Luminex Corporation
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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þ |
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
for the quarterly period ended June 30, 2007
or
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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 No. 000-30109
LUMINEX CORPORATION
(Exact name of Registrant as specified in its charter)
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DELAWARE
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74-2747608 |
(State or other jurisdiction of
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(I.R.S. Employer |
incorporation or organization)
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Identification No.) |
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12212 TECHNOLOGY BLVD., AUSTIN, TEXAS
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|
78727 |
(Address of principal executive offices)
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(Zip Code) |
(512) 219-8020
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated
filer in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o Accelerated filer þ Non-accelerated filer o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). Yes o No þ
There were 36,057,794 shares of the Companys Common Stock, par value $0.001 per share,
outstanding on August 3, 2007.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LUMINEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
|
|
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|
|
|
|
|
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|
June 30, |
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December 31, |
|
|
|
2007 |
|
|
2006 |
|
|
|
(unaudited) |
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|
|
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|
ASSETS |
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|
|
|
|
|
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|
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|
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|
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Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
11,836 |
|
|
$ |
27,414 |
|
Short-term investments |
|
|
3,314 |
|
|
|
10,956 |
|
Accounts receivable, net |
|
|
11,614 |
|
|
|
8,237 |
|
Inventory, net |
|
|
7,100 |
|
|
|
4,571 |
|
Other |
|
|
1,874 |
|
|
|
1,917 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
35,738 |
|
|
|
53,095 |
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
10,189 |
|
|
|
4,985 |
|
Intangible assets, net |
|
|
24,583 |
|
|
|
|
|
Long-term investments |
|
|
5,311 |
|
|
|
7,346 |
|
Goodwill |
|
|
34,132 |
|
|
|
|
|
Other |
|
|
1,705 |
|
|
|
1,270 |
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|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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Total assets |
|
$ |
111,658 |
|
|
$ |
66,696 |
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|
|
|
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|
|
|
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|
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|
LIABILITIES AND STOCKHOLDERS EQUITY |
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Current liabilities: |
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|
|
|
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Accounts payable |
|
$ |
3,687 |
|
|
$ |
3,255 |
|
Accrued liabilities |
|
|
8,219 |
|
|
|
2,905 |
|
Deferred revenue and other |
|
|
3,073 |
|
|
|
2,756 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
14,979 |
|
|
|
8,916 |
|
Long-term debt |
|
|
3,825 |
|
|
|
|
|
Deferred revenue and other |
|
|
3,814 |
|
|
|
3,621 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
22,618 |
|
|
|
12,537 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Stockholders equity: |
|
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|
|
|
|
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Common stock |
|
|
35 |
|
|
|
32 |
|
Additional paid-in capital |
|
|
186,059 |
|
|
|
139,116 |
|
Accumulated other comprehensive (loss) gain |
|
|
(80 |
) |
|
|
65 |
|
Accumulated deficit |
|
|
(96,974 |
) |
|
|
(85,054 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity |
|
|
89,040 |
|
|
|
54,159 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity |
|
$ |
111,658 |
|
|
$ |
66,696 |
|
|
|
|
|
|
|
|
See the accompanying notes which are an integral part of these
Condensed Consolidated Financial Statements.
LUMINEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Three Months Ended |
|
|
Six Months Ended |
|
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|
June 30, |
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
Revenue |
|
$ |
17,548 |
|
|
$ |
13,268 |
|
|
$ |
34,155 |
|
|
$ |
26,265 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Cost of revenue |
|
|
7,211 |
|
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|
5,608 |
|
|
|
13,388 |
|
|
|
10,346 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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Gross profit |
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|
10,337 |
|
|
|
7,660 |
|
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|
20,767 |
|
|
|
15,919 |
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|
|
|
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|
|
|
|
|
|
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Operating expenses: |
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|
|
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|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
3,865 |
|
|
|
1,790 |
|
|
|
6,571 |
|
|
|
3,987 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Selling, general and administrative |
|
|
10,716 |
|
|
|
6,137 |
|
|
|
18,812 |
|
|
|
12,086 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In-process research and development expense |
|
|
8,000 |
|
|
|
|
|
|
|
8,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
22,581 |
|
|
|
7,927 |
|
|
|
33,383 |
|
|
|
16,073 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Income (loss) from operations |
|
|
(12,244 |
) |
|
|
(267 |
) |
|
|
(12,616 |
) |
|
|
(154 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Interest expense from long-term debt |
|
|
(334 |
) |
|
|
|
|
|
|
(419 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Other income, net |
|
|
421 |
|
|
|
551 |
|
|
|
1,028 |
|
|
|
967 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes |
|
|
101 |
|
|
|
(13 |
) |
|
|
87 |
|
|
|
(16 |
) |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(12,056 |
) |
|
$ |
271 |
|
|
$ |
(11,920 |
) |
|
$ |
797 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share, basic |
|
$ |
(0.34 |
) |
|
$ |
0.01 |
|
|
$ |
(0.36 |
) |
|
$ |
0.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing net income (loss)
per share, basic |
|
|
35,006 |
|
|
|
31,386 |
|
|
|
33,504 |
|
|
|
31,288 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share, diluted |
|
$ |
(0.34 |
) |
|
$ |
0.01 |
|
|
$ |
(0.36 |
) |
|
$ |
0.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing net income (loss)
per share, diluted |
|
|
35,006 |
|
|
|
32,876 |
|
|
|
33,504 |
|
|
|
32,606 |
|
See the accompanying notes which are an integral part of these
Condensed Consolidated Financial Statements.
2
LUMINEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
Operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(12,056 |
) |
|
$ |
271 |
|
|
$ |
(11,920 |
) |
|
$ |
797 |
|
Adjustments to reconcile net income to net cash
(used in) provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
1,837 |
|
|
|
384 |
|
|
|
2,377 |
|
|
|
748 |
|
In-process research and development expense |
|
|
8,000 |
|
|
|
|
|
|
|
8,000 |
|
|
|
|
|
Stock-based compensation and other |
|
|
1,593 |
|
|
|
1,259 |
|
|
|
3,100 |
|
|
|
2,424 |
|
Loss (gain) on disposal of assets |
|
|
34 |
|
|
|
(2 |
) |
|
|
88 |
|
|
|
25 |
|
Other |
|
|
4 |
|
|
|
(7 |
) |
|
|
4 |
|
|
|
(9 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
|
(580 |
) |
|
|
(3,136 |
) |
|
|
(1,657 |
) |
|
|
(1,476 |
) |
Inventory, net |
|
|
(689 |
) |
|
|
460 |
|
|
|
(721 |
) |
|
|
138 |
|
Prepaids and other |
|
|
(460 |
) |
|
|
(399 |
) |
|
|
(120 |
) |
|
|
29 |
|
Accounts payable |
|
|
(2,263 |
) |
|
|
(254 |
) |
|
|
(3,817 |
) |
|
|
(1,506 |
) |
Accrued liabilities |
|
|
772 |
|
|
|
335 |
|
|
|
(2,353 |
) |
|
|
(835 |
) |
Deferred revenue |
|
|
(217 |
) |
|
|
5 |
|
|
|
143 |
|
|
|
(225 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities |
|
|
(4,025 |
) |
|
|
(1,084 |
) |
|
|
(6,876 |
) |
|
|
110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturities (purchases) of held-to-maturity investments |
|
|
2,185 |
|
|
|
955 |
|
|
|
9,710 |
|
|
|
(1,045 |
) |
Purchase of property and equipment |
|
|
(1,724 |
) |
|
|
(643 |
) |
|
|
(3,329 |
) |
|
|
(1,528 |
) |
Acquisition of business, net of cash acquired |
|
|
(744 |
) |
|
|
|
|
|
|
(2,735 |
) |
|
|
|
|
Acquired technology rights |
|
|
(265 |
) |
|
|
|
|
|
|
(265 |
) |
|
|
|
|
Proceeds from sale of assets |
|
|
30 |
|
|
|
2 |
|
|
|
30 |
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by investing activities |
|
|
(518 |
) |
|
|
314 |
|
|
|
3,411 |
|
|
|
(2,566 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments on debt |
|
|
(117 |
