##### 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 March 31, 2011
 or
 o
    
    Transition Report Pursuant Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to .
 Commission file number 1-11181
 IRIS INTERNATIONAL, INC.
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    94-2579751
(I.R.S. Employer
Identification No.)
 9158 Eton Avenue
Chatsworth, California 91311
 (818) 527-7000
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if smaller reporting company)
 o þ




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##### 



IRIS INTERNATIONAL, INC.
INDEX TO FORM 10-Q
 PagePART I FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets as of March 31, 2011 (unaudited) and December 31, 2010
    
    
    3Consolidated Statements of Operations for the three months ended March 31, 2011 and 2010 (unaudited)
    
    
    4Consolidated Statements of Cash Flows for the three months ended March 31, 2011 and 2010 (unaudited)
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    27Item 4. Controls and Procedures
    
    
    28PART II OTHER INFORMATION
    
    
    29Item 1A. Risk Factors
    
    
    29Item 6. Exhibits
    
    
    29Signatures
    
    
    31EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



PART I: FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements
 IRIS INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS
 March 31,
    
    
    December 31,2011
    
    
    2010(unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    24,602
    
    
    $
    25,531Accounts receivable, net of allowance for doubtful
accounts and sales returns of $440 and $453
    
    
    20,991
    
    
    
    20,733Inventories
    
    
    11,548
    
    
    
    10,310Prepaid expenses and other current assets
    
    
    1,739
    
    
    
    1,661Investment in sales-type leases, current portion
    
    
    3,677
    
    
    
    3,578Deferred tax asset
    
    
    3,862
    
    
    
    3,135Total current assets
    
    
    66,419
    
    
    
    64,948Property and equipment, net of accumulated
depreciation of $15,298 and $14,491
    
    
    13,862
    
    
    
    12,035Goodwill
    
    
    3,911
    
    
    
    3,957Intangible assets, net of accumulated amortization of
$614 and $529
    
    
    9,172
    
    
    
    9,345Software development costs, net of accumulated
amortization of $4,433 and $4,226
    
    
    2,474
    
    
    
    2,637Deferred tax asset
    
    
    1,697
    
    
    
    2,615Investment in sales-type leases, non-current portion
    
    
    10,171
    
    
    
    10,002Other assets
    
    
    1,152
    
    
    
    1,070Total assets
    
    $
    108,858
    
    
    $
    106,609Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    8,111
    
    
    $
    5,795Accrued expenses
    
    
    7,539
    
    
    
    7,513Deferred service contract revenue, current portion
    
    
    3,238
    
    
    
    3,205Total current liabilities
    
    
    18,888
    
    
    
    16,513Deferred service contract revenue, non-current portion
    
    
    66
    
    
    
    71Other long term liabilities
    
    
    146
    
    
    
    1,374Total liabilities
    
    $
    19,100
    
    
    $
    17,958Commitments and contingenciesShareholders equity:Common stock, $0.01 par value; authorized: 50 million
shares; issued and outstanding: 17,796 shares and
17,791 shares
    
    
    178
    
    
    
    178Preferred Stock, $.01 par value; authorized 1.0
million shares: Callable Series C shares issued and
outstanding: none
    
    
    
    
    
    
    Additional paid-in capital
    
    
    90,338
    
    
    
    89,703Other comprehensive income
    
    
    89
    
    
    
    140Accumulated deficit
    
    
    (847
    )
    
    
    (1,370
    )Total shareholders equity
    
    
    89,758
    
    
    
    88,651Total liabilities and shareholders equity
    
    $
    108,858
    
    
    $
    106,609
  3




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IRIS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
 For the three monthsended March 31,2011
    
    
    2010RevenuesIDD instruments
    
    $
    6,538
    
    
    $
    7,889IDD consumables and service
    
    
    16,744
    
    
    
    14,391Sample processing instruments and supplies
    
    
    3,594
    
    
    
    3,700Personalized medicine services
    
    
    63
    
    
    
    Total revenues
    
    
    26,939
    
    
    
    25,980Cost of RevenueIDD instruments
    
    
    4,265
    
    
    
    5,068IDD consumables and service
    
    
    7,375
    
    
    
    5,955Sample processing instruments and supplies
    
    
    1,670
    
    
    
    1,703Personalized medicine services
    
    
    522
    
    
    
    Total cost of goods sold
    
    
    13,832
    
    
    
    12,726Gross profit
    
    
    13,107
    
    
    
