##### 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, 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
(Do not check if smaller reporting company)
    
    Smaller reporting company o
 Yes o No þ




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##### 



TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)Condensed Consolidated Balance Sheets as of September 30, 2008 and December 31, 2007
    
    
    1Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2008 and 2007
    
    
    2Condensed Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2008 and 2007
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    27Item 4. Controls and Procedures
    
    
    27PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    28Item 1A. Risk Factors
    
    
    28Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    29Item 6. Exhibits
    
    
    29SIGNATURES and EXHIBITS
    
    
    30-31Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   ii




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PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 LUMINEX CORPORATION
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (in thousands)
 September 30,
    
    
    December 31,2008
    
    
    2007(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    81,618
    
    
    $
    27,233Short-term investments
    
    
    35,050
    
    
    
    6,944Accounts receivable, net
    
    
    12,789
    
    
    
    11,827Inventory, net
    
    
    9,547
    
    
    
    6,508Other
    
    
    1,698
    
    
    
    856Total current assets
    
    
    140,702
    
    
    
    53,368Property and equipment, net
    
    
    12,038
    
    
    
    12,673Intangible assets, net
    
    
    16,449
    
    
    
    16,919Long-term investments
    
    
    2,000
    
    
    
    Goodwill
    
    
    39,617
    
    
    
    39,617Other
    
    
    804
    
    
    
    982Total assets
    
    $
    211,610
    
    
    $
    123,559LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    3,963
    
    
    $
    3,346Accrued liabilities
    
    
    6,376
    
    
    
    6,811Deferred revenue
    
    
    2,898
    
    
    
    2,276Current portion of long term debt
    
    
    346
    
    
    
    134Total current liabilities
    
    
    13,583
    
    
    
    12,567Long-term debt
    
    
    3,463
    
    
    
    2,976Deferred revenue and other
    
    
    5,037
    
    
    
    4,536Total liabilities
    
    
    22,083
    
    
    
    20,079Stockholders equity:Common stock
    
    
    40
    
    
    
    35Additional paid-in capital
    
    
    276,234
    
    
    
    191,218Accumulated other comprehensive
loss
    
    
    (30
    )
    
    
    (8
    )Accumulated deficit
    
    
    (86,717
    )
    
    
    (87,765
    )Total stockholders equity
    
    
    189,527
    
    
    
    103,480Total liabilities and stockholders equity
    
    $
    211,610
    
    
    $
    123,559
 
  1




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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 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(unaudited)
    
    
    (unaudited)Revenue
    
    $
    28,897
    
    
    $
    19,353
    
    
    $
    76,250
    
    
    $
    53,508Cost of revenue
    
    
    9,343
    
    
    
    7,336
    
    
    
    24,876
    
    
    
    20,724Gross profit
    
    
    19,554
    
    
    
    12,017
    
    
    
    51,374
    
    
    
    32,784Operating expenses:Research and development
    
    
    4,443
    
    
    
    4,464
    
    
    
    13,899
    
    
    
    11,035Selling, general and administrative
    
    
    12,130
    
    
    
    10,011
    
    
    
    36,276
    
    
    
    28,823In-process research and development
expense
    
    
    
    
    
    
    (600
    )
    
    
    
    
    
    
    7,400Total operating expenses
    
    
    16,573
    
    
    
    13,875
    
    
    
    50,175
    
    
    
    47,258Income (loss) from operations
    
    
    2,981
    
    
    
    (1,858
    )
    
    
    1,199
    
    
    
    (14,474
    )Interest expense from long-term debt
    
    
    (137
    )
    
    
    (253
    )
    
    
    (406
    )
    
    
    (685
    )Other income, net
    
    
    490
    
    
    
    309
    
    
    
    629
    
    
    
    1,350Income (loss) before income taxes
    
    
    3,334
    
    
    
    (1,802
    )
    
    
    1,422
    
    
    
    (13,809
    )Income taxes
    
    
    (161
    )
    
    
    (50
    )
    
    
    (374
    )
    
    
    37Net income (loss)
    
