##### 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, 2009
 or
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 for the transition period from

to .
 Commission File Number: 000-30109
 LUMINEX CORPORATION
  DELAWARE
(State or other jurisdiction of 
incorporation or organization)
    
    74-2747608
(I.R.S. Employer
Identification No.)12212 TECHNOLOGY BLVD., AUSTIN, TEXAS
(Address of principal executive offices)
    
    78727
(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)
 Yes o No þ




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##### 



TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008
    
    
    1Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2009 and 2008
    
    
    2Condensed Consolidated Statements of Cash Flows for the three and six months ended June 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 1A. Risk Factors
    
    
    30Item 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
    
    
    S-1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   ii




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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 31,2009
    
    
    2008(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    66,151
    
    
    $
    81,619Short-term investments
    
    
    30,476
    
    
    
    40,501Accounts receivable, net
    
    
    18,064
    
    
    
    11,024Inventory, net
    
    
    12,411
    
    
    
    11,589Other
    
    
    2,194
    
    
    
    1,660Total current assets
    
    
    129,296
    
    
    
    146,393Property and equipment, net
    
    
    15,068
    
    
    
    12,567Intangible assets, net
    
    
    13,927
    
    
    
    14,901Long-term investments
    
    
    15,748
    
    
    
    2,000Goodwill
    
    
    39,617
    
    
    
    39,617Other
    
    
    1,417
    
    
    
    1,813Total assets
    
    $
    215,073
    
    
    $
    217,291LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    3,607
    
    
    $
    4,580Accrued liabilities
    
    
    4,863
    
    
    
    7,181Deferred revenue
    
    
    3,013
    
    
    
    2,671Current portion of long term debt
    
    
    321
    
    
    
    445Total current liabilities
    
    
    11,804
    
    
    
    14,877Long-term debt
    
    
    3,504
    
    
    
    2,914Deferred revenue and other
    
    
    4,962
    
    
    
    4,960Total liabilities
    
    
    20,270
    
    
    
    22,751Stockholders equity:Common stock
    
    
    41
    
    
    
    40Additional paid-in capital
    
    
    281,084
    
    
    
    279,255Accumulated other comprehensive gain (loss)
    
    
    64
    
    
    
    (47
    )Accumulated deficit
    
    
    (86,386
    )
    
    
    (84,708
    )Total stockholders equity
    
    
    194,803
    
    
    
    194,540Total liabilities and stockholders equity
    
    $
    215,073
    
    
    $
    217,291
 
  1




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##### Table of Contents



LUMINEX CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except per share amounts)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(unaudited)
    
    
    (unaudited)Revenue
    
    $
    27,801
    
    
    $
    24,341
    
    
    $
    53,358
    
    
    $
    47,353Cost of revenue
    
    
    8,501
    
    
    
    7,778
    
    
    
    16,490
    
    
    
    15,533Gross profit
    
    
    19,300
    
    
    
    16,563
    
    
    
    36,868
    
    
    
    31,820Operating expenses:Research and development
    
    
    4,977
    
    
    
    5,025
    
    
    
    9,603
    
    
    
    9,456Selling, general and administrative
    
    
    13,294
    
    
    
    12,052
    
    
    
    24,652
    
    
    
    24,146Total operating expenses
    
    
    18,271
    
    
    
    17,077
    
    
    
    34,255
    
    
    
    33,602Income (loss) from operations
    
    
    1,029
    
    
    
    (514
    )
    
    
    2,613
    
    
    
    (1,782
    )Interest expense from long-term debt
    
    
    (124
    )
    
    
    (134
    )
    
    
    (242
    )
    
    
    (269
    )Settlement of litigation
    
    
    
    
    
    
    
    
    
    
    (4,350
    )
    
    
    Other income (loss), net
    
    
    178
    
    
    
    (181
    )
    
    
    449
    
    
    
    139Income (loss) before income taxes
    
    
    1,083
    
    
    
    (829
    )
    
    
    (1,530
    )
    
    
    (1,912
    )Income taxes
    
    
    29
    
    
    
    (130
    )
    