) |
|
|
|
|
|
|
(12,345 |
) |
|
|
|
|
Proceeds from issuance of common stock |
|
|
159 |
|
|
|
358 |
|
|
|
174 |
|
|
|
1,434 |
|
Other |
|
|
7 |
|
|
|
|
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities |
|
|
49 |
|
|
|
358 |
|
|
|
(12,164 |
) |
|
|
1,434 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign currency exchange rate on cash |
|
|
135 |
|
|
|
16 |
|
|
|
51 |
|
|
|
22 |
|
Change in cash and cash equivalents |
|
|
(4,359 |
) |
|
|
(396 |
) |
|
|
(15,578 |
) |
|
|
(1,000 |
) |
Cash and cash equivalents, beginning of period |
|
|
16,195 |
|
|
|
24,602 |
|
|
|
27,414 |
|
|
|
25,206 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
11,836 |
|
|
$ |
24,206 |
|
|
$ |
11,836 |
|
|
$ |
24,206 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cashflow information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and penalties paid |
|
$ |
254 |
|
|
$ |
|
|
|
$ |
1,335 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash effect of acquisitions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase price |
|
$ |
(744 |
) |
|
$ |
|
|
|
$ |
(47,745 |
) |
|
$ |
|
|
Common stock issued |
|
|
|
|
|
|
|
|
|
|
41,755 |
|
|
|
|
|
Conversion of Tm options and warrants |
|
|
|
|
|
|
|
|
|
|
2,315 |
|
|
|
|
|
Cash acquired |
|
|
|
|
|
|
|
|
|
|
940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition, net of cash acquired |
|
$ |
(744 |
) |
|
$ |
|
|
|
$ |
(2,735 |
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See the accompanying notes which are an integral part of these
Condensed Consolidated Financial Statements.
3
LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been prepared by
Luminex Corporation (the Company or Luminex) in accordance with United States generally
accepted accounting principles for interim financial information and the rules and regulations of
the Securities and Exchange Commission. Accordingly, they do not include all of the information and
footnotes required by United States generally accepted accounting principles for complete financial
statements. The condensed consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been
eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal
recurring entries) considered necessary for a fair presentation have been included. Operating
results for the three and six months ended June 30, 2007 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2007. These financial statements
should be read in conjunction with the financial statements and notes thereto included in the
Companys Annual Report on Form 10-K for the year ended December 31, 2006.
The acquisition of Tm Bioscience Corporation, or Tm, now known as Luminex Molecular
Diagnostics or LMD, was completed on March 1, 2007; therefore, the results of operations of LMD in
our consolidated financial statements include only results since this date.
Historically the Company has operated as a single segment. Subsequent to the acquisition of
LMD, we now have two segments for financial reporting purposes: the Technology Segment and the
Assay Segment. See Note 7 Segment Information.
NOTE 2 BUSINESS COMBINATIONS
Acquisitions
On March 1, 2007, the Company completed the acquisition of Tm, a DNA-based research and
diagnostics company headquartered in Toronto, Canada. The acquired company is referred to as LMD
and is included in our Assay Segment for financial reporting purposes. The focus of LMD is to
design, develop, manufacture and commercialize nucleic-acid based testing products in genetic
testing, personalized medicine and infectious disease.
Upon the closing of the plan of arrangement, we exchanged 0.06 Luminex common shares for each
outstanding Tm share, which resulted in the issuance of approximately 3.2 million shares of Luminex
common stock. The value of the approximately 3.2 million common shares issued was determined based
on the average market price of our common shares over the period including five days before and
after the terms of the acquisition were agreed to and announced in accordance with SFAS No. 141,
Business Combinations (SFAS 141). We also agreed to assume all outstanding Tm options and
warrants according to the applicable Tm plan provisions, which options and warrants are potentially
exercisable for approximately 692,000 additional shares of Luminex common stock on an as-converted
basis. The estimated fair value of Luminex replacement options and warrants is calculated using
the Black-Scholes model. In accordance with Statement of Financial Accounting Standards No. 123R,
Share-based Payments (SFAS 123R), the portion of the estimated fair value of unvested Tm options
related to future service (approximately $242,000) is deducted from the purchase price
consideration and will be recognized as compensation expense over those awards remaining vesting
period.
