##### 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 September 30, 2009
 or
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period fromto .
 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
 o o
  Large accelerated filer þ
    
    Accelerated filer o
    
    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 StatementsCondensed Consolidated Balance Sheets as of September 30, 2009 and December 31, 2008
    
    
    1Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2009
and 2008
    
    
    2Condensed Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2009
and 2008
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    29Item 4. Controls and Procedures
    
    
    29PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    30Item 1A. Risk Factors
    
    
    30Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    30Item 6. Exhibits
    
    
    31SIGNATURES and EXHIBITS
    
    
    S-1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
  iii




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PART I. FINANCIAL INFORMATION
 
 ITEM 1.
    
    FINANCIAL STATEMENTS
 LUMINEX CORPORATION
 
 CONDENSED CONSOLIDATED BALANCE SHEETS  (in thousands)
 September 30,
    
    
    December 31,2009
    
    
    2008(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    78,740
    
    
    $
    81,619Short-term investments
    
    
    16,516
    
    
    
    40,501Accounts receivable, net
    
    
    19,116
    
    
    
    11,024Inventory, net
    
    
    12,697
    
    
    
    11,589Other
    
    
    1,641
    
    
    
    1,660Total current assets
    
    
    128,710
    
    
    
    146,393Property and equipment, net
    
    
    17,168
    
    
    
    12,567Intangible assets, net
    
    
    13,428
    
    
    
    14,901Long-term investments
    
    
    19,722
    
    
    
    2,000Goodwill
    
    
    39,617
    
    
    
    39,617Other
    
    
    1,370
    
    
    
    1,813Total assets
    
    $
    220,015
    
    
    $
    217,291LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    5,116
    
    
    $
    4,580Accrued liabilities
    
    
    6,496
    
    
    
    7,181Deferred revenue
    
    
    3,180
    
    
    
    2,671Current portion of long term debt
    
    
    516
    
    
    
    445Total current liabilities
    
    
    15,308
    
    
    
    14,877Long-term debt
    
    
    3,672
    
    
    
    2,914Deferred revenue and other
    
    
    4,768
    
    
    
    4,960Total liabilities
    
    
    23,748
    
    
    
    22,751Stockholders equity:Common stock
    
    
    41
    
    
    
    40Additional paid-in capital
    
    
    283,102
    
    
    
    279,255Accumulated other comprehensive gain (loss)
    
    
    119
    
    
    
    (47
    )Accumulated deficit
    
    
    (86,995
    )
    
    
    (84,708
    )Total stockholders equity
    
    
    196,267
    
    
    
    194,540Total liabilities and stockholders equity
    
    $
    220,015
    
    
    $
    217,291
 
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LUMINEX CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(unaudited)
    
    
    (unaudited)Revenue
    
    $
    29,118
    
    
    $
    28,897
    
    
    $
    82,476
    
    
    $
    76,250Cost of revenue
    
    
    10,347
    
    
    
    9,343
    
    
    
    26,837
    
    
    
    24,876Gross profit
    
    
    18,771
    
    
    
    19,554
    
    
    
    55,639
    
    
    
    51,374Operating expenses:Research and development
    
    
    5,643
    
    
    
    4,443
    
    
    
    15,246
    
    
    
    13,899Selling, general and administrative
    
    
    13,640
    
    
    
    12,130
    
    
    
    38,292
    
    
    
    36,276Total operating expenses
    
    
    19,283
    
    
    
    16,573
    
    
    
    53,538
    
    
    
    50,175Income (loss) from operations
    
    
    (512
    )
    
    
    2,981
    
    
    
    2,101
    
    
    
    1,199Interest expense from long-term debt
    
    
    (116
    )
    
    
    (137
    )
    
    
    (358
    )
    
    
    (406
    )Settlement of litigation
    
    
    
    
    
    
    
    
    
    
    (4,350
    )
    
    
    Other income, net
    
    
    144
    
    
    
    490
    
    
    
    593
    
    
    
    629Income (loss) before income taxes
    
    
    (484
    )
    
    
    3,334
    
    
    
    (2,014
    )
    
    
    1,422Income taxes
    
    
    (125
    )
    
    
    (161
    )
    
    
    (273
    )
    
    
    (374
    )Net income (loss)
    
    $
    (609
    )
    
    $
    3,173
    
    
    $
    (2,287
    )
    
