##### 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, 2008
 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: 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
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if smaller reporting company)
 o þ




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##### 



TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)Condensed Consolidated Balance Sheets as of June 30, 2008 and December 31, 2007
    
    
    1Condensed Consolidated Statements of Operations for the three and six months ended
June 30, 2008 and 2007
    
    
    2Condensed Consolidated Statements of Cash Flows for the three and six months ended
June 30, 2008 and 2007
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    25Item 4. Controls and Procedures
    
    
    25PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    26Item 1A. Risk Factors
    
    
    26Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    30Item 4. Submission of Matters to a Vote of Security Holders
    
    
    30Item 6. Exhibits
    
    
    31SIGNATURES and EXHIBITS
    
    
    32Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 LUMINEX CORPORATION
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 June 30,
    
    
    December 31,2008
    
    
    2007(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    102,679
    
    
    $
    27,233Short-term investments
    
    
    9,876
    
    
    
    6,944Accounts receivable, net
    
    
    10,042
    
    
    
    11,827Inventory, net
    
    
    8,513
    
    
    
    6,508Other
    
    
    1,833
    
    
    
    856Total current assets
    
    
    132,943
    
    
    
    53,368Property and equipment, net
    
    
    12,366
    
    
    
    12,673Intangible assets, net
    
    
    16,861
    
    
    
    16,919Goodwill
    
    
    39,617
    
    
    
    39,617Other
    
    
    857
    
    
    
    982Total assets
    
    $
    202,644
    
    
    $
    123,559LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    3,816
    
    
    $
    3,346Accrued liabilities
    
    
    6,100
    
    
    
    6,811Deferred revenue and other
    
    
    3,019
    
    
    
    2,410Total current liabilities
    
    
    12,935
    
    
    
    12,567Long-term debt
    
    
    3,551
    
    
    
    2,976Deferred revenue and other
    
    
    4,583
    
    
    
    4,536Total liabilities
    
    
    21,069
    
    
    
    20,079Stockholders equity:Common stock
    
    
    40
    
    
    
    35Additional paid-in capital
    
    
    271,376
    
    
    
    191,218Accumulated other comprehensive gain
    
    
    49
    
    
    
    (8
    )Accumulated deficit
    
    
    (89,890
    )
    
    
    (87,765
    )Total stockholders equity
    
    
    181,575
    
    
    
    103,480Total liabilities and stockholders equity
    
    $
    202,644
    
    
    $
    123,559
 
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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 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(unaudited)
    
    
    (unaudited)Revenue
    
    $
    24,341
    
    
    $
    17,548
    
    
    $
    47,353
    
    
    $
    34,155Cost of revenue
    
    
    7,778
    
    
    
    7,211
    
    
    
    15,533
    
    
    
    13,388Gross profit
    
    
    16,563
    
    
    
    10,337
    
    
    
    31,820
    
    
    
    20,767Operating expenses:Research and development
    
    
    5,025
    
    
    
    3,865
    
    
    
    9,456
    
    
    
    6,571Selling, general and administrative
    
    
    12,052
    
    
    
    10,716
    
    
    
    24,146
    
    
    
    18,812In-process research and development expense
    
    
    
    
    
    
    8,000
    
    
    
    
    
    
    
    8,000Total operating expenses
    
    
    17,077
    
    
    
    22,581
    
    
    
    33,602
    
    
    
    33,383Loss from operations
    
    
    (514
    )
    
    
    (12,244
    )
    
    
    (1,782
    )
    
    
    (12,616
    )Interest expense from long-term debt
    
    
    (134
    )
    
    
    (334
    )
    
    
    (269
    )
    
    
    (419
    )Other income, net
    
    
    (181
    )
    
    
    421
    
    
    
    139
    
    
    
    1,028Income taxes
    
    
    (130
    )
    
    
    101
    
    
    
    (213
    )
    
    
    87Net loss
    
    $
    (959
    )
    
    $
    (12,056
    )
    
    $
    (2,125
    )
    
    $
    (11,920
    )Net loss per share, basic
    
    $
    (0.03
    )
    
    $
    (0.34
    )
    
    $
    (0.06
    )
    
    $
    (0.36
    )Shares used in computing net loss
per share, basic
    
    
    35,698
    
    
    