    $
    3,173
    
    
    $
    (1,852
    )
    
    $
    1,048
    
    
    $
    (13,772
    )Net income (loss) per share, basic
    
    $
    0.08
    
    
    $
    (0.05
    )
    
    $
    0.03
    
    
    $
    (0.40
    )Shares used in computing net income (loss)
per share, basic
    
    
    40,002
    
    
    
    35,097
    
    
    
    37,056
    
    
    
    34,043Net income (loss) per share, diluted
    
    $
    0.08
    
    
    $
    (0.05
    )
    
    $
    0.03
    
    
    $
    (0.40
    )Shares used in computing net income (loss)
per share, diluted
    
    
    42,173
    
    
    
    35,097
    
    
    
    38,957
    
    
    
    34,043
 
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LUMINEX CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(unaudited)
    
    
    (unaudited)Operating activities:Net income (loss)
    
    $
    3,173
    
    
    $
    (1,852
    )
    
    $
    1,048
    
    
    $
    (13,772
    )Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    1,821
    
    
    
    1,067
    
    
    
    5,125
    
    
    
    3,445In-process research and development expense
    
    
    
    
    
    
    (600
    )
    
    
    
    
    
    
    7,400Stock-based compensation and other
    
    
    1,781
    
    
    
    1,744
    
    
    
    5,202
    
    
    
    4,843Loss on disposal of assets
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    88Other
    
    
    (131
    )
    
    
    1
    
    
    
    467
    
    
    
    3Changes in operating assets and liabilities:Accounts receivable, net
    
    
    (2,771
    )
    
    
    (741
    )
    
    
    (985
    )
    
    
    (2,398
    )Inventory, net
    
    
    (1,034
    )
    
    
    (503
    )
    
    
    (3,039
    )
    
    
    (1,223
    )Prepaids and other
    
    
    139
    
    
    
    361
    
    
    
    (793
    )
    
    
    242Accounts payable
    
    
    465
    
    
    
    (342
    )
    
    
    1,103
    
    
    
    (4,159
    )Accrued liabilities
    
    
    (290
    )
    
    
    536
    
    
    
    (1,346
    )
    
    
    (1,817
    )Deferred revenue
    
    
    530
    
    
    
    (545
    )
    
    
    1,122
    
    
    
    (402
    )Net cash provided by (used in) operating activities
    
    
    3,683
    
    
    
    (874
    )
    
    
    7,911
    
    
    
    (7,750
    )Investing activities:Net sales
(purchases) of held-to-maturity investments
    
    
    (27,174
    )
    
    
    33
    
    
    
    (30,106
    )
    
    
    9,743Purchase of property and equipment
    
    
    (852
    )
    
    
    (2,002
    )
    
    
    (2,747
    )
    
    
    (5,331
    )Acquisition of business, net of cash acquired
    
    
    
    
    
    
    50
    
    
    
    
    
    
    
    (2,686
    )Acquisition activity
    
    
    (93
    )
    
    
    
    
    
    
    (505
    )
    
    
    (265
    )Acquired technology rights
    
    
    (234
    )
    
    
    (5
    )
    
    
    (1,216
    )
    
    
    (5
    )Proceeds from sale of assets
    
    
    20
    
    
    
    
    
    
    
    20
    
    
    
    30Net cash (used in) provided by investing activities
    
    
    (28,333
    )
    
    
    (1,924
    )
    
    
    (34,554
    )
    
    
    1,486Financing activities:Payments on debt
    
    
    
    
    
    
    (4
    )
    
    
    (134
    )
    
    
    (12,349
    )Proceeds from secondary offering, net of offering costs
    
    
    (104
    )
    
    
    
    
    
    
    74,675
    
    
    
    Proceeds from issuance of common stock
    
    
    3,668
    
    
    
    459
    
    
    
    6,438
    
    
    
    632Other
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    13Net cash provided by (used in) financing activities
    
    
    3,564
    
    
    
    459
    
    
    
    80,979
    
    
    
    (11,704
    )Effect of foreign currency exchange rate on cash
    
    
    25
    
    
    
