaids and other
    
    
    (460
    )
    
    
    (399
    )
    
    
    (120
    )
    
    
    29Accounts payable
    
    
    (2,263
    )
    
    
    (254
    )
    
    
    (3,817
    )
    
    
    (1,506
    )Accrued liabilities
    
    
    772
    
    
    
    335
    
    
    
    (2,353
    )
    
    
    (835
    )Deferred revenue
    
    
    (217
    )
    
    
    5
    
    
    
    143
    
    
    
    (225
    )Net cash (used in) provided by operating activities
    
    
    (4,025
    )
    
    
    (1,084
    )
    
    
    (6,876
    )
    
    
    110Investing activities:Maturities (purchases) of held-to-maturity investments
    
    
    2,185
    
    
    
    955
    
    
    
    9,710
    
    
    
    (1,045
    )Purchase of property and equipment
    
    
    (1,724
    )
    
    
    (643
    )
    
    
    (3,329
    )
    
    
    (1,528
    )Acquisition of business, net of cash acquired
    
    
    (744
    )
    
    
    
    
    
    
    (2,735
    )
    
    
    Acquired technology rights
    
    
    (265
    )
    
    
    
    
    
    
    (265
    )
    
    
    Proceeds from sale of assets
    
    
    30
    
    
    
    2
    
    
    
    30
    
    
    
    7Net cash (used in) provided by investing activities
    
    
    (518
    )
    
    
    314
    
    
    
    3,411
    
    
    
    (2,566
    )Financing activities:Payments on debt
    
    
    (117
    )
    
    
    
    
    
    
    (12,345
    )
    
    
    Proceeds from issuance of common stock
    
    
    159
    
    
    
    358
    
    
    
    174
    
    
    
    1,434Other
    
    
    7
    
    
    
    
    
    
    
    7
    
    
    
    Net cash provided by (used in) financing activities
    
    
    49
    
    
    
    358
    
    
    
    (12,164
    )
    
    
    1,434Effect of foreign currency exchange rate on cash
    
    
    135
    
    
    
    16
    
    
    
    51
    
    
    
    22Change in cash and cash equivalents
    
    
    (4,359
    )
    
    
    (396
    )
    
    
    (15,578
    )
    
    
    (1,000
    )Cash and cash equivalents, beginning of period
    
    
    16,195
    
    
    
    24,602
    
    
    
    27,414
    
    
    
    25,206Cash and cash equivalents, end of period
    
    $
    11,836
    
    
    $
    24,206
    
    
    $
    11,836
    
    
    $
    24,206Supplemental disclosure of cashflow information:Interest and penalties paid
    
    $
    254
    
    
    $
    
    
    
    $
    1,335
    
    
    $
    Supplemental disclosure of non-cash effect of acquisitions:Purchase price
    
    $
    (744
    )
    
    $
    
    
    
    $
    (47,745
    )
    
    $
    Common stock issued
    
    
    
    
    
    
    
    
    
    
    41,755
    
    
    
    Conversion of Tm options and warrants
    
    
    
    
    
    
    
    
    
    
    2,315Cash acquired
    
    
    
    
    
    
    
    
    
    
    940
    
    
    
    Acquisition, net of cash acquired
    
    $
    (744
    )
    
    $
    
    
    
    $
    (2,735
    )
    
    $
    
 3
    Table of Contents   LUMINEX CORPORATION
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 NOTE 1  BASIS OF PRESENTATION
    NOTE 2  BUSINESS COMBINATIONS
 Acquisitions
    4




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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
     5




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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
 Cash
    
    $
    940Other current assets
    
    
    3,180Other assets
    
    
    28Property and equipment
    
    
    2,884Purchased intangible assets
    
    
    23,300In-process research and development
    
    
    8,000Other intangible assets
    
    
    2,083Goodwill
    
    
    34,132Total assets
    
    $
    74,547Current portion of debt assumed
    
    $
    12,447Accrued severance assumed
    
    
    2,120Other current liabilities assumed
    
    
    8,650Long-term debt assumed
    
    
    3,351Other long-term liabilities assumed
    
    
    234Total liabilities
    
    
    26,802Purchase price
    
    $
    47,745
 Pro Forma Information
    Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2007
    