Immediately subsequent to the acquisition, we retired approximately $13.2 million of Tm debt,
including an approximately $1.0 million related contractual penalty, by using existing cash
reserves. Under the terms of one of the retired debt instruments, the balance of the note became
callable upon the acquisition and was subject to a contractual penalty if either called by the debt
holder or prepaid by Tm. The penalty was triggered when the Tm shareholders ratified the
acquisition of Tm by Luminex on February 21, 2007. The penalty was recorded by Tm prior to
Luminex acquisition based on the penalty amount agreed by the debt holder, and was reflected in
the
4
LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
opening balance of Other current liabilities assumed. The impact of the acquisition on our
liquidity is more fully described under Liquidity and Capital Resources.
The acquisition is being accounted for as a purchase business combination in accordance with
SFAS 141 and LMD results of operations are included with the Companys from the date of
acquisition, March 1, 2007. The purchase price of the acquisition was approximately $47.7 million,
including common stock valued at $41.8 million, which will be adjusted for the valuation of certain
conversions of Tm options and warrants and final transaction-related costs. All transaction costs
incurred to-date have been recorded. Additional transaction costs will be recorded as incurred and
will primarily consist of fees related to our on-going evaluation of the fair market value of Tms
tangible and intangible assets and liabilities acquired and legal fees related to the finalization
of the transaction of approximately $250,000. The purchase price will be allocated to the net
assets acquired based on estimates of the fair values at the date of the acquisition.
Luminex is in the process of allocating fair values for certain intangible assets and
in-process research and development (IPR&D) identified during the acquisition. The excess purchase
price over the fair values of the net tangible assets, identified intangible assets and liabilities
will be allocated to goodwill. Luminex currently has $34.1 million of goodwill recorded related to
the Tm acquisition. Goodwill was adjusted in the second quarter of 2007 to allocate the estimated
fair value of intangibles and IPR&D identified as part of the acquisition. See Purchased
Intangible Assets set forth below in this note. This balance is subject to further adjustment as
Luminex completes certain standard activities around the transaction such as: 1) recording of final
transaction related costs and 2) allocation of the purchase price based on our final determination
of the fair market value of Tms tangible and intangible assets and liabilities. These activities
should be complete in the third quarter of 2007. As required by SFAS 142, the Company will begin
testing of this goodwill balance on an annual basis and on an interim basis if circumstances
indicate that necessity. No assurances can be given as to the size of any subsequent goodwill
adjustment, if any, at this time. Goodwill is not expected to be deductible for tax purposes.
The following table summarizes the estimated fair values of net assets at the date of
acquisition (in thousands). Tangible assets and liabilities are currently recorded at the
historical book value on the books of Tm which is expected to approximate fair value pending our
final analysis of these values. Intangible assets are currently recorded at their estimated fair
market value pending final analysis of these values. The intangible assets being evaluated are:
trade name (Tag-It), customer list/contracts, technology/trade secrets, and in-process research and
development needing to be expensed per SFAS 141. IPR&D has been recorded at its estimated fair
market value and charged to expense in the current period. The value allocated to intangible
assets and IPR&D is subject to potentially significant adjustments as the Company finalizes its
determination of these fair market values. Any change in the fair value of the net assets of LMD
is expected to change the amount of the purchase price allocable to goodwill.
5
LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
|
|
|
|
|
Cash |
|
$ |
940 |
|
Other current assets |
|
|
3,180 |
|
Other assets |
|
|
28 |
|
Property and equipment |
|
|
2,884 |
|
Purchased intangible assets |
|
|
23,300 |
|
In-process research and development |
|
|
8,000 |
|
Other intangible assets |
|
|
2,083 |
|
Goodwill |
|
|
34,132 |
|
|
|
|
|
Total assets |
|
$ |
74,547 |
|
|
|
|
|
|
|
|
|
|
Current portion of debt assumed |
|
$ |
12,447 |
|
Accrued severance assumed |
|
|
2,120 |
|
Other current liabilities assumed |
|
|
8,650 |
|
Long-term debt assumed |
|
|
3,351 |
|
Other long-term liabilities assumed |
|
|
234 |
|
|
|
|
|
Total liabilities |
|
|
26,802 |
|
|
|
|
|
|
|
|
|
|
Purchase price |
|
$ |
47,745 |
|
|
|
|
|
Pro Forma Information
The financial information in the table below summarizes the combined results of operations of
Luminex and LMD, on a pro forma basis, as though the companies had been combined at the beginning
of 2006.