    35,006
    
    
    
    35,559
    
    
    
    33,504Net loss per share, diluted
    
    $
    (0.03
    )
    
    $
    (0.34
    )
    
    $
    (0.06
    )
    
    $
    (0.36
    )Shares used in computing net loss
per share, diluted
    
    
    35,698
    
    
    
    35,006
    
    
    
    35,559
    
    
    
    33,504
 
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LUMINEX CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(unaudited)
    
    
    (unaudited)Operating activities:Net loss
    
    $
    (959
    )
    
    $
    (12,056
    )
    
    $
    (2,125
    )
    
    $
    (11,920
    )Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:Depreciation and amortization
    
    
    1,648
    
    
    
    1,837
    
    
    
    3,305
    
    
    
    2,377In-process research and development expense
    
    
    
    
    
    
    8,000
    
    
    
    
    
    
    
    8,000Stock-based compensation and other
    
    
    1,692
    
    
    
    1,593
    
    
    
    3,421
    
    
    
    3,100Loss on disposal of assets
    
    
    7
    
    
    
    34
    
    
    
    7
    
    
    
    88Other
    
    
    124
    
    
    
    4
    
    
    
    592
    
    
    
    4Changes in operating assets and liabilities:Accounts receivable, net
    
    
    1,734
    
    
    
    (580
    )
    
    
    1,785
    
    
    
    (1,657
    )Inventory, net
    
    
    (1,076
    )
    
    
    (689
    )
    
    
    (2,005
    )
    
    
    (721
    )Prepaids and other
    
    
    (638
    )
    
    
    (460
    )
    
    
    (931
    )
    
    
    (120
    )Accounts payable
    
    
    348
    
    
    
    (2,263
    )
    
    
    638
    
    
    
    (3,817
    )Accrued liabilities
    
    
    1,325
    
    
    
    772
    
    
    
    (1,056
    )
    
    
    (2,353
    )Deferred revenue
    
    
    (32
    )
    
    
    (217
    )
    
    
    592
    
    
    
    143Net cash provided by (used in) operating activities
    
    
    4,173
    
    
    
    (4,025
    )
    
    
    4,223
    
    
    
    (6,876
    )Investing activities:Net (sales) purchases of held-to-maturity investments
    
    
    (1,951
    )
    
    
    2,185
    
    
    
    (2,933
    )
    
    
    9,710Purchase of property and equipment
    
    
    (1,107
    )
    
    
    (1,724
    )
    
    
    (1,894
    )
    
    
    (3,329
    )Acquisition of business, net of cash acquired
    
    
    
    
    
    
    (744
    )
    
    
    
    
    
    
    (2,735
    )Acquisition activity
    
    
    (412
    )
    
    
    
    
    
    
    (412
    )
    
    
    Acquired technology rights
    
    
    (982
    )
    
    
    (265
    )
    
    
    (982
    )
    
    
    (265
    )Proceeds from sale of assets
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    30Net cash (used in) provided by investing activities
    
    
    (4,452
    )
    
    
    (518
    )
    
    
    (6,221
    )
    
    
    3,411Financing activities:Payments on debt
    
    
    (134
    )
    
    
    (117
    )
    
    
    (134
    )
    
    
    (12,345
    )Proceeds from secondary offering, net of offering costs
    
    
    74,779
    
    
    
    
    
    
    
    74,779
    
    
    
    Proceeds from issuance of common stock
    
    
    1,962
    
    
    
    159
    
    
    
    2,770
    
    
    
    174Other
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    7Net cash provided by (used in) financing activities
    
    
    76,607
    
    
    
    49
    
    
    
    77,415
    
    
    
    (12,164
    )Effect of foreign currency exchange rate on cash
    
    
    (9
    )
    
    
    135
    
    
    
    29
    
    
    
    51Change in cash and cash equivalents
    
    
    76,319
    
    
    
    (4,359
    )
    
    
    75,446
    
    
    
    (15,578
    )Cash and cash equivalents, beginning of period
    
    
    26,360
    
    
    
    16,195
    
    
    
    27,233
    
    
    
    27,414Cash and cash equivalents, end of period
    
    $
    102,679
    
    
    $
    11,836
    
    
    $
    102,679
    
    
    $
    11,836Supplemental disclosure of cashflow information:Interest and penalties paid
    