    2006
    
    2007
    
    2006Revenues
    
    $
    17,548
    
    
    $
    15,375
    
    
    $
    34,474
    
    
    $
    29,901Net loss
    
    $
    (12,056
    )
    
    $
    (4,380
    )
    
    $
    (18,297
    )
    
    $
    (8,123
    )Net loss per share, basic and diluted
    
    $
    (0.34
    )
    
    $
    (0.13
    )
    
    $
    (0.52
    )
    
    $
    (0.24
    )
 Purchased Intangible Assets
  6




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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
 Gross carrying
    
    
    Accumulated
    
    
    Weighted averageamount
    
    
    amortization
    
    
    lifeTechnology/trade secrets
    
    $
    17,700
    
    
    $
    641
    
    
    
    9Customer lists/contracts
    
    
    5,300
    
    
    
    118
    
    
    
    15Trade name
    
    
    300
    
    
    
    100
    
    
    
    1Total
    
    $
    23,300
    
    
    $
    859
  For the yearendingDecember 31,2007
    
    $
    2,1492008
    
    
    2,3282009
    
    
    2,2782010
    
    
    2,2782011
    
    
    2,2782012
    
    
    2,278
 In-process Research and Development (IPR&D)
   7




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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)  (UNAUDITED)
 NOTE 3  INVESTMENTS
   Cost
    
    
    Accrued Interest
    
    
    Amortized CostDue in one year or less
    
    $
    3,314
    
    
    $
    22
    
    
    $
    3,336Due after one year through two years
    
    
    5,311
    
    
    
    30
    
    
    
    5,341$
    8,625
    
    
    $
    52
    
    
    $
    8,677
 NOTE 4  INVENTORY, NET
  June 30,
    
    
    December 31,2007
    
    
    2006Parts and supplies
    
    $
    4,057
    
    
    $
    3,504Work-in-progress
    
    
    1,960
    
    
    
    555Finished goods
    
    
    1,847
    
    
    
    9327,864
    
    
    
    4,991Less: Allowance for excess and obsolete inventory
    
    
    (764
    )
    
    
    (420
    )$
    7,100
    
    
    $
    4,571
 NOTE 5  EARNINGS PER SHARE
   8




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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Numerator:Net income
(loss)
    
    $
    (12,056
    )
    
    $
    271
    
    
    $
    (11,920
    )
    
    $
    797Denominator:Denominator for basic net income (loss) per share -
weighted average common stock outstanding
    
    
    35,006
    
    
    
    31,386
    
    
    
    33,504
    
    
    
    31,288Dilutive common stock equivalents  common stock
options and awards
    
    
    
    
    
    
    1,490
    
    
    
    
    
    
    
    1,318Denominator for diluted net income (loss) per
share -
weighted average common stock outstanding and
dilutive common stock equivalents
    
    
    35,006
    
    
    
    32,876
    
    
    
    33,504
    
    
    
    32,606Basic net income (loss) per share
    
    $
    (0.34
    )
    
    $
    0.01
    
    
    $
    (0.36
    )
    
    $
    0.03Diluted net income (loss) per share
    
    $
    (0.34
    )
    
    $
    0.01
    
    
    $
    (0.36
    )
    
    $
    0.02
  NOTE 6  STOCK-BASED COMPENSATION
    9




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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
   WeightedAverageShares
    
    
    ExerciseStock Options
    
    (in thousands)
    
    
    PriceOutstanding at December 31, 2006
    
    
    3,163
    
    
    $
    9.76Granted
    
    
    790
    (1)
    
    
    21.26Exercised
    
    
    (33
    )
    
    
    5.27Cancelled or expired
    
    
    (142
    )
    
    
    25.96Outstanding at June 30, 2007
    
    
    3,778
    
    
    $
    11.59
 
 (1)
    
    Includes shares reserved with respect to the Tm options assumed in the acquisition.   Weighted-AverageShares
    
    
    Grant-DateRestricted Stock Awards
    
    (in thousands)
    