The pro forma financial information is presented for informational purposes only and is not
indicative of the results of operation that would have been achieved if the acquisition of LMD had
taken place at the beginning of fiscal 2006.
The following table summarizes the pro forma financial information for the three months ended
June 30, 2006 and the six months ended June 30, 2006 and 2007 and the actual results for the three
months ended June 30, 2007 (in thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2007 |
|
2006 |
|
2007 |
|
2006 |
Revenues |
|
$ |
17,548 |
|
|
$ |
15,375 |
|
|
$ |
34,474 |
|
|
$ |
29,901 |
|
Net loss |
|
$ |
(12,056 |
) |
|
$ |
(4,380 |
) |
|
$ |
(18,297 |
) |
|
$ |
(8,123 |
) |
Net loss per share, basic and diluted |
|
$ |
(0.34 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.52 |
) |
|
$ |
(0.24 |
) |
Purchased Intangible Assets
As of June 30, 2007, we had unamortized identifiable intangible assets of $23.3 million. The
following table details amounts relating to those assets (in thousands except weighted average
lives):
6
LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross carrying |
|
|
Accumulated |
|
|
Weighted average |
|
|
|
amount |
|
|
amortization |
|
|
life |
|
Technology/trade secrets |
|
$ |
17,700 |
|
|
$ |
641 |
|
|
|
9 |
|
Customer lists/contracts |
|
|
5,300 |
|
|
|
118 |
|
|
|
15 |
|
Trade name |
|
|
300 |
|
|
|
100 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
23,300 |
|
|
$ |
859 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The amortization expense related to purchased intangible assets for the three and six months
ended June 30, 2007 was $859,000. The estimated amortization expense for the current year and the
next five years is as follows (in thousands):
|
|
|
|
|
|
|
For the year |
|
|
ending |
|
|
December 31, |
2007 |
|
$ |
2,149 |
|
2008 |
|
|
2,328 |
|
2009 |
|
|
2,278 |
|
2010 |
|
|
2,278 |
|
2011 |
|
|
2,278 |
|
2012 |
|
|
2,278 |
|
In-process Research and Development (IPR&D)
IPR&D
was allocated to each IPR&D project using the estimated fair
value based on an income approach using discounted cash flows
related to the products that would result from each of the projects.
The discounted cash flows were estimated
based on relevant market size and growth factors, expected industry trends, individual product
sales cycles, the estimated life of each products underlying
technology, historical pricing, costs to complete the projects, costs
of production, R&D costs required to maintain the products once they
have been introduced into the market and related selling and
marketing costs. The discount rates used to discount the projected
net returns were based on a weighted average cost
of capital relative to the Company and the bio-technology industry, as well as the product-specific
risk associated with the IPR&D projects. Product-specific risk includes the stage of completion of
each product, the complexity of the development work completed to date, the likelihood of achieving
technological feasibility, and market acceptance. The forecast data employed in the analyses for
IPR&D was based upon both forecast information maintained by the acquired companies and Luminex
Corporations estimate of future performance of the business. The inputs used by the Company in
assessing the value of IPR&D were based upon assumptions that the Company believes to be reasonable but which
are inherently uncertain and unpredictable. These assumptions may be incomplete or inaccurate, and
no assurance can be given that unanticipated events and circumstances will not occur. Accordingly,
actual results may vary from the forecasted results. The major risks
and uncertainties associated with the timely and successful
completion of the acquired in-process projects consist of the ability
to confirm the safety and efficacy of the technology based on the
data from clinical trials and obtaining necessary regulatory
approvals. No assurance can be given that the underlying assumptions
used to forecast cash flows or the timely and successful completion
of the projects will materialize as estimated. For these reasons,
among others, actual results may vary significantly from estimated
results.
In
conjunction with the acquisition, the Company recorded an IPR&D
expense of $8.0 million for acquired IPR&D which was not technologically feasible as of the acquisition date and, other than its
intended use, had no alternative future
use. IPR&D was charged to net proft (loss) during the
period ended June 30, 2007. The value allocated to
IPR&D is subject to potentially significant adjustments as the Company finalizes its determination
of this fair market value.
7
LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 3 INVESTMENTS
Held-to-maturity securities as of June 30, 2007 consisted of $8.6 million of federal agency
debt securities. Amortized cost approximates fair value of these investments.