    $
    1,048Net income (loss) per share, basic
    
    $
    (0.01
    )
    
    $
    0.08
    
    
    $
    (0.06
    )
    
    $
    0.03Shares used in computing net income (loss)
per share, basic
    
    
    40,661
    
    
    
    40,002
    
    
    
    40,515
    
    
    
    37,056Net income (loss) per share, diluted
    
    $
    (0.01
    )
    
    $
    0.08
    
    
    $
    (0.06
    )
    
    $
    0.03Shares used in computing net income (loss)
per share, diluted
    
    
    40,661
    
    
    
    42,173
    
    
    
    40,515
    
    
    
    38,957
 
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LUMINEX CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(unaudited)
    
    
    (unaudited)Cash flows from operating activities:Net income (loss)
    
    $
    (609
    )
    
    $
    3,173
    
    
    $
    (2,287
    )
    
    $
    1,048Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    2,116
    
    
    
    1,821
    
    
    
    5,995
    
    
    
    5,125Stock-based compensation and
other
    
    
    2,231
    
    
    
    1,781
    
    
    
    5,817
    
    
    
    5,202Loss on disposal of assets
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    7Other
    
    
    676
    
    
    
    (131
    )
    
    
    1,257
    
    
    
    467Changes in operating assets and liabilities:Accounts receivable, net
    
    
    (898
    )
    
    
    (2,771
    )
    
    
    (7,988
    )
    
    
    (985
    )Inventory, net
    
    
    (286
    )
    
    
    (1,034
    )
    
    
    (1,108
    )
    
    
    (3,039
    )Prepaids and other
    
    
    405
    
    
    
    139
    
    
    
    (26
    )
    
    
    (793
    )Accounts payable
    
    
    1,437
    
    
    
    465
    
    
    
    376
    
    
    
    1,103Accrued liabilities
    
    
    1,295
    
    
    
    (290
    )
    
    
    (3,023
    )
    
    
    (1,346
    )Deferred revenue
    
    
    (28
    )
    
    
    530
    
    
    
    313
    
    
    
    1,122Net cash provided by (used in) operating activities
    
    
    6,339
    
    
    
    3,683
    
    
    
    (649
    )
    
    
    7,911Cash flows from investing activities:Net purchases of available-for-sale investments
    
    
    (12,003
    )
    
    
    
    
    
    
    (56,649
    )
    
    
    Maturities of available-for-sale investments
    
    
    17,986
    
    
    
    
    
    
    
    22,980
    
    
    
    Net purchases of held-to-maturity investments
    
    
    
    
    
    
    (28,651
    )
    
    
    
    
    
    
    (36,541
    )Maturities of held-to-maturity investments
    
    
    3,938
    
    
    
    1,477
    
    
    
    40,078
    
    
    
    6,435Purchase of property and equipment
    
    
    (3,502
    )
    
    
    (852
    )
    
    
    (8,618
    )
    
    
    (2,747
    )Acquisition activity
    
    
    
    
    
    
    (93
    )
    
    
    
    
    
    
    (505
    )Proceeds from sale of assets
    
    
    
    
    
    
    20
    
    
    
    
    
    
    
    20Acquired technology rights
    
    
    
    
    
    
    (234
    )
    
    
    (21
    )
    
    
    (1,216
    )Net cash provided by (used in) investing activities
    
    
    6,419
    
    
    
    (28,333
    )
    
    
    (2,230
    )
    
    
    (34,554
    )Cash flows from financing activities:Payment on debt
    
    
    
    
    
    
    
    
    
    
    (440
    )
    
    
    (134
    )Proceeds from secondary offering, net of offering costs
    
    
    
    
    
    
    (104
    )
    
    
    
    
    
    
    74,675Proceeds from debt
    
    
    
    
    
    
    
    
    
    
    454
    
    
    
    Proceeds from issuance of common stock
    
    
    77
    
    
    
    3,668
    
    
    
    362
    
    
    
    6,438Net cash provided by financing activities
    
    
    77
    
    
    
    3,564
    
    
    
    376
    
    
    
    80,979Effect of foreign currency exchange rate on cash
    
    
    (246
    )
    
    
    25
    
    
    
    (376
    )
    
    
    49Change in cash and cash equivalents
    
    
    12,589
    
    
    
    (21,061
    )
    