    
    (148
    )
    
    
    (213
    )Net income (loss)
    
    $
    1,112
    
    
    $
    (959
    )
    
    $
    (1,678
    )
    
    $
    (2,125
    )Net income (loss) per share, basic
    
    $
    0.03
    
    
    $
    (0.03
    )
    
    $
    (0.04
    )
    
    $
    (0.06
    )Shares used in computing net income (loss)
per share, basic
    
    
    40,533
    
    
    
    35,689
    
    
    
    40,441
    
    
    
    35,559Net income (loss) per share, diluted
    
    $
    0.03
    
    
    $
    (0.03
    )
    
    $
    (0.04
    )
    
    $
    (0.06
    )Shares used in computing net income (loss)
per share, diluted
    
    
    41,353
    
    
    
    35,689
    
    
    
    40,441
    
    
    
    35,559
 
  2




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LUMINEX CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(unaudited)
    
    
    (unaudited)Cash flows from operating activities:Net income (loss)
    
    $
    1,112
    
    
    $
    (959
    )
    
    $
    (1,678
    )
    
    $
    (2,125
    )Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:Depreciation and amortization
    
    
    1,916
    
    
    
    1,648
    
    
    
    3,879
    
    
    
    3,305Stock-based compensation and other
    
    
    1,815
    
    
    
    1,692
    
    
    
    3,586
    
    
    
    3,421Loss on disposal of assets
    
    
    15
    
    
    
    7
    
    
    
    25
    
    
    
    7Other
    
    
    712
    
    
    
    258
    
    
    
    581
    
    
    
    864Changes in operating assets and liabilities:Accounts receivable, net
    
    
    (3,990
    )
    
    
    1,734
    
    
    
    (7,090
    )
    
    
    1,785Inventory, net
    
    
    (964
    )
    
    
    (1,076
    )
    
    
    (822
    )
    
    
    (2,005
    )Prepaids and other
    
    
    (990
    )
    
    
    (638
    )
    
    
    (431
    )
    
    
    (931
    )Accounts payable
    
    
    (4,542
    )
    
    
    348
    
    
    
    (1,061
    )
    
    
    638Accrued liabilities
    
    
    (1,009
    )
    
    
    1,191
    
    
    
    (4,318
    )
    
    
    (1,328
    )Deferred revenue
    
    
    225
    
    
    
    (32
    )
    
    
    341
    
    
    
    592Net cash (used in) provided by operating activities
    
    
    (5,700
    )
    
    
    4,173
    
    
    
    (6,988
    )
    
    
    4,223Cash flows from investing activities:Net purchases of available-for-sale investments
    
    
    (13,165
    )
    
    
    
    
    
    
    (44,646
    )
    
    
    Maturities of available-for-sale investments
    
    
    4,994
    
    
    
    
    
    
    
    4,994
    
    
    
    Net purchases of held-to-maturity investments
    
    
    
    
    
    
    (1,951
    )
    
    
    
    
    
    
    (2,933
    )Maturities of held-to-maturity investments
    
    
    13,441
    
    
    
    
    
    
    
    36,140
    
    
    
    Purchase of property and equipment
    
    
    (3,585
    )
    
    
    (1,107
    )
    
    
    (5,116
    )
    
    
    (1,894
    )Acquisition activity
    
    
    
    
    
    
    (412
    )
    
    
    
    
    
    
    (412
    )Acquired technology rights
    
    
    (14
    )
    
    
    (982
    )
    
    
    (21
    )
    
    
    (982
    )Net cash provided by (used in) investing activities
    
    
    1,671
    
    
    
    (4,452
    )
    
    
    (8,649
    )
    
    
    (6,221
    )Cash flows from financing activities:Payment on debt
    
    
    (440
    )
    
    
    (134
    )
    
    
    (440
    )
    
    
    (134
    )Proceeds from secondary offering, net of offering costs
    
    
    
    
    
    
    74,779
    
    
    
    
    
    
    
    74,779Proceeds from debt
    
    
    
    
    
    
    
    
    
    
    454
    
    
    