The amortized costs of held-to-maturity debt securities at June 30, 2007, by contractual
maturity, are shown below (in thousands). Expected maturities may differ from contractual
maturities because the issuers of the securities may have the right to prepay obligations without
prepayment penalties.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost |
|
|
Accrued Interest |
|
|
Amortized Cost |
|
Due in one year or less |
|
$ |
3,314 |
|
|
$ |
22 |
|
|
$ |
3,336 |
|
Due after one year through two years |
|
|
5,311 |
|
|
|
30 |
|
|
|
5,341 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
8,625 |
|
|
$ |
52 |
|
|
$ |
8,677 |
|
|
|
|
|
|
|
|
|
|
|
NOTE 4 INVENTORY, NET
Inventory consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
|
|
2007 |
|
|
2006 |
|
Parts and supplies |
|
$ |
4,057 |
|
|
$ |
3,504 |
|
Work-in-progress |
|
|
1,960 |
|
|
|
555 |
|
Finished goods |
|
|
1,847 |
|
|
|
932 |
|
|
|
|
|
|
|
|
|
|
|
7,864 |
|
|
|
4,991 |
|
|
|
|
|
|
|
|
|
|
Less: Allowance for excess and obsolete inventory |
|
|
(764 |
) |
|
|
(420 |
) |
|
|
|
|
|
|
|
|
|
$ |
7,100 |
|
|
$ |
4,571 |
|
|
|
|
|
|
|
|
NOTE 5 EARNINGS PER SHARE
In accordance with Statement of Financial Accounting Standards (SFAS) No. 128, Earnings Per
Share, basic and diluted net income per share is computed by dividing the net income for the
period by the weighted average number of common shares outstanding during the period.
A reconciliation of the denominators used in computing per share net income, or EPS, is as
follows (in thousands):
8
LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss) |
|
$ |
(12,056 |
) |
|
$ |
271 |
|
|
$ |
(11,920 |
) |
|
$ |
797 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for basic net income (loss) per share -
weighted average common stock outstanding |
|
|
35,006 |
|
|
|
31,386 |
|
|
|
33,504 |
|
|
|
31,288 |
|
Dilutive common stock equivalents common stock
options and awards |
|
|
|
|
|
|
1,490 |
|
|
|
|
|
|
|
1,318 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for diluted net income (loss) per
share -
weighted average common stock outstanding and
dilutive common stock equivalents |
|
|
35,006 |
|
|
|
32,876 |
|
|
|
33,504 |
|
|
|
32,606 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per share |
|
$ |
(0.34 |
) |
|
$ |
0.01 |
|
|
$ |
(0.36 |
) |
|
$ |
0.03 |
|
Diluted net income (loss) per share |
|
$ |
(0.34 |
) |
|
$ |
0.01 |
|
|
$ |
(0.36 |
) |
|
$ |
0.02 |
|
Restricted stock awards, or RSAs, and stock options to acquire 1.7 million and 557,000 shares,
respectively, for the three months ended June 30, 2007 and 2006 and 1.3 million and 627,000,
respectively, for the six months ended June 30, 2007 and 2006 were excluded from the computations
of diluted EPS because the effect of including the RSAs and stock options would have been
anti-dilutive.
NOTE 6 STOCK-BASED COMPENSATION
The Company assumed the Tm Bioscience Corporation Share Option Plan (the Tm Plan) a
stock-based employee compensation plan in connection with the Tm acquisition. The Tm Plan governs
the former Tm options which were exchanged for options to purchase shares of Luminex common stock
in connection with the acquisition. The Tm Plan will be administered by the Compensation Committee
of the Board of Directors of Luminex. There are currently options to purchase up to approximately
100,000 shares of Luminex common stock outstanding under the Tm Plan at a weighted average exercise
price of $23.94 per share expiring on or before October 2011. No new equity awards may be issued
under the Tm Plan.
Also in connection with the Tm acquisition, warrants for the purchase of Tm common stock were
converted to the right to acquire shares of Luminex common stock. There are currently outstanding
warrants to purchase up to approximately 458,000 shares of Luminex common stock with a weighted
average exercise price of $20.64 per share expiring on or before November 2011.