    $
    23
    
    
    $
    254
    
    
    $
    25
    
    
    $
    1,335Supplemental disclosure of non-cash effect of acquisitions:Purchase price
    
    $
    
    
    
    $
    (744
    )
    
    $
    
    
    
    $
    (47,745
    )Common stock issued
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,755Conversion of Tm options and warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,315Cash acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    940Acquisition, net of cash acquired
    
    $
    
    
    
    $
    (744
    )
    
    $
    
    
    
    $
    (2,735
    )
 
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LUMINEX CORPORATION
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE 1  BASIS OF PRESENTATION
       Pro Forma Information
    Six Months EndedJune 30, 2007Revenues
    
    $
    34,474Net loss
    
    $
    (18,297
    )Net loss per share, basic and diluted
    
    $
    (0.52
    )
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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
 NOTE 2  INVESTMENTS
   Accrued
    
    
    AmortizedCost
    
    
    Interest
    
    
    CostDue in one year or less
    
    $
    9,876
    
    
    $
    73
    
    
    $
    9,949
 NOTE 3  INVENTORY, NET
  June 30,
    
    
    December 31,2008
    
    
    2007Parts and supplies
    
    $
    4,530
    
    
    $
    3,613Work-in-progress
    
    
    2,499
    
    
    
    1,632Finished goods
    
    
    2,206
    
    
    
    1,9569,235
    
    
    
    7,201Less: Allowance for excess and obsolete inventory
    
    
    (722
    )
    
    
    (693
    )$
    8,513
    
    
    $
    6,508
 NOTE 4  EARNINGS PER SHARE
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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Numerator:Net loss
    
    $
    (959
    )
    
    $
    (12,056
    )
    
    $
    (2,125
    )
    
    $
    (11,920
    )Denominator:Denominator for basic net loss per share 
weighted average common stock outstanding
    
    
    35,698
    
    
    
    35,006
    
    
    
    35,559
    
    
    
    33,504Dilutive common stock equivalents  common stock
options and awards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Denominator for diluted net loss per share 
weighted average common stock outstanding and
dilutive common stock equivalents
    
    
    35,698
    
    
    
    35,006
    
    
    
    35,559
    
    
    
    33,504Basic net loss per share
    
    $
    (0.03
    )
    
    $
    (0.34
    )
    
    $
    (0.06
    )
    
    $
    (0.36
    )Diluted net loss per share
    
    $
    (0.03
    )
    
    $
    (0.34
    )
    
    $
    (0.06
    )
    
    $
    (0.36
    )
  NOTE 5  STOCK-BASED COMPENSATION
  Weighted-AverageShares
    
    
    ExerciseStock Options
    
    (in thousands)
    
    
    PriceOutstanding at December 31, 2007
    
    
    3,444
    
    
    $
    11.96Granted
    
    
    77
    
    
    
    20.70Exercised
    
    
    (249
    )
    
    
    11.11Cancelled or expired
    
    
    (3
    )
    
    
    21.71Outstanding at June 30, 2008
    
    
    3,269
    
    
    $
    12.22
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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
  Weighted-AverageShares
    
    
    Grant-DateRestricted Stock Awards
    
    (in thousands)
    
    
    Fair ValueNon-vested at December 31, 2007
    
    
    1,333
    
    
    $
    13.37Granted
    
    
    292
    
    
    
    20.91Vested
    
    
    (235
    )
    
    
    12.71Cancelled or expired
    
    
    (35
    )
    
    
    13.98Non-vested at June 30, 2008
    
    
    1,355
    
    
    $
    15.09
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Cost of revenue
    
    $
    122
    
    
    $
    71
    
    
    $
    234
    
    
    $
    142Research and development
    
    
    255
    
    
    
    165
    
    
    
    499
    
    
    
    343Selling, general and administrative
    
    
    1,315
    
    
    
    1,357
    
    
    
    2,688
    
    
    
    2,610Total stock-based compensation costs
    
    $
    1,692
    
    
    $
    1,593
    
    
    $
    3,421
    
    
    $
    3,095
 NOTE 6  SEGMENT INFORMATION
  Technology
    
    
    Assay
    
    
    IntersegmentGroup
    
    
    Group
    
    
    Eliminations
    
    
    ConsolidatedRevenues from external
customers
    
    $
    38,914
    
    
    $
    8,439
    
    
    $
    
    
    