    13,254Marketing and selling
    
    
    5,970
    
    
    
    4,427General and administrative
    
    
    4,802
    
    
    
    3,737Research and development, net
    
    
    3,635
    
    
    
    3,688Gain on revaluation of contingent consideration
    
    
    (1,225
    )
    
    
    Total operating expenses
    
    
    13,182
    
    
    
    11,852Operating income (loss)
    
    
    (75
    )
    
    
    1,402Other income (expense):Interest income
    
    
    277
    
    
    
    237Interest expense
    
    
    (2
    )
    
    
    (3
    )Other income (expense)
    
    
    385
    
    
    
    (57
    )Income before provision for income taxes
    
    
    585
    
    
    
    1,579Provision for income taxes
    
    
    62
    
    
    
    537Net income
    
    $
    523
    
    
    $
    1,042Net income per share  basic
    
    $
    0.03
    
    
    $
    0.06Net income per share  diluted
    
    $
    0.03
    
    
    $
    0.06Weighted average common shares outstanding  basic
    
    
    17,717
    
    
    
    17,891Weighted average common shares outstanding  diluted
    
    
    17,812
    
    
    
    18,025
  4




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IRIS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the three monthsended March 31,2011
    
    
    2010Cash flows from operating activities:Net income
    
    $
    523
    
    
    $
    1,042Adjustments to reconcile net income to net cash
provided by operating activities:Loss on disposal of fixed assets
    
    
    48
    
    
    
    Gain on foreign currency remeasurement of
intercompany balances
    
    
    (389
    )
    
    
    Gain on revaluation of contingent consideration
    
    
    (1,225
    )
    
    
    Deferred taxes
    
    
    (66
    )
    
    
    Tax benefit from stock option exercises
    
    
    (3
    )
    
    
    Depreciation and amortization
    
    
    1,218
    
    
    
    1,006Common stock and stock based compensation
    
    
    1,000
    
    
    
    1,090Changes in operating assets and liabilities:Accounts receivable
    
    
    (137
    )
    
    
    (1,189
    )Inventories
    
    
    (1,167
    )
    
    
    (307
    )Prepaid expenses and other current assets
    
    
    (149
    )
    
    
    (246
    )Investment in sales-type leases
    
    
    (239
    )
    
    
    (449
    )Accounts payable
    
    
    2,400
    
    
    
    1,557Accrued expenses
    
    
    (30
    )
    
    
    730Deferred service contract revenue
    
    
    (60
    )
    
    
    475Other liabilities
    
    
    (4
    )
    
    
    Net cash provided by operating activities
    
    
    1,720
    
    
    
    3,709Cash flows from investing activities:Purchase of assets from European distributor
    
    
    
    
    
    
    (671
    )Refund on acquisition of business
    
    
    46
    
    
    
    Acquisition of property and equipment
    
    
    (2,661
    )
    
    
    (118
    )Software development costs capitalized
    
    
    (47
    )
    
    
    (184
    )Net cash used in investing activities
    
    
    (2,662
    )
    
    
    (973
    )Cash flows from financing activities:Issuance of common stock and warrants for cash
    
    
    2
    
    
    
    28Settlement on restricted stock withholding
    
    
    (113
    )
    
    
    (121
    )Tax benefit from stock option exercises
    
    
    3
    
    
    
    Net cash used in financing activities
    
    
    (108
    )
    
    
    (93
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    121
    
    
    
    (386
    )Net increase (decrease) in cash and cash equivalents
    
    
    (929
    )
    
    
    2,257Cash and cash equivalents at beginning of period
    
    
    25,531
    
    
    
    34,253Cash and cash equivalents at end of period
    
    $
    24,602
    
    
    $
    36,510Supplemental disclosure of cash flow information:Cash paid for income taxes
    
    $
    67
    
    
    $
    197Cash paid for interest
    
    $
    2
    
    
    $
    3
    5




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IRIS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Description of Business
  2. Interim Financial Reporting
 Basis of Presentation 
  Use of Estimates 
 Earnings Per Share  Earnings per share
 6




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IRIS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
  For the three months endedMarch 31,(in thousands)2011
    
    2010Weighted average common shares outstanding  basic
    
    
    17,717
    
    
    
    17,891Dilutive stock options and warrants
    
    
    67
    
    
    
    102Dilutive restricted common shares and restricted stock units
    
    
    28
    
    
    
    32Weighted average common shares outstanding  diluted
    
    
    17,812
    
    
    