    Proceeds from issuance of common stock
    
    
    146
    
    
    
    1,962
    
    
    
    285
    
    
    
    2,770Net cash (used in) provided by financing activities
    
    
    (294
    )
    
    
    76,607
    
    
    
    299
    
    
    
    77,415Effect of foreign currency exchange rate on cash
    
    
    (241
    )
    
    
    (9
    )
    
    
    (130
    )
    
    
    29Change in cash and cash equivalents
    
    
    (4,564
    )
    
    
    76,319
    
    
    
    (15,468
    )
    
    
    75,446Cash and cash equivalents, beginning of period
    
    
    70,715
    
    
    
    26,360
    
    
    
    81,619
    
    
    
    27,233Cash and cash equivalents, end of period
    
    $
    66,151
    
    
    $
    102,679
    
    
    $
    66,151
    
    
    $
    102,679
 
  3




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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)
 Held-to-maturity securities consisted of the following as of June 30, 2009 (in thousands):
 AccruedCost
    
    
    Interest
    
    
    Amortized CostDue in one year or less
    
    $
    6,361
    
    
    $
    107
    
    
    $
    6,468
  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 Other
    
    
    Accumulated OtherAmortized
    
    
    Comprehensive
    
    
    Comprehensive
    
    
    EstimatedCost
    
    
    Gain (Loss)
    
    
    Gain (Loss)
    
    

Fair ValueCurrent:Money Market funds
    
    $
    61,152
    
    
    $
    
    
    
    $
    
    
    
    $
    61,152Government sponsored debt securities
    
    
    28,968
    
    
    
    39
    
    
    
    
    
    
    
    29,007Total current securities
    
    
    90,120
    
    
    
    39
    
    
    
    
    
    
    
    90,159Noncurrent:Non-government sponsored debt securities
    
    
    2,048
    
    
    
    5
    
    
    
    
    
    
    
    2,053Government sponsored debt securities
    
    
    13,628
    
    
    
    67
    
    
    
    
    
    
    
    13,695Total noncurrent securities
    
    
    15,676
    
    
    
    72
    
    
    
    
    
    
    
    15,748Total available-for-sale securities
    
    $
    105,796
    
    
    $
    111
    
    
    $
    
    
    
    $
    105,907
   5




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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  EstimatedFair ValueDue in one year or less
    
    $
    29,007Due in 12 years
    
    
    15,748$
    44,755
       Fair Value Measurements at Reporting Date UsingLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalMoney Market funds
    
    $
    61,152
    
    
    
    
    
    
    
    
    
    
    $
    61,152Non-government sponsored debt obligations
    
    
    2,053
    
    
    
    
    
    
    
    
    
    
    
    2,053Government sponsored debt obligations
    
    
    49,170
    
    
    
    
    
    
    
    
    
    
    
    49,170Total
    
    $
    112,375
    
    
    
    
    
    
    
    
    
    
    $
    112,375Amounts included in:Cash and cash equivalents
    
    $
    66,151
    
    
    
    
    
    
    
    
    
    
    $
    66,151Short-term investments
    
    
    30,476
    
    
    
    
    
    
    
    
    
    
    
    30,476Long-term investments
    
    
    15,748
    
    
    
    
    
    
    
    
    
    
    
    15,748Total
    
    $
    112,375
    
    
    
    
    
    
    
    
    
    
    $
    112,375
  6




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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE 3  INVENTORY, NET
  June 30,
    
    
    December 31,2009
    
    
    2008Parts and supplies
    
    $
    5,539
    
    
    $
    5,213Work-in-progress
    
    
    4,380
    
    
    
    3,939Finished goods
    
    
    2,492
    
    
    
    2,437$
    12,411
    
    
    $
    11,589
 NOTE 4  EARNINGS PER SHARE
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Numerator:Net income (loss)
    
    $
    1,112
    
    
    $
    (959
    )
    
    $
    (1,678
    )
    
    $
    (2,125
    )Denominator:Denominator for basic net income (loss) per share 
weighted average common stock outstanding
    
    
    40,533
    
    
    