    228
    
    
    
    49
    
    
    
    279Change in cash and cash equivalents
    
    
    (21,061
    )
    
    
    (2,111
    )
    
    
    54,385
    
    
    
    (17,689
    )Cash and cash equivalents, beginning of period
    
    
    102,679
    
    
    
    11,836
    
    
    
    27,233
    
    
    
    27,414Cash and cash equivalents, end of period
    
    $
    81,618
    
    
    $
    9,725
    
    
    $
    81,618
    
    
    $
    9,725Supplemental disclosure of cashflow information:Interest and penalties paid
    
    $
    1
    
    
    $
    1
    
    
    $
    160
    
    
    $
    1,336Supplemental disclosure of non-cash effect of acquisitions:Purchase price
    
    $
    
    
    
    $
    (1,182
    )
    
    $
    
    
    
    $
    (48,928
    )Common stock issued
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,755Conversion of Tm options and warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,315Cash acquired
    
    
    
    
    
    
    1,232
    
    
    
    
    
    
    
    1,232Acquisition, net of cash acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    940$
    
    
    
    $
    50
    
    
    $
    
    
    
    $
    (2,686
    )
 
  3




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LUMINEX CORPORATION
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 NOTE 1  BASIS OF PRESENTATION
       Pro Forma Information
    Nine Months EndedSeptember 30, 2007Revenues
    
    $
    53,827Net loss
    
    $
    (20,149
    )Net loss per share, basic and diluted
    
    $
    (0.58
    )
  4




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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
    
    $
    40,024
    
    
    $
    219
    
    
    $
    40,243Due after one year through two years
    
    $
    2,000
    
    
    $
    4
    
    
    $
    2,004$
    42,024
    
    
    $
    223
    
    
    $
    42,247
 NOTE 3  INVENTORY, NET
  September 30,
    
    
    December 31,2008
    
    
    2007Parts and supplies
    
    $
    4,831
    
    
    $
    3,613Work-in-progress
    
    
    3,295
    
    
    
    1,632Finished goods
    
    
    2,133
    
    
    
    1,95610,259
    
    
    
    7,201Less: Allowance for excess and obsolete
inventory
    
    
    (712
    )
    
    
    (693
    )$
    9,547
    
    
    $
    6,508
 NOTE 4  EARNINGS PER SHARE
   5




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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Numerator:Net income (loss)
    
    $
    3,173
    
    
    $
    (1,852
    )
    
    $
    1,048
    
    
    $
    (13,772
    )Denominator:Denominator for basic net income (loss) per
share -
weighted average common stock outstanding
    
    
    40,002
    
    
    
    35,097
    
    
    
    37,056
    
    
    
    34,043Dilutive common stock equivalents  common
stock
options and awards
    
    
    2,171
    
    
    
    
    
    
    
    1,901
    
    
    
    Denominator for diluted net income (loss) per share -
weighted average common stock
outstanding and
dilutive common stock equivalents
    
    
    42,173
    
    
    
    35,097
    
    
    
    38,957
    
    
    
    34,043Basic net income (loss) per share
    
    $
    0.08
    
    
    $
    (0.05
    )
    
    $
    0.03
    
    
    $
    (0.40
    )Diluted net income (loss) per share
    
    $
    0.08
    
    
    $
    (0.05
    )
    
    $
    0.03
    
    
    $
    (0.40
    )
  NOTE 5  STOCK-BASED COMPENSATION
  WeightedAverageShares
    
    
    ExerciseStock Options
    
    (in thousands)
    
    
    PriceOutstanding at December 31, 2007
    
    
    3,444
    
    
    $
    11.96Granted
    
    
    77
    
    
    
    20.70Exercised
    
    
    (582
    )
    
    
    11.06Cancelled or expired
    
    
    (25
    )
    
    
    22.03Outstanding at September 30, 2008
    
    
    2,914
    
    
    $
    12.28
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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
  Weighted-AverageShares
    
    
    Grant-DateRestricted Stock Awards and Units
    
    (in thousands)
    