    18,025
 Foreign Currency Hedge
 Accounting for Derivative Instruments and Hedging Activities
  Goodwill and Intangible Assets
  7




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IRIS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
   Foreign Currency Exchange Translation
  8




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##### Table of Contents



IRIS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
 Reclassifications
 Certain Risks and Uncertainties
    3. Acquisition
  9




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##### Table of Contents



IRIS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
  
    
    to expand beyond its initial molecular pathology test menu by adding other molecular
panels, flow cytometry for the detection and monitoring of leukemia and lymphoma, FISH
testing, and proprietary new tests based on the Companys NADiA technology platform;
 
    
    to have better control of all aspects of the commercial operations of the NADiA
platform, starting with NADiA ProsVue;
 
    
    to enable the acceleration of the development efforts of the NADiA technology product
pipeline; and
 
    
    to enter the attractive personalized medicine market due to its significant growth
potential.
  (In thousands)Cash
    
    $
    4,584Fair value of contingent consideration
    
    
    1,210Total purchase price
    
    $
    5,794
 Goodwill and Intangible Assets
  (In thousands)Current assets
    
    $
    74Property and equipment
    
    
    523Core technology
    
    
    3,090CLIA License
    
    
    1,604Customer relationships
    
    
    6Non-compete agreements
    
    
    100Goodwill
    
    
    1,461Other assets
    
    
    31Current liabilities
    
    
    (316
    )Lease obligations
    
    
    (178
    )Other liabilities
    
    
    (61
    )Deferred tax liability, net
    
    
    (540
    )Total purchase price
    
    $
    5,794
  10




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IRIS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
      For ThreeMonths EndedMarch 31,2010(In thousands)Revenue
    
    $
    25,986Net income
    
    
    415Net income per basic and diluted share
    
    $
    0.02
 11




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IRIS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
 ®
  4. Inventories
  March 31,
    
    
    December 31,2011
    
    
    2010(in thousands)Finished goods
    
    $
    3,743
    
    
    $
    3,423Work-in-process
    
    
    213
    
    
    
    181Raw materials, parts and sub-assemblies
    
    
    7,592
    
    
    
    6,706Inventories
    
    $
    11,548
    
    
    $
    10,310
 5. Sales-type Leases
  March 31,
    
    
    December 31,2011
    
    
    2010(in thousands)Total minimum lease payments
    
    $
    16,280
    
    
    $
    16,044Less: unearned income
    
    
    (2,432
    )
    
    
    (2,464
    )Net investment in sales-type leases
    
    
    13,848
    
    
    
    13,580Less: current portion
    
    
    (3,677
    )
    
    
    (3,578
    )Net investment in sales-type leases, non-current portion
    
    $
    10,171
    
    
    $
    10,002
 12




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IRIS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
  (In thousands)Year Ending December 31,2011 (nine months remaining)
    
    $
    2,9412012
    
    
    3,3552013
    
    
    2,9392014
    
    
    2,5662015
    
    
    1,742Thereafter
    
    
    305$
    13,848
  (In thousands)Low risk
    
    $
    12,399Moderate risk
    
    
    752High Risk
    
    
    697$
    13,848
  6. Bank Credit Facility
  13




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IRIS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
  7. Income Taxes
   8. Stock-Based Compensation
  For the three months endedMarch 31,(in thousands)2011
    
    
    2010Cost of sales
    
    $
    91
    
    
    $
    114Marketing and selling
    
    
    158
    
    
    
    187General and administrative
    
    
    497
    
    
    
    565Research and development
    
    
    254
    
    
    
    224Stock-based compensation
    
    $
    1,000
    
    
    $
    1,090
 Stock Options
  14




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##### Table of Contents



IRIS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
  Number of Option Shares(In thousands)AvailablePlan
    
    Authorized
    
    Exercised
    
    Outstanding
    
    for Grant1994 Plan
    
    
    700
    
    
    
    680
    
    
    
    20
    
    
    
    1998 Plan
    
    
    4,100
    
    
    
    2,719
    
    
    
    724
    
    
    
    2007 Plan
    
    
    3,300
    
    
    
    
    
    
    
    2,091
    
    
    
    3838,100
    
    
    
    3,399
    
    
    
    2,835
    
    
    
    383
  Weighted
    
    WeightedAverage
    
    AverageExercise
    
    Remaining
    
    AggregatePrice Per
    
    Contractual
    
    IntrinsicShares
    
    Share
    
    Term
    
    Value(in thousands)
    