    
    (2,879
    )
    
    
    54,385Cash and cash equivalents, beginning of period
    
    
    66,151
    
    
    
    102,679
    
    
    
    81,619
    
    
    
    27,233Cash and cash equivalents, end of period
    
    $
    78,740
    
    
    $
    81,618
    
    
    $
    78,740
    
    
    $
    81,618
 
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LUMINEX CORPORATION
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  (UNAUDITED)
 NOTE 1  BASIS OF PRESENTATION
      NOTE 2  INVESTMENTS
   4




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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  AccruedCost
    
    Interest
    
    Amortized CostDue in one year or less
    
    $
    2,423
    
    
    $
    76
    
    
    $
    2,499
  AccruedCost
    
    
    Interest
    
    
    Amortized CostDue in one year or
less
    
    $
    40,501
    
    
    $
    283
    
    
    $
    40,784Due after one year through two
years
    
    
    2,000
    
    
    
    20
    
    
    $
    2,020Total held-to-maturity securities
    
    $
    42,501
    
    
    $
    303
    
    
    $
    42,804
  Gains in
    
    
    Losses inAccumulated
    
    
    AccumulatedOther
    
    
    OtherAmortized
    
    
    Comprehensive
    
    
    Comprehensive
    
    
    EstimatedCost
    
    
    Gain (Loss)
    
    
    Gain (Loss)
    
    
    Fair ValueCurrent:Money Market funds
    
    $
    63,224
    
    
    $
    
    
    
    $
    
    
    
    $
    63,224Non-government sponsored debt securities
    
    
    23,982
    
    
    
    33
    
    
    
    
    
    
    
    24,015Total current securities
    
    
    87,206
    
    
    
    33
    
    
    
    
    
    
    
    87,239Noncurrent:Non-government sponsored debt securities
    
    
    17,590
    
    
    
    89
    
    
    
    (9
    )
    
    
    17,670Government sponsored debt securities
    
    
    2,042
    
    
    
    11
    
    
    
    
    
    
    
    2,053Total noncurrent
securities
    
    
    19,632
    
    
    
    100
    
    
    
    (9
    )
    
    
    19,723Total available-for-sale securities
    
    $
    106,838
    
    
    $
    133
    
    
    $
    (9
    )
    
    $
    106,962
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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  EstimatedFair ValueDue in one year or less
    
    $
    24,015Due after one year through two years
    
    
    19,723$
    43,738
       Fair Value Measurements at Reporting Date UsingLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalMoney Market funds
    
    $
    63,224
    
    
    
    
    
    
    
    
    
    
    $
    63,224Non-government sponsored debt obligations
    
    
    44,184
    
    
    
    
    
    
    
    
    
    
    
    44,184Government sponsored debt obligations
    
    
    2,053
    
    
    
    
    
    
    
    
    
    
    
    2,053Total
    
    $
    109,461
    
    
    
    
    
    
    
    
    
    
    $
    109,461Amounts included in:Cash and cash equivalents
    
    $
    73,223
    
    
    
    
    
    
    
    
    
    
    $
    73,223Short-term investments
    
    
    16,516
    
    
    
    
    
    
    
    
    
    
    
    16,516Long-term investments
    
    
    19,722
    
    
    
    
    
    
    
    
    
    
    
    19,722Total
    
    $
    109,461
    
    
    
    
    
    
    
    
    
    
    $
    109,461
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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE 3  INVENTORY, NET
  September 30,
    
    
    December 31,2009
    
    
    2008Parts and
supplies
    
    $
    5,385
    
    
    $
    5,213Work-in-progress
    
    
    4,266
    
    
    
    3,939Finished goods
    
    
    3,046
    
    
    
    2,437$
    12,697
    
    
    $
    11,589
 NOTE 4  EARNINGS PER SHARE
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Numerator:Net income (loss)
    
    $
    (609
    )
    
    $
    3,173
    
    
    $
    (2,287
    )
    
    $
    1,048Denominator:Denominator for basic net income (loss) per share -
weighted average common stock
outstanding
    
    
    40,661
    
    
    
    40,002
    
    
    
    40,515
    
    
    
    37,056Dilutive common stock equivalents  common stock
options and awards
    
    
    
    
    
    
    2,171
    
    
    
    
    
    
    