On March 25, 2007, the Compensation Committee approved an amendment to the restricted stock
agreement, dated May 17, 2004 (the Restricted Stock Agreement), of Mr. Balthrop. The Company and
Mr. Balthrop initially entered into the Restricted Stock Agreement in connection with the hiring of
Mr. Balthrop as the President and Chief Executive Officer of the Company. The Restricted Stock
Agreement provided for the grant of 200,000 restricted shares, which would vest in portions based
on the attainment of certain performance goals related to Company
revenue, earnings and stock price. If the goals provided for in the Restricted Stock Agreement
were not achieved by the end of the fifth anniversary of the date of the Restricted Stock
Agreement, all non-vested shares would be forfeited. The amendment provides for the automatic
vesting of all unvested restricted shares immediately prior to the fifth anniversary of the date of
the Restricted Stock Agreement, to the extent any or all of the performance measures have not been
previously achieved. Mr. Balthrops 200,000 share restricted stock award, as amended, has market,
service or performance criteria for vesting of all shares. We have assumed that vesting will occur
at the end
9
LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
of the five years based on achievement of the service criteria so all expense is being amortized
straight-line over the five-year period from May 17, 2004 through 2009. Pursuant to the amendment
to this award, the award was revalued to the market price on the date of amendment of $14.39. This
resulted in additional expense to the Company of approximately $356,000 of which approximately
$205,000 was recognized in the first quarter of 2007 and approximately $151,000 of which will be
recognized pro-rata over the remaining term of the award.
The Companys stock option activity for the six months ended June 30, 2007 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
Average |
|
|
|
Shares |
|
|
Exercise |
|
Stock Options |
|
(in thousands) |
|
|
Price |
|
Outstanding at December 31, 2006 |
|
|
3,163 |
|
|
$ |
9.76 |
|
Granted |
|
|
790 |
(1) |
|
|
21.26 |
|
Exercised |
|
|
(33 |
) |
|
|
5.27 |
|
Cancelled or expired |
|
|
(142 |
) |
|
|
25.96 |
|
|
|
|
|
|
|
|
Outstanding at June 30, 2007 |
|
|
3,778 |
|
|
$ |
11.59 |
|
|
|
|
(1) |
|
Includes shares reserved with respect to the Tm options assumed in the acquisition. |
The Company had $2.3 million of total unrecognized compensation costs related to stock
options at June 30, 2007 that are expected to be recognized over a weighted-average period of 1.0
years.
The Companys non-vested shares activity for the six months ended June 30, 2007 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted- |
|
|
|
|
|
|
|
Average |
|
|
|
Shares |
|
|
Grant-Date |
|
Restricted Stock Awards |
|
(in thousands) |
|
|
Fair Value |
|
Non-vested at December 31, 2006 |
|
|
798 |
|
|
$ |
12.46 |
|
Granted |
|
|
387 |
|
|
|
13.76 |
|
Vested |
|
|
(187 |
) |
|
|
13.60 |
|
Cancelled or expired |
|
|
(7 |
) |
|
|
13.98 |
|
|
|
|
|
|
|
|
Non-vested at June 30, 2007 |
|
|
991 |
|
|
$ |
13.61 |
|
As of June 30, 2007, there was $11.3 million of unrecognized compensation cost related to
RSAs. That cost is expected to be recognized over a weighted average-period of 2.1 years.
The following are the stock-based compensation costs recognized in the Companys condensed
consolidated statements of income (in thousands):
10
LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
Cost of revenue |
|
$ |
71 |
|
|
$ |
79 |
|
|
$ |
142 |
|
|
$ |
158 |
|
Research and development |
|
|
165 |
|
|
|
137 |
|
|
|
343 |
|
|
|
239 |
|
Selling, general and administrative |
|
|
1,357 |
|
|
|
1,043 |
|
|
|
2,610 |
|
|
|
2,027 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stock-based compensation costs |
|
$ |
1,593 |
|
|
$ |
1,259 |
|
|
$ |
3,095 |
|
|
$ |
2,424 |
|
NOTE 7 SEGMENT INFORMATION
Management has determined that we have two segments for financial reporting purposes: the
Technology Segment and the Assay Segment. As described in Note 2 Business Combinations, the
acquisition of LMD (formerly Tm) was completed on March 1, 2007; therefore, the results of
operation of LMD in our consolidated financial statements include only results since this date.