    
    
    
    
    (in thousands)Outstanding at January 1, 2011
    
    
    2,769
    
    
    $
    12.26
    
    
    4.8 years
    
    $
    1,564Granted
    
    
    260
    
    
    $
    9.84Exercised
    
    
    (1
    )
    
    $
    2.00Canceled or expired
    
    
    (193
    )
    
    $
    21.38Outstanding at March 31, 2011
    
    
    2,835
    
    
    $
    11.42
    
    
    4.3 years
    
    $
    971Exercisable at March 31, 2011
    
    
    1,654
    
    
    $
    12.14
    
    
    3.2 years
    
    $
    966
   15




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IRIS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
 For the three monthsended March 31,2011
    
    2010Risk free interest rate
    
    
    1.8
    %
    
    
    2.0
    %Expected lives (years)
    
    
    4.0
    
    
    
    4.0Expected volatility
    
    
    50.9
    %
    
    
    59.0
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %
   WeightedAverageGrant DateFair ValueShares
    
    Per Share(In thousands)Non-vested options at January 1, 2011
    
    
    1,127
    
    
    $
    4.80Granted
    
    
    261
    
    
    $
    4.09Vested
    
    
    (188
    )
    
    $
    5.19Forfeited or expired
    
    
    (18
    )
    
    $
    4.59Non-vested options at March 31, 2011
    
    
    1,182
    
    
    $
    4.58
 Restricted Shares
 1 4
 16




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IRIS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
 WeightedAverageGrant DateFair ValueShares
    
    Per Share(in thousands)Non-vested shares at January 1, 2011
    
    
    286
    
    
    $
    10.89Granted
    
    
    133
    
    
    $
    9.85Vested
    
    
    (39
    )
    
    $
    11.78Forfeited
    
    
    (12
    )
    
    $
    10.54Non-vested shares at March 31, 2011
    
    
    368
    
    
    $
    10.44
  9. Contingencies
 Litigation
  Guarantees
  17




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IRIS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
 10 Segments and Geographic Information
 Segment Reporting
     18




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IRIS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
  UnallocatedSample
    
    Personalized
    
    CorporateIDD
    
    Processing
    
    Medicine(1)
    
    Expenses
    Total(In thousands)For the three months ended March
31, 2011Revenues
    
    $
    23,282
    
    
    $
    3,594
    
    
    $
    63
    
    
    $
    
    
    
    $
    26,939Gross profit (loss)
    
    
    11,642
    
    
    
    1,924
    
    
    
    (459
    )
    
    
    
    
    
    
    13,107Marketing and selling
    
    
    4,709
    
    
    
    344
    
    
    
    917
    
    
    
    
    
    
    
    5,970General and administrative
    
    
    1,608
    
    
    
    384
    
    
    
    748
    
    
    
    2,062
    
    
    
    4,802Research and development, net
    
    
    2,184
    
    
    
    218
    
    
    
    1,233
    
    
    
    
    
    
    
    3,635Gain on revaluation of contingent
consideration
    
    
    
    
    
    
    
    
    
    
    (1,225
    )
    
    
    
    
    
    
    (1,225
    )Total operating expenses
    
    
    8,501
    
    
    
    946
    
    
    
    1,673
    
    
    
    2,062
    
    
    
    13,182Operating income (loss)
    
    
    3,141
    
    
    
    978
    
    
    
    (2,132
    )
    
    
    (2,062
    )
    
    
    (75
    )Interest income
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    255
    
    
    
    277Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2Depreciation and amortization
    
    
    1,046
    
    
    
    22
    
    
    
    147
    
    
    
    3
    
    
    
    1,218Segment pre-tax income (loss)
    
    
    4,014
    
    
    
    947
    
    
    
    (2,139
    )
    
    
    (2,237
    )
    
    
    585Segment assets
    
    
    82,612
    
    
    
    8,856
    
    
    
    11,830
    
    
    
    5,560
    
    
    
    108,858Investment in long-lived assets
    
    
    25,128
    
    
    
    3,997
    
    
    
    11,616
    
    
    
    
    
    
    
    40,741For the three months ended March
31, 2010Revenues
    
    $
    22,280
    
    
    $
    3,700
    
    
    $
    
    
    
    $
    
    
    
    $
    25,980Gross profit (loss)
    
    
    11,257
    
    
    
    1,997
    
    
    
    
    
    
    
    
    
    
    
    13,254Marketing and selling
    
    
    4,143
    
    
    