    $
    47,353Intersegment revenue
    
    
    (2,405
    )
    
    
    (86
    )
    
    
    2,491
    
    
    
    Depreciation and amortization
    
    
    1,577
    
    
    
    1,819
    
    
    
    (91
    )
    
    
    3,305Segment profit (loss)
    
    
    5,457
    
    
    
    (7,401
    )
    
    
    (181
    )
    
    
    (2,125
    )Segment assets
    
    
    223,067
    
    
    
    65,741
    
    
    
    (86,164
    )
    
    
    202,644
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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
  Technology
    
    
    Assay
    
    
    IntersegmentGroup
    
    
    Group
    
    
    Eliminations
    
    
    ConsolidatedRevenues from external customers
    
    $
    28,980
    
    
    $
    5,175
    
    
    $
    
    
    
    $
    34,155Intersegment revenue
    
    
    (1,580
    )
    
    
    (25
    )
    
    
    1,605
    
    
    
    Depreciation and amortization
    
    
    938
    
    
    
    658
    
    
    
    (86
    )
    
    
    1,510Segment profit (loss)
    
    
    1,674
    
    
    
    (13,208
    )
    
    
    (386
    )
    
    
    (11,920
    )Segment assets
    
    
    223,067
    
    
    
    65,741
    
    
    
    (6,284
    )
    
    
    282,524
 NOTE 7  INCOME TAXES
   NOTE 8  COMMITMENTS AND CONTINGENCIES
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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
 NOTE 9  RECENT ACCOUNTING PRONOUNCEMENTS
   
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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 our 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;
    
    our ability to successfully launch new products;
    
    the timing of regulatory approvals;
    
    the implementation, including any modification, of our strategic operating plans;
    
    the uncertainty regarding the outcome or expense of any litigation brought against us;
    
    risks relating to our foreign operations; and
    
    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.
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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 100e and 200 analyzers
often coupled with an optional XY Platform and/or Sheath Delivery System products. 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 include facilities such as testing labs, development facilities and
research facilities that purchase prepared kits and have specific testing needs or testing
service companies that provide assay results to pharmaceutical research companies or
physicians.
    
    Assay revenue is generated from the sale of our kits which are a combination of chemical
and biological reagents and our proprietary bead technology used to perform diagnostic and
research assays on test samples. Assay revenue currently includes both LBG and LMD sales.
LMD sales have been included since March 1, 2007 as a result of our acquisition that was
effective on that date. Previously, assay revenue generated from LBG was recorded in other
revenue as it did not constitute a material amount of total revenue.
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
    
    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.
    
    Other revenue consists of items such as training, shipping, parts sales, license
revenue, grant revenue, contract research and development fees, milestone revenue and other
items that individually amount to less than 5% of total revenue.
 Acquisition of LMD
  Second Quarter 2008 Highlights
 
    
    Consolidated total revenue of $24.3 million representing a 38.7% increase over revenue
for the second quarter of 2007, the first full quarter of consolidated activity after the
acquisition of LMD
    
    System shipments of 203 resulting in cumulative life to date shipments of 5,402, up
19.4% from a year ago representing the seventh consecutive quarter of system shipments of
200 or more
    
    Increase in consumables and royalty revenue by 157% and 55%, respectively, from the
second quarter of 2007
    
    Consolidated gross profit margin of 68% for the second quarter
    
    Raised $74.8 million net proceeds in a public offering of 4,025,000 shares of common
stock
    
    Our partners reported over $55 million of royalty bearing end user sales in xMAP
technology for the quarter ended June 30, 2008
 Segment Information
  Future Operations
   12




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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
   Acquisition Expenses.
  13




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RESULTS OF OPERATIONS
 THREE MONTHS ENDED JUNE 30, 2008 COMPARED TO THREE MONTHS ENDED JUNE 30, 2007
  Three Months EndedJune 30,2008
    