    
    Fair ValueNon-vested at December 31, 2007
    
    
    1,333
    
    
    $
    13.37Granted
    
    
    401
    
    
    
    20.96Vested
    
    
    (308
    )
    
    
    12.71Cancelled or expired
    
    
    (105
    )
    
    
    13.69Non-vested at September 30, 2008
    
    
    1,321
    
    
    $
    15.35
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Cost of revenue
    
    $
    140
    
    
    $
    105
    
    
    $
    374
    
    
    $
    254Research and development
    
    
    312
    
    
    
    216
    
    
    
    812
    
    
    
    559Selling, general and administrative
    
    
    1,329
    
    
    
    1,423
    
    
    
    4,016
    
    
    
    4,030Total stock-based compensation
costs
    
    $
    1,781
    
    
    $
    1,744
    
    
    $
    5,202
    
    
    $
    4,843
 NOTE 6  SEGMENT INFORMATION
  Technology
    
    
    Assay
    
    
    IntersegmentGroup
    
    
    Group
    
    
    Eliminations
    
    
    ConsolidatedRevenues from external
customers
    
    $
    61,496
    
    
    $
    14,754
    
    
    $
    
    
    
    $
    76,250Intersegment revenue
    
    
    (3,926
    )
    
    
    (158
    )
    
    
    4,084
    
    
    
    Depreciation and amortization
    
    
    2,408
    
    
    
    2,860
    
    
    
    (143
    )
    
    
    5,125Segment profit (loss)
    
    
    10,496
    
    
    
    (9,426
    )
    
    
    (22
    )
    
    
    1,048Segment assets
    
    
    233,413
    
    
    
    72,150
    
    
    
    (93,953
    )
    
    
    211,610
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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
  Technology
    
    
    Assay
    
    
    IntersegmentGroup
    
    
    Group
    
    
    Eliminations
    
    
    ConsolidatedRevenues from external
customers
    
    $
    45,007
    
    
    $
    8,501
    
    
    $
    
    
    
    $
    53,508Intersegment revenue
    
    
    (2,322
    )
    
    
    (48
    )
    
    
    2,370
    
    
    
    Depreciation and amortization
    
    
    1,515
    
    
    
    2,434
    
    
    
    (161
    )
    
    
    3,788Segment profit (loss)
    
    
    2,894
    
    
    
    (16,504
    )
    
    
    (162
    )
    
    
    (13,772
    )Segment assets
    
    
    58,308
    
    
    
    66,135
    
    
    
    (13,629
    )
    
    
    110,814
 NOTE 7  INCOME TAXES
   NOTE 8  COMMITMENTS AND CONTINGENCIES
   8




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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
 NOTE 9  RECENT ACCOUNTING PRONOUNCEMENTS
  Determining the Fair Value of a Financial Asset
When the Market for That Asset Is Not Active Fair Value Measurements Accounting Changes and Error
Corrections
   9




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LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
 
 The Hierarchy of Generally Accepted Accounting
Principles The Meaning
of Present Fairly in Conformity With Generally Accepted Accounting Principles
  10




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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 on us and on our
strategic partners and their customers, including its effects on their 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, 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 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, including the SUNY litigation;
    
    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.
   11




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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 analyzers often coupled
with our 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.
  12




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
    
    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 in Assay revenue since March 1, 2007 as a result of our acquisition of LMD 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.
    
    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
  Third Quarter 2008 Highlights
 
    
    Net income of $3.2 million for the third quarter of 2008 and $1.0 million of net income
year to date
    
    Consolidated total revenue of $28.9 million representing a 49% increase over revenue for
the third quarter of 2007
    
    System shipments of 239 resulting in cumulative life to date shipments of 5,641, up 19%
from a year ago representing the eighth consecutive quarter of system shipments of 200 or
more
    
    Consumables revenue of $8.3 million and royalty revenue of $3.9 million, up 47% and 45%,
respectively, from the third quarter of 2007
    