    
    Fair ValueNon-vested at December 31, 2006
    
    
    798
    
    
    $
    12.46Granted
    
    
    387
    
    
    
    13.76Vested
    
    
    (187
    )
    
    
    13.60Cancelled or expired
    
    
    (7
    )
    
    
    13.98Non-vested at June 30, 2007
    
    
    991
    
    
    $
    13.61
   10




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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Cost of revenue
    
    $
    71
    
    
    $
    79
    
    
    $
    142
    
    
    $
    158Research and development
    
    
    165
    
    
    
    137
    
    
    
    343
    
    
    
    239Selling, general and administrative
    
    
    1,357
    
    
    
    1,043
    
    
    
    2,610
    
    
    
    2,027Total stock-based compensation costs
    
    $
    1,593
    
    
    $
    1,259
    
    
    $
    3,095
    
    
    $
    2,424
 NOTE 7  SEGMENT INFORMATION
   Technology
    
    Assay
    
    IntersegmentGroup
    
    Group
    
    Eliminations
    
    ConsolidatedRevenues from external customers
    
    $
    14,822
    
    
    $
    4,000
    
    
    $
    
    
    
    $
    18,822Intersegment revenue
    
    
    1,257
    
    
    
    17
    
    
    
    (1,274
    )
    
    
    (1,274
    )Depreciation and amortization
    
    
    524
    
    
    
    1,355
    
    
    
    (66
    )
    
    
    1,813Segment profit (loss)
    
    
    13
    
    
    
    (11,748
    )
    
    
    (321
    )
    
    
    (12,056
    )Segment assets
    
    
    49,559
    
    
    
    68,383
    
    
    
    (6,284
    )
    
    
    111,658
  Technology
    
    Assay
    
    IntersegmentGroup
    
    Group
    
    Eliminations
    
    ConsolidatedRevenues from external customers
    
    $
    30,560
    
    
    $
    5,200
    
    
    $
    
    
    
    $
    35,760Intersegment revenue
    
    
    1,580
    
    
    
    25
    
    
    
    (1,605
    )
    
    
    (1,605
    )Depreciation and amortization
    
    
    938
    
    
    
    1,517
    
    
    
    (86
    )
    
    
    2,369Segment profit (loss)
    
    
    1,674
    
    
    
    (13,208
    )
    
    
    (386
    )
    
    
    (11,920
    )Segment assets
    
    
    49,559
    
    
    
    68,383
    
    
    
    (6,284
    )
    
    
    111,658
 11




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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
 NOTE 8  INCOME TAXES
     NOTE 9  RECENT ACCOUNTING PRONOUNCEMENTS
   12




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  SAFE HARBOR CAUTIONARY STATEMENT
  
    
    risks and uncertainties relating to market demand and acceptance of our products and technology,
    
    dependence on strategic partners for development, commercialization and distribution of products,
    
    concentration of the Companys revenue in a limited number of strategic partners,
    
    fluctuations in quarterly results due to a lengthy and unpredictable sales cycle and
bulk purchases of consumables,
    
    our ability to scale manufacturing operations and manage operating expenses, gross
margins and inventory levels,
    
    potential shortages of components,
    
    competition,
    
    the timing of regulatory approvals,
    
    the implementation, including any modification, of the Companys strategic operating plans,
    
    risks and uncertainties associated with implementing our acquisition strategy and the
ability to integrate acquired companies, including LMD, or selected assets into our
consolidated business operations, including the ability to recognize the benefits of our
acquisitions,
    
    our ability to develop, manufacture and commercialize products within our Assay Segment,
and
    
    the current status of the credit market could effect our ability to obtain debt or
equity funds on favorable terms, if at all.
   13




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##### Table of Contents



OVERVIEW
    
    
    System revenue is generated from the sale of our xMap systems and peripherals.
Currently, system revenue is derived from the sale of the Luminex 100 and 200 analyzers,
often coupled with an optional XY Platform and/or Sheath Delivery System. We currently
expect the average system price to be between $25,000 and $30,000 in a given reporting
period. This metric includes all configurations of our xMAP systems including refurbished
systems, demonstration systems and modular components.
    