    284
    
    
    
    
    
    
    
    
    
    
    
    4,427General and administrative
    
    
    1,537
    
    
    
    413
    
    
    
    
    
    
    
    1,787
    
    
    
    3,737Research and development, net
    
    
    2,132
    
    
    
    133
    
    
    
    1,423
    
    
    
    
    
    
    
    3,688Gain on revaluation of contingent
consideration
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total operating expenses
    
    
    7,812
    
    
    
    830
    
    
    
    1,423
    
    
    
    1,787
    
    
    
    11,852Operating income (loss)
    
    
    3,445
    
    
    
    1,167
    
    
    
    (1,423
    )
    
    
    (1,787
    )
    
    
    1,402Interest income
    
    
    20
    
    
    
    8
    
    
    
    
    
    
    
    209
    
    
    
    237Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    3Depreciation and amortization
    
    
    887
    
    
    
    51
    
    
    
    64
    
    
    
    4
    
    
    
    1,006Segment pre-tax income (loss)
    
    
    5,130
    
    
    
    1,149
    
    
    
    (1,423
    )
    
    
    (3,277
    )
    
    
    1,579Segment assets
    
    
    81,800
    
    
    
    9,713
    
    
    
    4,556
    
    
    
    6,136
    
    
    
    102,205Investment in long-lived assets
    
    
    20,347
    
    
    
    356
    
    
    
    4,208
    
    
    
    
    
    
    
    24,911
 
 (1)
    
    Personalized Medicine includes the operations of Arista, which was acquired on July 28, 2010
(see Note 3). 19




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IRIS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  continued
   11. Joint Development Agreement
 (TM)
  12. Subsequent Events
  20




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Overview
 Segment Reporting
 Iris Diagnostics Division
    Personalized Medicine
  21




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Sample Processing
 ®
 ®
 Critical Accounting Policies
   22




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##### Table of Contents



Results of Operations
  Three months endedMarch 31,(in thousands)2011
    
    
    2010RevenuesIDD instruments
    
    $
    6,538
    
    
    
    24
    %
    
    $
    7,889
    
    
    
    30
    %IDD consumables and service
    
    
    16,744
    
    
    
    62
    %
    
    
    14,391
    
    
    
    56
    %Sample Processing instruments and supplies
    
    
    3,594
    
    
    
    13
    %
    
    
    3,700
    
    
    
    14
    %Personalized Medicine services
    
    
    63
    
    
    
    0
    %
    
    
    
    
    
    
    0
    %Total revenues
    
    
    26,939
    
    
    
    100
    %
    
    
    25,980
    
    
    
    100
    %Gross profit (1)IDD instruments
    
    
    2,273
    
    
    
    35
    %
    
    
    2,821
    
    
    
    36
    %IDD consumable and service
    
    
    9,369
    
    
    
    56
    %
    
    
    8,436
    
    
    
    59
    %Sample Processing instruments and supplies
    
    
    1,924
    
    
    
    54
    %
    
    
    1,997
    
    
    
    54
    %Personalized Medicine services
    
    
    (459
    )
    
    
    (729
    )%
    
    
    
    
    
    
    0
    %Gross profit
    
    
    13,107
    
    
    
    49
    %
    
    
    13,254
    
    
    
    51
    %Operating expensesMarketing and selling
    
    
    5,970
    
    
    
    22
    %
    
    
    4,427
    
    
    
    17
    %General and administrative
    
    
    4,802
    
    
    
    18
    %
    
    
    3,737
    
    
    
    14
    %Research and development, net
    
    
    3,635
    
    
    
    13
    %
    
    
    3,688
    
    
    
    14
    %Gain on revaluation of contingent consideration
    
    
    (1,225
    )
    
    
    (5
    )%
    
    
    
    
    
    
    0
    %Total operating expenses
    
    
    13,182
    
    
    
    49
    %
    
    
    11,852
    
    
    
    46
    %Operating income
    
    
    (75
    )
    
    
    0
    %
    
    
    1,402
    
    
    
    5
    %Other income
    
    
    660
    
    
    
    
    
    
    
    177Income before income taxes
    
    
    585
    
    
    
    2
    %
    
    
    1,579
    
    
    
    6
    %Income taxes (2)
    
    
    62
    
    
    
    11
    %
    
    
    537
    
    
    
    34
    %Net income
    
    $
    523
    
    
    
    2
    %
    
    $
    1,042
    
    
    
    4
    %
 
 (1)
    