    35,689
    
    
    
    40,441
    
    
    
    35,559Denominator for diluted net income (loss) per share 
weighted average common stock outstanding and
dilutive common stock equivalents
    
    
    41,353
    
    
    
    35,689
    
    
    
    40,441
    
    
    
    35,559Basic net income (loss) per share
    
    $
    0.03
    
    
    $
    (0.03
    )
    
    $
    (0.04
    )
    
    $
    (0.06
    )Diluted net income (loss) per share
    
    $
    0.03
    
    
    $
    (0.03
    )
    
    $
    (0.04
    )
    
    $
    (0.06
    )
   7




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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
    
    
    124
    
    
    
    15.67Exercised
    
    
    (27
    )
    
    
    10.66Cancelled or expired
    
    
    (67
    )
    
    
    17.85Outstanding at June 30, 2009
    
    
    2,801
    
    
    $
    11.99
   WeightedAverageShares
    
    
    Grant-DateRestricted Stock Awards
    
    (in thousands)
    
    
    Fair ValueNon-vested at December 31, 2008
    
    
    1,197
    
    
    $
    15.39Granted
    
    
    388
    
    
    
    15.70Vested
    
    
    (388
    )
    
    
    14.94Cancelled or expired
    
    
    (100
    )
    
    
    15.92Non-vested at June 30, 2009
    
    
    1,097
    
    
    $
    16.60
 SharesRestricted Stock Units
    
    (in thousands)Non-vested at December 31, 2008
    
    
    280Granted
    
    
    344Vested
    
    
    (11
    )Cancelled or expired
    
    
    (77
    )Non-vested at June 30, 2009
    
    
    536
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Cost of revenue
    
    $
    162
    
    
    $
    122
    
    
    $
    289
    
    
    $
    234Research and development
    
    
    240
    
    
    
    255
    
    
    
    542
    
    
    
    499Selling, general and administrative
    
    
    1,413
    
    
    
    1,315
    
    
    
    2,755
    
    
    
    2,688Total stock-based compensation costs
    
    $
    1,815
    
    
    $
    1,692
    
    
    $
    3,586
    
    
    $
    3,421
  8




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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE 6  SEGMENT INFORMATION
  Three Months Ended
    
    
    Three Months EndedJune 30, 2009
    

    
    June 30, 2008Technology
    
    
    Assay
    
    
    
    
    
    
    Technology
    
    
    AssaySegment
    
    
    Segment
    
    
    Consolidated
    
    
    Segment
    
    
    Segment
    
    
    ConsolidatedRevenues from external
customers
    
    $
    19,466
    
    
    $
    8,335
    
    
    $
    27,801
    
    
    $
    20,258
    
    
    $
    4,083
    
    
    $
    24,341Depreciation and amortization
    
    
    1,057
    
    
    
    859
    
    
    $
    1,916
    
    
    
    799
    
    
    
    849
    
    
    $
    1,648Segment profit (loss)
    
    
    1,448
    
    
    
    (336
    )
    
    $
    1,112
    
    
    
    2,156
    
    
    
    (3,115
    )
    
    $
    (959
    )Segment assets
    
    
    141,126
    
    
    
    73,947
    
    
    $
    215,073
    
    
    
    137,275
    
    
    
    65,369
    
    
    $
    202,644
  Six Months Ended
    
    
    Six Months EndedJune 30, 2009
    
    
    June 30, 2008Technology
    
    
    Assay
    
    
    
    
    
    
    Technology
    
    
    AssaySegment
    
    
    Segment
    
    
    Consolidated
    
    
    Segment
    
    
    Segment
    
    
    ConsolidatedRevenues from external
customers
    
    $
    40,564
    
    
    $
    12,794
    
    
    $
    53,358
    
    
    $
    38,914
    
    
    $
    8,439
    
    
    $
    47,353Depreciation and amortization
    
    
    2,028
    
    
    
    1,851
    
    
    $
    3,879
    
    
    
    1,577
    
    
    
    1,728
    
    
    $
    3,305Segment profit (loss)
    
    
    3,357
    
    
    