    1,901Denominator for diluted net income (loss) per share -
weighted average common stock outstanding and
dilutive common stock equivalents
    
    
    40,661
    
    
    
    42,173
    
    
    
    40,515
    
    
    
    38,957Basic net income (loss) per share
    
    $
    (0.01
    )
    
    $
    0.08
    
    
    $
    (0.06
    )
    
    $
    0.03Diluted net income (loss) per share
    
    $
    (0.01
    )
    
    $
    0.08
    
    
    $
    (0.06
    )
    
    $
    0.03
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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE 5  STOCK-BASED COMPENSATION
  WeightedAverageShares
    
    
    ExerciseStock Options
    
    (in thousands)
    
    
    PriceOutstanding at December 31,
2008
    
    
    2,771
    
    
    $
    11.96Granted
    
    
    167
    
    
    
    16.31Exercised
    
    
    (38
    )
    
    
    9.59Cancelled or expired
    
    
    (70
    )
    
    
    17.81Outstanding at September 30,
2009
    
    
    2,830
    
    
    $
    12.10
   WeightedAverageShares
    
    
    Grant-DateRestricted Stock Awards
    
    (in thousands)
    
    
    Fair ValueNon-vested at December 31,
2008
    
    
    1,197
    
    
    $
    15.39Granted
    
    
    473
    
    
    
    16.18Vested
    
    
    (450
    )
    
    
    14.70Cancelled or expired
    
    
    (101
    )
    
    
    16.04Non-vested at September 30,
2009
    
    
    1,119
    
    
    $
    15.94
 SharesRestricted Stock Units
    
    (in thousands)Non-vested at December 31, 2008
    
    
    280Granted
    
    
    353Vested
    
    
    (11
    )Cancelled or expired
    
    
    (77
    )Non-vested at September 30, 2009
    
    
    545
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Cost of revenue
    
    $
    204
    
    
    $
    140
    
    
    $
    493
    
    
    $
    374Research and development
    
    
    381
    
    
    
    312
    
    
    
    923
    
    
    
    812Selling, general and
administrative
    
    
    1,646
    
    
    
    1,329
    
    
    
    4,401
    
    
    
    4,016Total stock-based compensation
costs
    
    $
    2,231
    
    
    $
    1,781
    
    
    $
    5,817
    
    
    $
    5,202
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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE 6  SEGMENT INFORMATION
  Three Months Ended
    
    Three Months EndedSeptember 30, 2009
    
    September 30, 2008Technology
    
    Assay
    
    
    
    
    
    Technology
    
    AssaySegment
    
    Segment
    
    Consolidated
    
    Segment
    
    Segment
    
    ConsolidatedRevenues from external
customers
    
    $
    22,031
    
    
    $
    7,087
    
    
    $
    29,118
    
    
    $
    22,582
    
    
    $
    6,315
    
    
    $
    28,897Depreciation and
amortization
    
    
    1,102
    
    
    
    1,014
    
    
    $
    2,116
    
    
    
    829
    
    
    
    992
    
    
    $
    1,821Segment profit (loss)
    
    
    558
    
    
    
    (1,167
    )
    
    $
    (609
    )
    
    
    3,590
    
    
    
    (417
    )
    
    $
    3,173Segment assets
    
    
    147,130
    
    
    
    72,885
    
    
    $
    220,015
    
    
    
    141,670
    
    
    
    69,940
    
    
    $
    211,610
  Nine Months Ended
    
    Nine Months EndedSeptember 30, 2009
    
    September 30, 2008Technology
    
    Assay
    
    
    
    
    
    Technology
    
    AssaySegment
    
    Segment
    
    Consolidated
    
    Segment
    
    Segment
    
    ConsolidatedRevenues from external
customers
    
    $
    62,595
    
    
    $
    19,881
    
    
    $
    82,476
    
    
    $
    61,496
    
    
    $
    14,754
    
    
    $
    76,250Depreciation and
amortization
    
    
    3,130
    
    
    
    2,865
    
    
    $
    5,995
    
    
    
    2,404
    
    
    
    2,721
    
    
    $
    5,125Segment profit (loss)
    
    
    3,915
    
    
    
    (6,202
    )
    
    $
    (2,287
    )
    
    
    6,900
    
    
    
    (5,852
    )
    
    $
    1,048Segment assets
    
    
    147,130
    
    
    