    Gross profit margin percentages are based on the related sales of each category.(2)
    
    Income tax percentage is computed based on the relationship of income taxes to pre-tax
income. Comparison of Three Months Ended March 31, 2011 to Three Months Ended March 31, 2010
  23




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24




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##### Table of Contents



Liquidity and Capital Resources
   Operating Cash Flows
  Investing Activities
 25




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##### Table of Contents



Financing Activities
   Off-Balance Sheet Arrangements
  Recent Accounting Pronouncements
 Receivables: A Creditors Determination of Whether a Restructuring is a
Troubled Debt Restructuring.
 Business Combinations- Disclosure of
Supplementary Pro Forma Information
  26




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##### Table of Contents



When to Perform Step 2 of the Goodwill
Impairment Test for Reporting Units with Zero or Negative Carrying Amounts.
  Certain Revenue Arrangements That Include
Software Elements Software
 
 Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
 Market Risk
  Foreign Currencies
  27




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##### Table of Contents



Item 4.
    
    Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls over Financial Reporting
  28




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##### Table of Contents



PART II: OTHER INFORMATION
 
 Item 1A.
    
    Risk Factors
  
 Item 6.
    
    Exhibits
 Exhibit
    
    
    
    ReferenceNumber
    
    Description
    
    Document10.1
    
    Fourth Amendment to Key Employee Agreement for César M. Garcia effective
March 30, 2011 between IRIS International, Inc. and César M. Garcia.
    
    (1)10.2
    
    First Amendment to Key Employee Agreement
 for Amin Khalifa effective March 30, 2011 between IRIS International, Inc. and Amin Khalifa.
    
    (2)10.3
    
    Second Amendment to Key Employee Agreement
 for John Yi effective March 30, 2011 between IRIS International, Inc. and John Yi.
    
    (3)10.4
    
    Second Amendment to Key Employee Agreement
 for Tom Warekois effective March 30, 2011 between IRIS International, Inc. and Tom Warekois.
    
    (4)10.5
    
    Second Amendment to Key Employee Agreement
for Robert Mello effective March 30, 2011 between IRIS International, Inc. and Robert Mello.
    
    (5)10.6
    
    First Amendment to Key Employee Agreement for Thomas H. Adams, Ph.D effective March 30,
2011 between IRIS International, Inc. and Thomas H. Adams, Ph.D.
    
    (6)10.7
    
    Amendment to Key Employee Agreement for
 Vance Randal White effective March 30, 2011 between IRIS International, Inc. and Vance Randal White.
    
    (7)10.8
    
    Amendment to Key Employee Agreement for
Philip Ginsburg effective March 30, 2011 between IRIS International, Inc. and Philip Ginsburg.
    
    (8)31.1
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Executive
 Officer
    
    *
 29




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##### Table of Contents



Exhibit
    
    
    
    ReferenceNumber
    
    Description
    
    Document31.2
    
    Certification Pursuant to Section 302 of the
 Sarbanes-Oxley Act of 2002 by Chief Financial Officer
    
    *32.1
    
    Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer
    
    *32.2
    
    Certification Pursuant to Section 906 of the
 Sarbanes-Oxley Act of 2002 by Chief Financial Officer
    
    *
 
 *
    
    Filed herewith
    
    A management contract or compensatory plan or arrangement.(1)
    
    Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K, filed April 5, 2011.(2)
    
    Incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K, filed April 5, 2011.(3)
    
    Incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K, filed April 5, 2011.(4)
    
    Incorporated by reference to Exhibit 10.4 to Current Report on Form 8-K, filed April 5, 2011.(5)
    
    Incorporated by reference to Exhibit 10.5 to Current Report on Form 8-K, filed April 5, 2011.(6)
    
    Incorporated by reference to Exhibit 10.6 to Current Report on Form 8-K, filed April 5, 2011.(7)
    
    Incorporated by reference to Exhibit 10.7 to Current Report on Form 8-K, filed April 5, 2011.(8)
    
    Incorporated by reference to Exhibit 10.8 to Current Report on Form 8-K, filed April 5, 2011. 30




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##### Table of Contents



SIGNATURES
  Date: May 10, 2011
    IRIS INTERNATIONAL, INC.By:
    /s/ César M. GarcíaCésar M. GarcíaChairman, President and Chief
Executive OfficerBy:
    /s/ Amin I. KhalifaAmin I. KhalifaChief Financial Officer
(Principal Financial Officer and
   
Principal Accounting Officer) 31