    (5,035
    )
    
    $
    (1,678
    )
    
    
    3,310
    
    
    
    (5,435
    )
    
    $
    (2,125
    )Segment assets
    
    
    141,126
    
    
    
    73,947
    
    
    $
    215,073
    
    
    
    137,275
    
    
    
    65,369
    
    
    $
    202,644
 NOTE 7  INCOME TAXES
    9




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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 NOTE 8  COMMITMENTS AND CONTINGENCIES
  ®
 NOTE 9  RECENT ACCOUNTING PRONOUNCEMENTS
   
    
    FAS No. 166, Accounting for Transfers of Financial Assets, an amendment of FASB
Statement No. 140, or FAS 166;
 
    
    FAS No. 167, Amendments to FASB Interpretation No. 46(R),or FAS 167; and
 
    
    FAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally
Accepted Accounting Principles, a replacement of FASB Statement No. 162, or FAS 168.
   10




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##### Table of Contents



LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  ,  
 
  Earnings per Share
  11




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##### Table of Contents



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 end users capital spending policies and their
ability to finance purchases of our products;
 
    
    concentration of our revenue in a limited number of strategic partners;
 
    
    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.
  12




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##### Table of Contents



OVERVIEW
 ®
    13




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##### Table of Contents




    
    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.
 Second Quarter 2009 Highlights
 
    
    Consolidated revenue of $27.8 million for the quarter ended June 30, 2009, representing
a 14% increase over revenue for the second quarter of 2008
 
    
    Consolidated gross profit margin of 69% compared with second quarter 2008 gross profit
margin of 68%
 
    
    System shipments of 158 including 16 shipments of FLEXMAP 3D, resulting in cumulative
life-to-date shipments of 6,255
 
    
    Full commercial launch of the high-throughput FLEXMAP 3D multiplexing system
 
    
    Establishment of an office in Shanghai, Peoples Republic of China to provide commercial
support and service to customers and partners in the area
 
    
    Launch of two new cystic fibrosis (CF) tests in Europe, the xTAG® Cystic
Fibrosis 39 Kit v2 and xTAG Cystic Fibrosis 71 Kit v2, as CE IVD Marked products under the
European Directive on In Vitro Diagnostic Medical Devices
 
    
    Our partners reported over $67 million of royalty bearing end user sales on xMAP
technology for the quarter, a 21% increase over the second quarter of 2008
  14




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##### Table of Contents




    
    The tightening of the capital markets due to the overall economic environment and the
related extension of the sales cycle on our system sales. We remain confident in our long
term guidance of 175 to 225 systems per quarter, recognizing that volatility in the number
of systems sold per quarter can be expected in the short term.
 
    
    The uncertainties surrounding government funding and its effect on the timing of planned
purchases by end users.
 
    
    The decline in bulk consumable purchases in the second quarter of 2009. In the fourth
quarter of 2008, first quarter of 2009, and second quarter of 2009, we had bulk purchases
totaling $6.8 million, $6.1 million, and $5.5 million in consumables, respectively. In the
first quarter of 2009, the decrease was primarily a result of one less bulk purchaser. The
decrease in the second quarter of 2009 was primarily a result of a significant volume
reduction in the bulk purchases from one of our partners due to the varying consumable
needs during the regulatory clearance and commercialization phases of development of that
partners new products. We have previously indicated that variability is expected in the
absolute number of bulk purchasers and purchases per quarter and we expect this variability
to continue. Non-bulk purchases for the past four quarters have remained essentially
unchanged at approximately $1.0 million to $1.5 million.
 Segment Information
  Future Operations
   
    
    the constraints on capital spending experienced by our partners and customers due
to the current economic conditions and the impact on our system sales;
    
    the timing effect of government funding on planned purchases by end users;
    
    continued adoption and development of partner products incorporating Luminex
technology;
    
    our ability to manage operating costs appropriately in order to improve operating
margins;
    
    commercialization, regulatory acceptance and market adoption of output from the
Assay Segment; and
    
    the expansion and enhancement of our footprint and reputation within our identified
target market segments.
  15