    72,885
    
    
    $
    220,015
    
    
    
    141,670
    
    
    
    69,940
    
    
    $
    211,610
 NOTE 7  INCOME TAXES
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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE 8  COMMITMENTS AND CONTINGENCIES
  ®
  NOTE 9  RECENT ACCOUNTING PRONOUNCEMENTS
   10




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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
   11




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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;
    
    the impact of the ongoing uncertainty in global finance markets and changes in
government funding, including its effects on the capital spending policies of our partners
and end-users and their ability to finance purchases of our products;
    
    concentration of our revenue in a limited number of strategic partners, some of which
may be experiencing decreased demand for their products utilizing or incorporating our
technology and budget or finance constraints in the current economic environment or
periodic variability in their purchasing patterns or practices;
    
    fluctuations in quarterly results due to a lengthy and unpredictable sales cycle, bulk
purchases of consumables, fluctuations in product mix, and the seasonal nature of some of
our assay products;
    
    our ability to scale manufacturing operations and manage operating expenses, gross
margins and inventory levels;
    
    potential shortages, or increases in costs, 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 or
initiated by us;
    
    risks relating to our foreign operations; and
    
    risks and uncertainties associated with implementing our acquisition strategy including
our ability to obtain financing, our ability to integrate acquired companies or selected
assets into our consolidated business operations, and the ability to recognize the benefits
of our acquisitions.
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OVERVIEW
 ®
   13




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
    
    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,
our FLEXMAP 3D system, optional XY Platform and Sheath Delivery Systems.
    
    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 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 samples.
    
    Service revenue is generated when a partner or other owner of a system purchases a
service contract from us after the standard 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.
 Third Quarter 2009 Highlights
 
    
    Consolidated revenue of $29.1 million for the quarter ended September 30, 2009,
representing a 1% increase over revenue for the third quarter of 2008
    
    Consolidated gross profit margin of 64% compared with third quarter 2008 gross profit
margin of 68%
    
    System shipments of 259 including 11 shipments of FLEXMAP 3D, resulting in cumulative
life-to-date shipments of 6,514; this represents an 8% increase in the number of system
shipments and an 18% increase in system sales over the third quarter of 2008
    
    Higher margin items (assays, consumables and royalty revenues) of $17.0 million or 58%
of third quarter 2009 revenue
    
    Received 510(k) clearance from the FDA for a new cystic fibrosis test: the xTAG Cystic
Fibrosis 39 Kit v2
    
    Establishment of an office in Tokyo, Japan to provide commercial support and service to
customers and partners in the area
    
    Received FDA clearance for an update to the xTAG(R) Respiratory Viral Panel package
insert
    
    Our partners reported over $74 million of royalty bearing end user sales on xMAP
technology for the quarter, a 17% increase over the third quarter of 2008
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Segment Information
  Future Operations
   
    
    the timing effect of the ongoing uncertainty in global finance markets and changes
in government funding on planned purchases by end users;
    
    continued adoption and development of partner products incorporating Luminex
technology;
    
    commercialization, regulatory acceptance and market adoption of output from the
Assay Segment; and
    
    the expansion and enhancement of our installed base and leadership position within
our identified target market segments.
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
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RESULTS OF OPERATIONS
 THREE MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2008
  Three Months EndedSeptember 30,2009
    
    2008Revenue
    
    $
    29,118
    
    
    $
    28,897Gross profit
    
    $
    18,771
    
    
    $
    19,554Gross profit margin
percentage
    
    
    64
    %
    
    
    68
    %Operating expenses
    
    $
    19,283
    
    
    $
    16,573Income (loss) from operations
    
    $
    (512
    )
    
    $
    2,981
   Three Months EndedSeptember 30,2009
    
    
    2008System sales
    
    $
    9,166
    
    
    $
    7,788Consumable sales
    
    
    6,062
    
    
    
    8,340Assay revenue
    
    
    6,199
    
    
    
    5,897Royalty revenue
    
    
    4,699
    
    
    
    3,865Service contracts
    
    
    1,491
    
    
    
    1,429Other revenue
    
    
    1,501
    
    
    
    1,578$
    29,118
    
    
    $
    28,897
  17




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Technology Segment
  Three Months EndedSeptember 30,2009
    