    
    2007Revenue
    
    $
    24,341
    
    
    $
    17,548Gross profit
    
    $
    16,563
    
    
    $
    10,337Gross profit margin percentage
    
    
    68
    %
    
    
    59
    %Operating expenses
    
    $
    17,077
    
    
    $
    22,581Net operating loss
    
    $
    (514
    )
    
    $
    (12,244
    )
     14




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Technology Segment
  Three Months EndedJune 30,2008
    
    
    2007Revenue
    
    $
    20,258
    
    
    $
    13,565Gross profit
    
    $
    13,826
    
    
    $
    7,739Gross profit margin
    
    
    68
    %
    
    
    57
    %Operating expenses
    
    $
    11,365
    
    
    $
    9,347Net operating income (loss)
    
    $
    2,461
    
    
    $
    (1,608
    )
 Revenue.
  Three Months EndedJune 30,2008
    
    
    2007System sales
    
    $
    5,860
    
    
    $
    5,397Consumable sales
    
    
    8,492
    
    
    
    3,305Royalty revenue
    
    
    3,472
    
    
    
    2,210Service contracts
    
    
    1,266
    
    
    
    1,087Other revenue
    
    
    1,168
    
    
    
    1,566$
    20,258
    
    
    $
    13,565
    15




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Gross profit
 Research and development expense
 Selling, general and administrative expense
 Other income, net
  16




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Assay Segment
  Three Months EndedJune 30,2008
    
    
    2007Revenue
    
    $
    4,083
    
    
    $
    3,983Gross profit
    
    $
    2,737
    
    
    $
    2,598Gross profit margin
    
    
    67
    %
    
    
    65
    %Operating expenses
    
    $
    5,712
    
    
    $
    13,234Net operating loss
    
    $
    (2,975
    )
    
    $
    (10,636
    )
  Three Months EndedJune 30,2008
    
    
    2007System sales
    
    $
    458
    
    
    $
    186Consumable sales
    
    
    11
    
    
    
    Service contracts
    
    
    11
    
    
    
    Assay revenue
    
    
    3,526
    
    
    
    3,737Other revenue
    
    
    77
    
    
    
    60$
    4,083
    
    
    $
    3,983
 Revenue.
 Gross profit
 Research and development expense.
 Selling, general and administrative expense
  17




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SIX MONTHS ENDED JUNE 30, 2008 COMPARED TO SIX MONTHS ENDED JUNE 30, 2007
  Six Months EndedJune 30,2007
    
    
    2007Revenue
    
    $
    47,353
    
    
    $
    34,155Gross profit
    
    $
    31,820
    
    
    $
    20,767Gross profit margin percentage
    
    
    67
    %
    
    
    61
    %Operating expenses
    
    $
    33,602
    
    
    $
    33,383Net operating loss
    
    $
    (1,782
    )
    
    $
    (12,616
    )
     18




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Technology Segment
  Six Months EndedJune 30,2008
    
    
    2007Revenue
    
    $
    38,914
    
    
    $
    28,980Gross profit
    
    $
    25,815
    
    
    $
    17,442Gross profit margin percentage
    
    
    66
    %
    
    
    60
    %Operating expenses
    
    $
    22,455
    
    
    $
    18,217Net operating income (loss)
    
    $
    3,360
    
    
    $
    (775
    )
 Revenue.
  Six Months EndedJune 30,2008
    
    
    2007System sales
    
    $
    12,023
    
    
    $
    11,089Consumable sales
    
    
    15,037
    
    
    
    8,116Royalty revenue
    
    
    6,990
    
    
    
    4,742Service contracts
    
    
    2,485
    
    
    
    2,090Other revenue
    
    
    2,379
    
    
    
    2,943$
    38,914
    
    
    $
    28,980
    19




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Gross profit
 Research and development expense
 Selling, general and administrative expense
  20




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Assay Segment
  Six Months EndedJune 30,2008
    
    
    2007Revenue
    
    $
    8,439
    
    
    $
    5,175Gross profit
    
    $
    6,005
    
    
    $
    3,325Gross profit margin percentage
    
    
    71
    %
    
    
    64
    %Operating expenses
    
    $
    11,147
    
    
    $
    15,166Net operating loss
    
    $
    (5,142
    )
    
    $
    (11,841
    )
  Six Months EndedJune 30,2008
    
    
    2007System sales
    
    $
    922
    
    
    $
    226Consumable sales
    
    
    20
    
    
    