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##### Table of Contents



CRITICAL ACCOUNTING POLICIES AND ESTIMATES
    16




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##### Table of Contents



RESULTS OF OPERATIONS
 THREE MONTHS ENDED JUNE 30, 2009 COMPARED TO THREE MONTHS ENDED JUNE 30, 2008
  Three Months EndedJune 30,2009
    
    
    2008Revenue
    
    $
    27,801
    
    
    $
    24,341Gross profit
    
    $
    19,300
    
    
    $
    16,563Gross profit margin percentage
    
    
    69
    %
    
    
    68
    %Operating expenses
    
    $
    18,271
    
    
    $
    17,077Income (loss) from operations
    
    $
    1,029
    
    
    $
    (514
    )
   Three Months EndedJune 30,2009
    
    
    2008System sales
    
    $
    6,111
    
    
    $
    6,318Consumable sales
    
    
    6,682
    
    
    
    8,503Assay revenue
    
    
    7,769
    
    
    
    3,526Royalty revenue
    
    
    4,298
    
    
    
    3,472Service contracts
    
    
    1,424
    
    
    
    1,277Other revenue
    
    
    1,517
    
    
    
    1,245$
    27,801
    
    
    $
    24,341
   17




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##### Table of Contents



®
 Technology Segment
  Three Months EndedJune 30,2009
    
    
    2008Revenue
    
    $
    19,466
    
    
    $
    20,258Gross profit
    
    $
    12,958
    
    
    $
    13,826Gross profit margin percentage
    
    
    67
    %
    
    
    68
    %Operating expenses
    
    $
    11,572
    
    
    $
    11,365Income from operations
    
    $
    1,386
    
    
    $
    2,461
 Revenue.
  Three Months EndedJune 30,2009
    
    
    2008System sales
    
    $
    5,719
    
    
    $
    5,860Consumable sales
    
    
    6,660
    
    
    
    8,492Royalty revenue
    
    
    4,298
    
    
    
    3,472Service contracts
    
    
    1,353
    
    
    
    1,266Other revenue
    
    
    1,436
    
    
    
    1,168$
    19,466
    
    
    $
    20,258
   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 EndedJune 30,2009
    
    
    2008Revenue
    
    $
    8,335
    
    
    $
    4,083Gross profit
    
    $
    6,342
    
    
    $
    2,737Gross profit margin percentage
    
    
    76
    %
    
    
    67
    %Operating expenses
    
    $
    6,699
    
    
    $
    5,712Loss from operations
    
    $
    (357
    )
    
    $
    (2,975
    )
  Three Months EndedJune 30,2009
    
    
    2008System sales
    
    $
    392
    
    
    $
    458Consumable sales
    
    
    22
    
    
    
    11Assay revenue
    
    
    7,769
    
    
    
    3,526Service contracts
    
    
    71
    
    
    
    11Other revenue
    
    
    81
    
    
    
    77$
    8,335
    
    
    $
    4,083
 Revenue.
  20




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##### Table of Contents



Gross profit
 Research and development expense.
 Selling, general and administrative expense
 SIX MONTHS ENDED JUNE 30, 2009 COMPARED TO SIX MONTHS ENDED JUNE 30, 2008
  Six Months EndedJune 30,2009
    
    
    2008Revenue
    
    $
    53,358
    
    
    $
    47,353Gross profit
    
    $
    36,868
    
    
    $
    31,820Gross profit margin percentage
    
    
    69
    %
    
    
    67
    %Operating expenses
    
    $
    34,255
    
    
    $
    33,602Income (loss) from operations
    
    $
    2,613
    
    
    $
    (1,782
    )
   Six Months EndedJune 30,2009
    
    
    2008System sales
    
    $
    12,238
    
    
    $
    12,945Consumable sales
    
    
    14,285
    
    
    
    15,057Assay revenue
    
    
    11,965
    
    
    
    7,371Royalty revenue
    
    
    8,825
    
    
    
    6,990Service contracts
    
    
    2,856
    
    
    