    2008Revenue
    
    $
    22,031
    
    
    $
    22,582Gross profit
    
    $
    13,767
    
    
    $
    14,541Gross profit margin
percentage
    
    
    62
    %
    
    
    64
    %Operating expenses
    
    $
    13,218
    
    
    $
    11,313Income from operations
    
    $
    549
    
    
    $
    3,228
 Revenue.
  Three Months EndedSeptember 30,2009
    
    
    2008System sales
    
    $
    8,501
    
    
    $
    7,483Consumable sales
    
    
    6,052
    
    
    
    8,328Royalty revenue
    
    
    4,699
    
    
    
    3,865Service contracts
    
    
    1,419
    
    
    
    1,403Other revenue
    
    
    1,360
    
    
    
    1,503$
    22,031
    
    
    $
    22,582
  18




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Gross profit
 Research and development expense
 19




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##### Table of Contents



Selling, general and administrative expense
 Other income, net
 Assay Segment
  Three Months EndedSeptember 30,2009
    
    2008Revenue
    
    $
    7,087
    
    
    $
    6,315Gross profit
    
    $
    5,004
    
    
    $
    5,013Gross profit margin
percentage
    
    
    71
    %
    
    
    79
    %Operating expenses
    
    $
    6,065
    
    
    $
    5,260Loss from operations
    
    $
    (1,061
    )
    
    $
    (247
    )
  Three Months EndedSeptember 30,2009
    
    
    2008System sales
    
    $
    665
    
    
    $
    305Consumable sales
    
    
    10
    
    
    
    12Assay revenue
    
    
    6,199
    
    
    
    5,897Service contracts
    
    
    72
    
    
    
    26Other revenue
    
    
    141
    
    
    
    75$
    7,087
    
    
    $
    6,315
 Revenue.
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Gross profit
 Research and development expense.
 Selling, general and administrative expense
 NINE MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2008
  Nine Months EndedSeptember 30,2009
    
    2008Revenue
    
    $
    82,476
    
    
    $
    76,250Gross profit
    
    $
    55,639
    
    
    $
    51,374Gross profit margin
percentage
    
    
    67
    %
    
    
    67
    %Operating expenses
    
    $
    53,538
    
    
    $
    50,175Income from operations
    
    $
    2,101
    
    
    $
    1,199
   Nine Months EndedSeptember 30,2009
    
    
    2008System sales
    
    $
    21,404
    
    
    $
    20,733Consumable sales
    
    
    20,347
    
    
    
    23,397Assay revenue
    
    
    18,164
    
    
    
    13,268Royalty revenue
    
    
    13,524
    
    
    
    10,855Service contracts
    
    
    4,347
    
    
    
    3,926Other revenue
    
    
    4,690
    
    
    
    4,071$
    82,476
    
    
    $
    76,250
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Technology Segment
  Nine Months EndedSeptember 30,2009
    
    2008Revenue
    
    $
    62,595
    
    
    $
    61,496Gross profit
    
    $
    41,308
    
    
    $
    40,356Gross profit margin percentage
    
    
    66
    %
    
    
    66
    %Operating expenses
    
    $
    35,855
    
    
    $
    33,768Income from operations
    
    $
    5,453
    
    
    $
    6,588
 Revenue.
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Nine Months EndedSeptember 30,2009
    
    
    2008System sales
    
    $
    20,231
    
    
    $
    19,506Consumable sales
    
    
    20,302
    
    
    
    23,365Royalty revenue
    
    
    13,524
    
    
    
    10,855Service contracts
    
    
    4,144
    
    
    
    3,888Other revenue
    
    
    4,394
    
    
    
    3,882$
    62,595
    
    
    $
    61,496
      23




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Gross profit
 Research and development expense
 Selling, general and administrative expense
 Assay Segment
  Nine Months EndedSeptember 30,2009
    
    2008Revenue
    
    $
    19,881
    
    
    $
    14,754Gross profit
    
    $
    14,331
    
    
    $
    11,018Gross profit margin percentage
    
    
    72
    %
    
    
    75
    %Operating expenses
    
    $
    17,683
    
    
    $
    16,407Loss from operations
    
    $
    (3,352
    )
    
    $
    (5,389
    )
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Nine Months EndedSeptember 30,2009
    
    
    2008System sales
    
    $
    1,173
    
    
    $
    1,227Consumable sales
    
    
    45
    
    
    