    Consolidated gross profit margin of 68% for the third quarter
 Segment Information
  Future Operations
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
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RESULTS OF OPERATIONS
 THREE MONTHS ENDED SEPTEMBER 30, 2008 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2007
  Three Months EndedSeptember 30,2008
    
    
    2007Revenue
    
    $
    28,897
    
    
    $
    19,353Gross profit
    
    $
    19,554
    
    
    $
    12,017Gross profit margin percentage
    
    
    68
    %
    
    
    62
    %Operating expenses
    
    $
    16,573
    
    
    $
    13,875Income (loss) from operations
    
    $
    2,981
    
    
    $
    (1,858
    )
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Technology Segment
  Three Months EndedSeptember 30,2008
    
    
    2007Revenue
    
    $
    22,582
    
    
    $
    16,027Gross profit
    
    $
    14,541
    
    
    $
    10,085Gross profit margin percentage
    
    
    64
    %
    
    
    63
    %Operating expenses
    
    $
    11,313
    
    
    $
    9,875Income from operations
    
    $
    3,228
    
    
    $
    210
 Revenue.
  Three Months EndedSeptember 30,2008
    
    
    2007System sales
    
    $
    7,483
    
    
    $
    5,148Consumable sales
    
    
    8,328
    
    
    
    5,655Royalty revenue
    
    
    3,865
    
    
    
    2,667Service contracts
    
    
    1,403
    
    
    
    1,167Other revenue
    
    
    1,503
    
    
    
    1,390$
    22,582
    
    
    $
    16,027
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Gross profit
 Research and development expense
 Selling, general and administrative expense
  17




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Other income, net
 Assay Segment
  Three Months EndedSeptember 30,2008
    
    
    2007Revenue
    
    $
    6,315
    
    
    $
    3,326Gross profit
    
    $
    5,013
    
    
    $
    1,932Gross profit margin percentage
    
    
    79
    %
    
    
    58
    %Operating expenses
    
    $
    5,260
    
    
    $
    4,000Loss from operations
    
    $
    (247
    )
    
    $
    (2,068
    )
  Three Months EndedSeptember 30,2008
    
    
    2007System sales
    
    $
    305
    
    
    $
    352Consumable sales
    
    
    12
    
    
    
    Service contracts
    
    
    26
    
    
    
    Assay revenue
    
    
    5,897
    
    
    
    2,945Other revenue
    
    
    75
    
    
    
    29$
    6,315
    
    
    $
    3,326
 Revenue.
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Gross profit
 Research and development expense.
 Selling, general and administrative expense
 NINE MONTHS ENDED SEPTEMBER 30, 2008 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2007
  Nine Months EndedSeptember 30,2008
    
    
    2007Revenue
    
    $
    76,250
    
    
    $
    53,508Gross profit
    
    $
    51,374
    
    
    $
    32,784Gross profit margin percentage
    
    
    67
    %
    
    
    61
    %Operating expenses
    
    $
    50,175
    
    
    $
    47,258Income (loss) from operations
    
    $
    1,199
    
    
    $
    (14,474
    )
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Technology Segment
  Nine Months EndedSeptember 30,2008
    
    
    2007Revenue
    
    $
    61,496
    
    
    $
    45,007Gross profit
    
    $
    40,356
    
    
    $
    27,527Gross profit margin percentage
    
    
    66
    %
    
    
    61
    %Operating expenses
    
    $
    33,768
    
    
    $
    28,092Income (loss) from operations
    
    $
    6,588
    
    
    $
    (565
    )
 Revenue.
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Nine Months EndedSeptember 30,2008
    
    
    2007System sales
    
    $
    19,506
    
    
    $
    16,236Consumable sales
    
    
    23,365
    
    
    
    13,771Royalty revenue
    
    
    10,855
    
    
    
    7,409Service contracts
    
    
    3,888
    
    
    
    3,257Other revenue
    
    
    3,882
    
    
    
    4,334$
    61,496
    
    
    $
    45,007
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Gross profit
 Research and development expense
 Selling, general and administrative expense
 Assay Segment
  Nine Months EndedSeptember 30,2008
    