    2,497Other revenue
    
    
    3,189
    
    
    
    2,493$
    53,358
    
    
    $
    47,353
  21




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##### Table of Contents



Technology Segment
  Six Months EndedJune 30,2009
    
    
    2008Revenue
    
    $
    40,564
    
    
    $
    38,914Gross profit
    
    $
    27,541
    
    
    $
    25,815Gross profit margin percentage
    
    
    68
    %
    
    
    66
    %Operating expenses
    
    $
    22,637
    
    
    $
    22,455Income from operations
    
    $
    4,904
    
    
    $
    3,360
 Revenue.
  22




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##### Table of Contents



Six Months EndedJune 30,2009
    
    
    2008System sales
    
    $
    11,730
    
    
    $
    12,023Consumable sales
    
    
    14,250
    
    
    
    15,037Assay revenue
    
    
    
    
    
    
    Royalty revenue
    
    
    8,825
    
    
    
    6,990Service contracts
    
    
    2,725
    
    
    
    2,485Other revenue
    
    
    3,034
    
    
    
    2,379$
    40,564
    
    
    $
    38,914
     23




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##### Table of Contents



Gross profit
 Research and development expense
 Selling, general and administrative expense
 Assay Segment
  Six Months EndedJune 30,2009
    
    
    2008Revenue
    
    $
    12,794
    
    
    $
    8,439Gross profit
    
    $
    9,327
    
    
    $
    6,005Gross profit margin percentage
    
    
    73
    %
    
    
    71
    %Operating expenses
    
    $
    11,618
    
    
    $
    11,147Loss from operations
    
    $
    (2,291
    )
    
    $
    (5,142
    )
  24




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##### Table of Contents



Six Months EndedJune 30,2009
    
    
    2008System sales
    
    $
    508
    
    
    $
    922Consumable sales
    
    
    35
    
    
    
    20Assay revenue
    
    
    11,965
    
    
    
    7,371Royalty
revenue
    
    
    
    
    
    
    Service contracts
    
    
    131
    
    
    
    12Other revenue
    
    
    155
    
    
    
    114$
    12,794
    
    
    $
    8,439
 Revenue.
 Gross profit
 Research and development expense.
 Selling, general and administrative expense
  25




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
 June 30,
    
    
    December 31,2009
    
    
    2008(in thousands)
    
    
    (in thousands)Cash and cash
equivalents
    
    $
    66,151
    
    
    $
    81,619Short-term
investments
    
    
    30,476
    
    
    
    40,501Long-term
investments
    
    
    15,748
    
    
    
    2,000$
    112,375
    
    
    $
    124,120
       26




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##### Table of Contents



27




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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 Years(in thousands)Non-cancelable rental
obligations
    
    $
    11,484
    
    
    $
    2,133
    
    
    $
    4,204
    
    
    $
    3,818
    
    
    $
    1,329Non-cancelable purchase
obligations (1)
    
    $
    9,721
    
    
    
    4,652
    
    
    
    1,549
    
    
    
    1,288
    
    
    
    2,232Long-term debt
obligations (2)
    
    $
    4,929
    
    
    
    644
    
    
    
    2,197
    
    
    
    1,445
    
    
    
    643Capital lease obligations
    
    $
    35
    
    
    
    31
    
    
    
    4
    
    
    
    
    
    
    
    Total (3)
    
    $
    26,169
    
    
    $
    7,460
    
    
    $
    7,954
    
    
    $
    6,551
    
    
    $
    4,204
 (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 June 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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##### 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
  Changes in Internal Control over Financial Reporting
   29




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1A.
    