    Consumable revenue is generated from the sale of our dyed polystyrene microspheres and
sheath fluid. Our larger commercial and development partners often purchase these
consumables in bulk to minimize the number of incoming qualification events and to allow
for longer development and production runs.
    
    Royalty revenue is generated when a partner sells a kit incorporating our proprietary
microspheres to an end user or when a partner utilizes a kit to provide a testing result to
a user. End users can be facilities such as testing labs, development facilities and
research facilities who buy prepared kits and have specific testing needs or testing
service companies that provide assay results to pharmaceutical research companies or
physicians.
    
    Service revenue is generated when a partner or other owner of a system purchases a
service contract from us after the warranty has expired. Service contract revenue is
amortized over the life of the contract and the costs associated with those contracts are
recognized as incurred.
    
    Assay revenue is generated from the sale of our kits which is a combination of chemical
and biological reagents and our proprietary bead technology used to perform diagnostic and
research assays on samples. For the six months ended June 30, 2007, assay revenue includes
revenue since March 1, 2007 from Luminex Molecular Diagnostics, or LMD, formerly Tm
Bioscience Corporation, as a result of our acquisition which was effective March 1, 2007.
Assay revenue generated from the Luminex Bioscience Group, or LBG, is also classified here.
Previously, assay revenue generated from the LBG was recorded in other revenue as it did
not constitute a material amount of total revenue.
    
    Other revenue consists of items such as training, shipping, parts sales, license
revenue, grant revenue, contract research and development fees and milestone revenue and
other items that individually amount to less than 5% of total revenue.
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##### Table of Contents



Second Quarter 2007 Highlights
 
    
    Consolidated revenue of $17.5 million, a 32% increase year over year; and a 6% increase
over the first quarter of 2007
    
    System shipments surpass 4,500 an increase of 20% from the second quarter of 2006
    
    Consolidated gross margins of 59%
    
    In July 2007, announced a distribution agreement with Exiqon for the FlexmiR line of
products co-developed by the companies in 2006
    
    In July 2007, unveiled FlexMAP 3D a next generation bead-based multiplexing system
    
    Completion of manufacturing space update/expansion in response to expanded product offerings
    
    Partner successes, including Bio-Rad BioPlex 2200 Quest deal
 Acquisition of TM Bioscience
  Segment Information
  Future Operations
   CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  15




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Revenue Recognition.
  Inventory Valuation.
 Warranties.
 Accounts Receivable and Allowance for Doubtful Accounts.
 Purchase
Price Allocation and Goodwill.
  16




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RESULTS OF OPERATIONS
 THREE MONTHS ENDED JUNE 30, 2007 COMPARED TO THREE MONTHS ENDED JUNE 30, 2006
 Consolidated
 Three Months EndedJune 30,2007
    
    2006Revenue
    
    $
    17,548
    
    
    $
    13,268Gross profit
    
    $
    10,337
    
    
    $
    7,660Gross margin percentage
    
    
    59
    %
    
    
    58
    %Operating expenses
    
    $
    22,581
    
    
    $
    7,927Net operating loss
    
    $
    (12,244
    )
    
    $
    (267
    )
   Technology Segment
  17




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##### Table of Contents



Three Months EndedJune 30,2007
    
    2006Revenue
    
    $
    13,565
    
    
    $
    13,254Gross profit
    
    $
    7,739
    
    
    $
    7,641Gross margin percentage
    
    
    57
    %
    
    
    58
    %Operating expenses
    
    $
    9,347
    
    
    $
    7,410Net operating income (loss)
    
    $
    (1,608
    )
    
    $
    231
 Revenue.
  Three Months EndedJune 30,2007
    
    
    2006System sales
    
    $
    5,397
    
    
    $
    5,811Consumable sales
    
    
    3,305
    
    
    
    3,053Royalty revenue
    
    
    2,210
    
    
    
    2,001Service contracts
    
    
    1,087
    
    
    
    811Other revenue
    
    
    1,566
    
    
    
    1,578$
    13,565
    
    
    $
    13,254
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##### Table of Contents