    Service contracts
    
    
    12
    
    
    
    Assay revenue
    
    
    7,371
    
    
    
    4,880Other revenue
    
    
    114
    
    
    
    69$
    8,439
    
    
    $
    5,175
 Revenue.
 Gross profit
 Research and development expense.
  21




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Selling, general and administrative expense
 LIQUIDITY AND CAPITAL RESOURCES
 June 30,
    
    
    December 31,2008
    
    
    2007(in thousands)
    
    
    (in thousands)Cash and cash equivalents
    
    $
    102,679
    
    
    $
    27,233Short-term investments
    
    
    9,876
    
    
    
    6,944$
    112,555
    
    
    $
    34,177
       22




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Contractual Obligations
  Payment Due By PeriodLess Than
    
    
    
    
    
    
    
    
    
    
    More ThanContractual Obligations
    
    Total
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsNon-cancelable rental
obligations
    
    $
    10,160
    
    
    $
    2,027
    
    
    $
    2,845
    
    
    $
    2,700
    
    
    $
    2,588Non-cancelable purchase
obligations (1)
    
    
    9,430
    
    
    
    5,057
    
    
    
    876
    
    
    
    1,006
    
    
    
    2,491Long-term debt
obligations (2)
    
    
    5,484
    
    
    
    522
    
    
    
    2,763
    
    
    
    2,199
    
    
    
    Capital lease obligations
    
    
    75
    
    
    
    35
    
    
    
    40
    
    
    
    
    
    
    
    Total
    
    $
    25,149
    
    
    $
    7,641
    
    
    $
    6,524
    
    
    $
    5,905
    
    
    $
    5,079
 (1)
    
    Purchase obligations include contractual arrangements in the form of purchase orders
primarily resulting from normal inventory purchases or minimum payments due resulting when
minimum purchase commitments are not met and annual minimum purchase requirements in supply
agreements. 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. Annual minimum purchase requirements in supply
agreements extend up to ten years.(2)
    
    In 2003, Tm Bioscience 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) 7.3 million relating to the development of several genetic tests. Funds
were advanced from Technology Partnerships Canada (TPC), a special operating program.
Luminex assumed this agreement upon acquisition of Tm Bioscience, now LMD. LMD has
received $4.3 million from TPC which is expected to be repaid along with approximately $1.2
million of imputed interest for a total of approximately $5.5 million. LMD has agreed to
repay the TPC funding through a royalty on assay revenue related to the funded product
development. Royalty payments commenced in 2007 at a rate of 1% of assay revenue and at a
rate of 2.5% for 2008 and thereafter. Aggregate royalty repayment will continue until
total advances plus imputed interest has been repaid or until April 30, 2015, whichever is
earlier. The repayment obligation expires on April 30, 2015 and any unpaid balance will be
cancelled and forgiven on that date. Should the term of repayment be shorter than we
expect due to higher than expected assay revenue, the effective interest rate would
decrease as repayment is accelerated. Repayments denominated in U.S. Dollars are currently
projected to be as shown in the table above, but actual future sales generating a repayment
obligation will vary from this projection and are subject to the risks and uncertainties
described elsewhere in this report, including under Risk Factors and Safe Harbor
Cautionary Statement. Furthermore, payment reflected in U.S. Dollars is subject to
adjustment based upon applicable exchange rates as of the reporting date.  24




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Risk.
  Foreign Currency Risk.
  
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
    25




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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
  We have a limited history of profitability and had an accumulated deficit of approximately $89.9
million as of June 30, 2008.
  We expect our operating results to continue to fluctuate from quarter to quarter.
   26




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If the FDA or other governmental laws and regulations change in ways that we do not anticipate and
we fail to comply with those regulations that affect our business, we could be subject to
enforcement actions, injunctions and civil and criminal penalties or otherwise be subject to
increased costs that could delay or prevent marketing of our products.
      27




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Our success depends partly on our ability to operate without infringing on or misappropriating the
proprietary rights of others.
   28




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We may be unsuccessful in implementing our acquisition strategy. We may face difficulties
integrating acquired entities with our existing businesses.
  