    RISK FACTORS
  
 ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  ISSUER PURCHASES OF EQUITY SECURITIES
 Average
    
    
    Total Number of Shares
    
    
    Appromixate Dollar Value ofTotal Number
    
    
    Price Paid
    
    
    Purchased as Part of
    
    
    Shares that May Yet Beof Shares
    
    
    per Share
    
    
    Publicly Announced
    
    
    Purchased Under the Plans orPeriod
    
    Purchased
    
    
    (1)($)
    
    
    Plans or Programs
    
    
    Programs04/01/09  04/30/09
    
    
    6,839
    
    
    
    16.94
    
    
    
    
    
    
    
    05/01/09  05/31/09
    
    
    81,510
    
    
    
    15.54
    
    
    
    
    
    
    
    06/01/09  06/30/09
    
    
    9,305
    
    
    
    16.20
    
    
    
    
    
    
    
    Total Second Quarter
    
    
    97,654
    
    
    
    15.70
    
    
    
    
    
    
    
    
 (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
    
    
    WithheldPartrick J. Balthrop, Sr.
    
    
    35,566,581
    
    
    
    210,438G. Walter Loewenbaum II
    
    
    35,502,026
    
    
    
    274,993Kevin M. McNamara
    
    
    35,389,588
    
    
    
    387,431Edward A. Ogunro, Ph.D.
    
    
    35,552,577
    
    
    
    224,442
   30




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##### Table of Contents



Number of SharesVoted
    
    
    
    
    
    
    BrokerVoted For
    
    
    Against
    
    
    Abstained
    
    
    Non-VotesTo approve the
Luminex Corporation
Amended and
Restated 2006
Equity Incentive
Plan
    
    
    26,443,987
    
    
    
    2,060,524
    
    
    
    51,268
    
    
    
    7,221,240To ratify the
appointment by the
Companys Audit
Committee of Ernst
& Young LLP as the
Companys
independent
registered public
accounting firm for
fiscal 2009
    
    
    35,746,660
    
    
    
    10,158
    
    
    
    20,200
    
    
    
    
 
 ITEM 6.
    
    EXHIBITS
  Exhibit

Number
    
    Description of Documents10.1
    
    
    Luminex Corporation Amended and Restated 2006 Equity Incentive Plan (Incorporated by
reference to Exhibit 10.1 to our Current Report on Form 8-K dated May 21, 2009).10.2
    
    
    Form of Non-Qualified Stock Option Agreement (Incorporated by reference to Exhibit 10.2 to
our Current Report on Form 8-K dated May 21, 2009).10.3
    
    
    Form of Restricted Share Award Agreement (Officers and Employees) (Incorporated by reference
to Exhibit 10.3 to our Current Report on Form 8-K dated May 21, 2009).10.4
    
    
    Form of Restricted Share Award Agreement (Directors) (Incorporated by reference to Exhibit
10.4 to our Current Report on Form 8-K dated May 21, 2009).10.5
    
    
    Form of Restricted Share Unit Agreement (Officers and Employees) (Incorporated by reference
to Exhibit 10.5 to our Current Report on Form 8-K dated May 21, 2009).10.6
    
    
    Form of Restricted Share Unit Agreement (Directors) (Incorporated by reference to Exhibit
10.6 to our Current Report on Form 8-K dated May 21, 2009).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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##### Table of Contents



SIGNATURES
  Date: August 7, 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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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description of Documents10.1
    
    
    Luminex Corporation Amended and Restated 2006 Equity Incentive Plan (Incorporated by
reference to Exhibit 10.1 to our Current Report on Form 8-K dated May 21, 2009).10.2
    
    
    Form of Non-Qualified Stock Option Agreement (Incorporated by reference to Exhibit 10.2 to
our Current Report on Form 8-K dated May 21, 2009).10.3
    
    
    Form of Restricted Share Award Agreement (Officers and Employees) (Incorporated by reference
to Exhibit 10.3 to our Current Report on Form 8-K dated May 21, 2009).10.4
    
    
    Form of Restricted Share Award Agreement (Directors) (Incorporated by reference to Exhibit
10.4 to our Current Report on Form 8-K dated May 21, 2009).10.5
    
    
    Form of Restricted Share Unit Agreement (Officers and Employees) (Incorporated by reference
to Exhibit 10.5 to our Current Report on Form 8-K dated May 21, 2009).10.6
    
    
    Form of Restricted Share Unit Agreement (Directors) (Incorporated by reference to Exhibit
10.6 to our Current Report on Form 8-K dated May 21, 2009).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.
  S-2