Gross profit
 Operating expenses
  Assay Segment
  Three Months EndedJune 30,2007
    
    2006Revenue
    
    $
    3,983
    
    
    $
    14Gross profit
    
    $
    2,598
    
    
    $
    19Gross margin percentage
    
    
    65
    %
    
    
    136
    %Operating expenses
    
    $
    13,234
    
    
    $
    517Net operating loss
    
    $
    (10,636
    )
    
    $
    (498
    )
 19




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##### Table of Contents



Three Months EndedJune 30,2007
    
    
    2006Assays
    
    $
    3,737
    
    
    $
    14Other revenue
    
    
    246
    
    
    
    $
    3,983
    
    
    $
    14
 Revenue.
 Operating Expenses.
   SIX MONTHS ENDED JUNE 30, 2007 COMPARED TO SIX MONTHS ENDED JUNE 30, 2006
 Consolidated
 Six Months EndedJune 30,2007
    
    2006Revenue
    
    $
    34,155
    
    
    $
    26,265Gross profit
    
    $
    20,767
    
    
    $
    15,919Gross margin percentage
    
    
    61
    %
    
    
    61
    %Operating expenses
    
    $
    33,383
    
    
    $
    16,073Net operating loss
    
    $
    (12,616
    )
    
    $
    (154
    )
  20




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Technology Segment
  Six Months EndedJune 30,2007
    
    2006Revenue
    
    $
    28,980
    
    
    $
    26,251Gross profit
    
    $
    17,442
    
    
    $
    15,907Gross margin percentage
    
    
    60
    %
    
    
    61
    %Operating expenses
    
    $
    18,217
    
    
    $
    15,121Net
operating income (loss)
    
    $
    (775
    )
    
    $
    786
 Revenue.
  Six Months EndedJune 30,2007
    
    
    2006System sales
    
    $
    11,089
    
    
    $
    9,803Consumable sales
    
    
    8,116
    
    
    
    8,555Royalty revenue
    
    
    4,742
    
    
    
    3,791Service contracts
    
    
    2,090
    
    
    
    1,618Other revenue
    
    
    2,943
    
    
    
    2,484$
    28,980
    
    
    $
    26,251
   21




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Gross profit
 Operating expenses
  Assay Segment
  22




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##### Table of Contents



Six Months EndedJune 30,2007
    
    2006Revenue
    
    $
    5,175
    
    
    $
    14Gross profit
    
    $
    3,325
    
    
    $
    12Gross margin percentage
    
    
    64
    %
    
    
    86
    %Operating expenses
    
    $
    15,166
    
    
    $
    952Net operating (loss)
    
    $
    (11,841
    )
    
    $
    (940
    )
  Six Months EndedJune 30,2007
    
    
    2006Assays
    
    $
    4,881
    
    
    $
    14Other revenue
    
    
    294
    
    
    
    $
    5,175
    
    
    $
    14
 Revenue.
 Operating Expenses.
   LIQUIDITY AND CAPITAL RESOURCES
 June 30,
    
    
    December 31,2007
    
    
    2006Cash and cash equivalents
    
    $
    11,836
    
    
    $
    27,414Short-term investments
    
    
    3,314
    
    
    
    10,956Long-term investments
    
    
    5,311
    
    
    
    7,346$
    20,461
    
    
    $
    45,716
 23




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24




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##### Table of Contents



Contractual Obligations
  Payment Due By PeriodLess Than
    
    
    
    
    
    
    
    
    
    
    More ThanContractual Obligations
    
    Total
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsNon-cancelable rental
obligations
    
    $
    5,284
    
    
    $
    2,257
    
    
    $
    3,027
    
    
    $
    
    
    
    $
    Non-cancelable purchase
obligations (1)
    
    
    4,250
    
    
    
    3,650
    
    
    
    600
    
    
    
    
    
    
    
    Long-term debt
obligations (2)
    
    
    6,908
    
    
    
    137
    
    
    
    3,183
    
    
    
    3,588
    
    
    
    Total
    
    $
    16,442
    
    
    $
    6,044
    
    
    $
    6,810
    
    
    $
    3,588
    
    
    $
    
 
 (1)
    