    
    2007Revenue
    
    $
    14,754
    
    
    $
    8,501Gross profit
    
    $
    11,018
    
    
    $
    5,257Gross profit margin percentage
    
    
    75
    %
    
    
    62
    %Operating expenses
    
    $
    16,407
    
    
    $
    19,166Loss from operations
    
    $
    (5,389
    )
    
    $
    (13,909
    )
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Nine Months EndedSeptember 30,2008
    
    
    2007System sales
    
    $
    1,227
    
    
    $
    578Consumable sales
    
    
    32
    
    
    
    Service contracts
    
    
    38
    
    
    
    Assay revenue
    
    
    13,268
    
    
    
    7,826Other revenue
    
    
    189
    
    
    
    97$
    14,754
    
    
    $
    8,501
 Revenue.
 Gross profit
 Research and development expense.
 Selling, general and administrative expense
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LIQUIDITY AND CAPITAL RESOURCES
 September 30,
    
    
    December 31,2008
    
    
    2007(in thousands)
    
    
    (in thousands)Cash and cash equivalents
    
    $
    81,618
    
    
    $
    27,233Short-term investments
    
    
    35,050
    
    
    
    6,944Long-term investments
    
    
    2,000
    
    
    
    
        24




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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
    
    $
    11,811
    
    
    $
    2,166
    
    
    $
    3,639
    
    
    $
    3,608
    
    
    $
    2,398Non-cancelable purchase
obligations (1)
    
    
    10,154
    
    
    
    5,878
    
    
    
    902
    
    
    
    1,013
    
    
    
    2,361Long-term debt
obligations (2)
    
    
    5,285
    
    
    
    503
    
    
    
    2,043
    
    
    
    2,739
    
    
    
    Capital lease obligations
    
    
    65
    
    
    
    35
    
    
    
    30
    
    
    
    
    
    
    
    Total
    
    $
    27,315
    
    
    $
    8,582
    
    
    $
    6,614
    
    
    $
    7,360
    
    
    $
    4,759
 (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 less payments made to
date. 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. 
  26




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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
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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
  Negative conditions in global credit markets may result in delayed payments or reduced orders
from our partners and their and our customers and may negatively impact our suppliers.
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ITEM 2. UNREGISTRED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  ISSUER PURCHASES OF EQUITY SECURITIESTotal 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
    
    
    Programs07/01/08  07/31/08
    
    
    5,224
    
    
    
    20.50
    
    
    
    
    
    
    
    08/01/08  08/31/08
    
    
    16,132
    
    
    
    23.55
    
    
    
    
    
    
    
    09/01/08  09/30/08
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Third Quarter
    
    
    21,356
    
    
    
    22.80
    
    
    
    
    
    
    
    
 (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 6. EXHIBITS
  ExhibitNumber
    
    Description of Documents3.1
    
    
    Amended and Restated Bylaws of Luminex Corporation (Incorporated by reference to Exhibit 3.1
to our Current Report on Form 8-K dated September 16, 2008).10.1
    
    
    Form of Indemnification Agreement (Incorporated by reference to Exhibit 10.1 to our Current
Report on Form 8-K dated September 16, 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.
  29




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SIGNATURES
  LUMINEX CORPORATIONDate: November 7, 2008By:
    
    /s/ Harriss T. Currie

Harriss T. Currie
Vice President  Finance, Chief Financial Officerand Treasurer (Principal Financial Officer)By:
    
    /s/ Patrick J. Balthrop, Sr.

Patrick J. Balthrop, Sr.
President and Chief Executive Officer
(Principal Executive Officer)
 
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EXHIBIT INDEX
 ExhibitNumber
    
    Description of Documents3.1
    
    
    Amended and Restated Bylaws of Luminex Corporation (Incorporated by reference to Exhibit 3.1
to our Current Report on Form 8-K dated September 16, 2008).10.1
    
    
    Form of Indemnification Agreement (Incorporated by reference to Exhibit 10.1 to our Current
Report on Form 8-K dated September 16, 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