    
    we may not be able to accurately estimate the financial effect of
acquisitions on our business;
 
    
    future acquisitions may require us to assume liabilities, incur large
and immediate write-offs, issue capital stock potentially dilutive to our
stockholders or spend significant cash or may result in a decrease in our future
operating income or operating margins;
 
    
    we may be unable to realize the anticipated benefits and synergies from
acquisitions as a result of inherent risks and uncertainties, including
difficulties integrating acquired businesses or retaining their key personnel,
partners, customers or other key relationships, entering market segments in which
we have no or limited experience, and risks that acquired entities may not operate
profitably or that acquisitions may not result in improved operating performance;
 
    
    acquisitions and subsequent integration of these companies may disrupt
our business and distract our management from other responsibilities; and
 
    
    the costs of unsuccessful acquisition efforts may adversely affect our
financial performance.
  
    
    disparate information technology, internal control, financial reporting
and record-keeping systems;
 
    
    differences in accounting policies, including those requiring judgment
or complex estimation processes;
 
    
    new partners or customers who may operate on terms and programs different than ours;
    
    additional employees not familiar with our operations;
 
    
    facilities or operations in remote locations or potentially foreign
jurisdictions and the inherent risks of operating in unfamiliar legal and
regulatory environments; and
 
    
    new products, including the risk that any underlying intellectual
property associated with such products may not have been adequately protected or
that such products may infringe on the proprietary rights of others.
  29




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##### Table of Contents



Our operating results may be affected by current economic and political conditions.
  
 ITEM 2. UNREGISTRED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  ISSUER PURCHASES OF EQUITY SECURITIES
 Total Number of Shares
    
    
    Approximate Dollar Value ofTotal Number of
    
    
    Average Price
    
    
    Purchased as Part of
    
    
    Shares that May Yet BeShares
    
    
    Paid per Share
    
    
    Publicly Announced
    
    
    Purchased Under the Plans orPeriod
    
    Purchased
    
    
    (1)($)
    
    
    Plans or Programs
    
    
    Programs04/01/08  04/30/08
    
    
    6,289
    
    
    
    19.76
    
    
    
    
    
    
    
    05/01/08  05/31/08
    
    
    3,098
    
    
    
    20.42
    
    
    
    
    
    
    
    06/01/08  06/30/08
    
    
    497
    
    
    
    21.55
    
    
    
    
    
    
    
    Total First Quarter
    
    
    9,884
    
    
    
    20.06
    
    
    
    
    
    
    
    
 (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
    
    
    WithheldFred C. Goad, Jr.
    
    
    30,861,141
    
    
    
    1,667,016Jim D. Kever
    
    
    30,812,027
    
    
    
    1,716,130Jay B. Johnston
    
    
    30,869,160
    
    
    
    1,658,997
   30




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Number of SharesVoted
    
    
    
    
    
    
    BrokerVoted For
    
    
    Against
    
    
    Abstained
    
    
    Non-VotesTo ratify the
appointment by the
Companys Audit
committee of Ernst &
Young LLP as the
Companys
independent
registered public
accounting firm for
fiscal 2008
    
    
    32,493,737
    
    
    
    6,973
    
    
    
    27,447
    
    
    
    0
 
 ITEM 6. EXHIBITS
  ExhibitNumber
    
    Description of Documents1.1
    
    
    Underwriting Agreement dated June 24, 2008 by and among Luminex Corporation, J.P. Morgan
Securities Inc. and UBS Securities LLC, as representatives for the several underwriters named
therein. (Incorporated by reference to Exhibit 1.1 to our Current Report on Form 8-K dated
June 25, 2008)10.1
    
    
    First Amendment to Credit Agreement, dated May 28, 2008, by and between Luminex Corporation
and JPMorgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.1 to our Current Report
on Form 8-K dated May 29, 2008)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.
  31




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SIGNATURES
  LUMINEX CORPORATIONDate: August 8, 2008By:
    /s/ Harriss T. CurrieHarriss T. CurrieVice President - Finance,
Chief Financial Officer and Treasurer (Principal Financial
Officer)By:
    /s/ Patrick J. Balthrop, Sr.Patrick J. Balthrop, Sr.President and Chief Executive Officer
(Principal Executive Officer)  32




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description of Documents31.1
    
    
    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.