    Purchase obligations include contractual arrangements in the form of purchase
orders primarily a result of normal inventory purchases or minimum payments due resulting
when minimum purchase commitments are not met. Purchase obligations relating to purchase
orders do not extend beyond a year; however, we would expect future years to have these
purchase commitments that will arise in the ordinary course of business and will
generally increase or decrease according to fluctuations in overall sales volume. 25




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##### Table of Contents



(2)
    
    On December 12, 2003, LMD entered into an agreement with the Ministry of
Industry of the Government of Canada under which the Government agreed to invest up to
Canadian (Cdn.) $7,300,000 relating to the development of several genetic tests. Funds
were advanced from Technology Partnerships Canada (TPC), a special operating program.
The actual payments received by the Company were predicated on eligible expenditures made
during the project period which ended July 31, 2006. LMD has received Cdn. $5,739,000
from TPC which is expected to be repaid along with approximately Cdn. $1,577,000 of
imputed interest for a total of approximately Cdn. $7,316,000.  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Risk.
  Foreign Exchange Risk.
  
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  26




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##### Table of Contents



Changes in Internal Control over Financial Reporting
  
 PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  27




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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  ISSUER PURCHASES OF EQUITY SECURITIESTotal Number of Shares
    
    Appromixate Dollar Value ofTotal Number of
    
    Average Price
    
    Purchased as Part of
    
    Shares that May Yet BeShares
    
    Paid per Share
    
    Publicly Announced
    
    PurchasedPeriod
    
    Purchased
    
    (1)($)
    
    Plans of Programs
    
    Under the Plans or Programs04/01/07 - 04/30/07
    
    
    7,981
    
    
    
    14.09
    
    
    
    
    
    
    
    05/01/07 - 05/31/07
    
    
    2,356
    
    
    
    12.27
    
    
    
    
    
    
    
    06/01/07 -06/30/07
    
    
    142
    
    
    
    12.20
    
    
    
    
    
    
    
    Total Second Quarter
    
    
    10,479
    
    
    $
    13.66
    
    
    
    
    
    
    
    
 
 (1)
    
    Shares purchased are attributable to the withholding of shares by Luminex to satisfy the payment of tax obligations
related to the vesting of restricted shares. 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  Number of SharesVoted For
    
    WithheldRobert J. Cresci
    
    
    29,984,721
    
    
    
    366,376Thomas W. Erickson
    
    
    30,169,964
    
    
    
    181,133Gerard Vaillant
    
    
    30,205,770
    
    
    
    145,327
   Number of SharesVoted
    
    
    
    
    
    BrokerVoted For
    
    Against
    
    Abstained
    
    Non-VotesTo ratify the
appointment by the
Companys AuditCommittee of Ernst &
Young LLP as theCompanys
independent
registered public
accounting firm for
fiscal 2007
    
    
    30,306,416
    
    
    
    29,242
    
    
    
    15,437
    
    
    
    2
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ITEM 6. EXHIBITS
  ExhibitNumber
    
    Description of Documents10.1
    
    Amendment to Luminex Corporation 2000 Amended and Restated Long-Term Incentive Plan dated as
of May 24, 2007.10.2
    
    Amendment to Luminex Corporation 2001 Broad-Based Stock Option Plan dated as of May 24, 2007.10.3
    
    Amendment to Luminex Corporation 2006 Management Stock Purchase Plan dated as of May 24,
2007.10.4
    
    Amendment to Luminex Corporation 2006 Equity Incentive Plan dated as of May 24, 2007.10.5
    
    Form of Amendments to Equity Award Agreements.31.1
    
    Certification by CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification by CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification by CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
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##### Table of Contents



SIGNATURES
  LUMINEX CORPORATIONDate:  August 9, 2007
    By:
    /s/ HARRISS T. CURRIEHarriss T. CurrieVice President, Finance and Chief
Financial Officer (Principal Financial Officer)By:
    /s/ PATRICK J. BALTHROPPatrick J. BalthropPresident and Chief Executive Officer
(Principal Executive Officer)