    32Assay revenue
    
    
    18,164
    
    
    
    13,268Service contracts
    
    
    203
    
    
    
    38Other revenue
    
    
    296
    
    
    
    189$
    19,881
    
    
    $
    14,754
 Revenue.
 Gross profit
 Research and development expense.
 Selling, general and administrative expense
 25




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LIQUIDITY AND CAPITAL RESOURCES
 September 30,
    
    
    December 31,2009
    
    
    2008(in thousands)
    
    
    (in thousands)Cash and cash equivalents
    
    $
    78,740
    
    
    $
    81,619Short-term investments
    
    
    16,516
    
    
    
    40,501Long-term investments
    
    
    19,722
    
    
    
    2,000$
    114,978
    
    
    $
    124,120
      26




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27




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Contractual Obligations
  Payment Due By PeriodLess Than
    
    
    
    
    
    
    
    
    
    
    More ThanContractual Obligations
    
    Total
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 Years(in thousands)Non-cancelable rental
obligations
    
    $
    11,119
    
    
    $
    2,227
    
    
    $
    4,369
    
    
    $
    3,617
    
    
    $
    906Non-cancelable purchase
obligations (1)
    
    $
    12,568
    
    
    
    7,700
    
    
    
    1,348
    
    
    
    1,288
    
    
    
    2,232Long-term debt
obligations (2)
    
    $
    5,247
    
    
    
    672
    
    
    
    2,050
    
    
    
    1,356
    
    
    
    1,169Capital lease obligations
    
    $
    27
    
    
    
    26
    
    
    
    1
    
    
    
    
    
    
    
    Total (3)
    
    $
    28,961
    
    
    $
    10,625
    
    
    $
    7,768
    
    
    $
    6,261
    
    
    $
    4,307
 
 (1)
    
    Purchase obligations include contractual arrangements in the form of purchase orders
primarily as a result of normal inventory purchases or minimum payments due resulting when
minimum purchase commitments are not met.(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)
$7.3 million relating to the development of several genetic tests. This agreement was
amended in March 2009. Funds were advanced from Technology Partnerships Canada (TPC), a
special operating program. The actual payments we received were predicated on eligible
expenditures made during the amended project period which ended July 31, 2008. LMD has
received Cdn $4.9 million from TPC which is expected to be repaid along with approximately
Cdn $1.6 million of imputed interest for a total of approximately Cdn $6.5 million.LMD has agreed to repay the TPC funding through a royalty on revenues. Royalty payments
commenced in 2007 at a rate of 1% of total 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 December 31, 2016, whichever is earlier. The repayment
obligation expires on December 31, 2016 and any unpaid balance will be cancelled and
forgiven on that date. Should the term of repayment be shorter than expected due to higher
than expected assay revenue, the effective interest rate would increase 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. The amount
due within one year, as shown in the table above, is our estimated repayment amount based on
the current projected sales for the full year 2009. Furthermore, payments reflected in U.S.
Dollars are subject to adjustment based upon applicable exchange rates as of the reporting
date.(3)
    
    Due to the uncertainty with respect to the timing of future cash flows associated with
Luminexs unrecognized tax benefits at September 30, 2009, Luminex is unable to make
reasonable reliable estimates of the timing of cash settlement with the respective taxing
authority. Therefore, $251,000 of unrecognized tax benefits have been excluded from the
contractual obligations table above. 28




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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
  Changes in Internal Control over Financial Reporting
  29




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
   
 ITEM 1A. RISK FACTORS
  
 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
    
    Purchased Under the Plans orPeriod
    
    Purchased
    
    (1)($)
    
    Plans or Programs
    
    Programs07/01/09 - 07/31/09
    
    
    650
    
    
    
    17.70
    
    
    
    
    
    
    
    08/01/09 - 08/31/09
    
    
    16,257
    
    
    
    17.71
    
    
    
    
    
    
    
    09/01/09 - 09/30/09
    
    
    72
    
    
    
    18.13
    
    
    
    
    
    
    
    Total Third Quarter
    
    
    16,979
    
    
    
    17.71
    
    
    
    
    
    
    
    
 
 (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. 30




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ITEM 6. EXHIBITS
  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.
 31




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SIGNATURES
  Date: November 5, 2009
    LUMINEX CORPORATIONBy:
    /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) S-1




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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.
 S-2