The accounting principles of the segments are the same as those described in the Summary of
Significant Policies in our Annual Report on Form 10-K and in this report.
Following is selected information for the three months ended June 30, 2007 or at June 30, 2007
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology |
|
Assay |
|
Intersegment |
|
|
|
|
Group |
|
Group |
|
Eliminations |
|
Consolidated |
Revenues from external customers |
|
$ |
14,822 |
|
|
$ |
4,000 |
|
|
$ |
|
|
|
$ |
18,822 |
|
Intersegment revenue |
|
|
1,257 |
|
|
|
17 |
|
|
|
(1,274 |
) |
|
|
(1,274 |
) |
Depreciation and amortization |
|
|
524 |
|
|
|
1,355 |
|
|
|
(66 |
) |
|
|
1,813 |
|
Segment profit (loss) |
|
|
13 |
|
|
|
(11,748 |
) |
|
|
(321 |
) |
|
|
(12,056 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets |
|
|
49,559 |
|
|
|
68,383 |
|
|
|
(6,284 |
) |
|
|
111,658 |
|
Following is selected information for the six months ended June 30, 2007 or at June 30, 2007
(in thousands), with recognition that the LMD impact is only for the period of March 1, 2007
through June 30, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology |
|
Assay |
|
Intersegment |
|
|
|
|
Group |
|
Group |
|
Eliminations |
|
Consolidated |
Revenues from external customers |
|
$ |
30,560 |
|
|
$ |
5,200 |
|
|
$ |
|
|
|
$ |
35,760 |
|
Intersegment revenue |
|
|
1,580 |
|
|
|
25 |
|
|
|
(1,605 |
) |
|
|
(1,605 |
) |
Depreciation and amortization |
|
|
938 |
|
|
|
1,517 |
|
|
|
(86 |
) |
|
|
2,369 |
|
Segment profit (loss) |
|
|
1,674 |
|
|
|
(13,208 |
) |
|
|
(386 |
) |
|
|
(11,920 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets |
|
|
49,559 |
|
|
|
68,383 |
|
|
|
(6,284 |
) |
|
|
111,658 |
|
11
LUMINEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 8 INCOME TAXES
The Company adopted the Financial Accounting Standards Board (FASB) Interpretation (FIN) 48,
Accounting for Uncertainty in Income Taxes (FIN 48) at the beginning of fiscal year 2007. As a
result of the implementation of FIN 48, the Company had no unrecognized tax benefits.
The Company recognizes interest and penalties related to uncertain tax positions in the
provision for income taxes. The Company has not recognized any interest or penalties related to
uncertain tax positions to date.
The tax years 2002 through 2006 remain open to examination by the major taxing jurisdictions
to which the Company is subject.
Income taxes decreased by approximately $125,000 during the three months ended June 30, 2007
as a result of Texas HB 3928, effective June 15, 2007, which required the Company to recognize
changes in deferred tax assets related to a computational change of the temporary credit.
NOTE 9 RECENT ACCOUNTING PRONOUNCEMENTS
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157), which
defines fair value, establishes a framework for using fair value to measure assets and liabilities,
and expands disclosures about fair value measurements. The Statement applies whenever other
statements require or permit assets or liabilities to be measured at fair value. SFAS 157 is
effective for fiscal years beginning after November 15, 2007. We are currently evaluating the
impact this statement will have on our consolidated financial statements.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets
and Financial Liabilities Including an Amendment of FASB Statement No. 115 (SFAS 159). SFAS 159
permits entities to choose to measure many financial instruments and certain other items at fair
value, with unrealized gains and losses related to these financial instruments reported in earnings
at each subsequent reporting date. SFAS 159 is effective for fiscal years beginning after November
15, 2007. We are currently evaluating the impact this statement will have on our consolidated
financial statements.
12
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following information should be read in conjunction with the condensed consolidated
financial statements and the accompanying notes included in Part I Item 1 of this Report, the Risk
Factors referenced in Part II Item 1A of this Report and our Annual Report on Form 10-K for the
year ended December 31, 2006.
SAFE HARBOR CAUTIONARY STATEMENT
This Quarterly Report on Form 10-Q contains statements that are forward-looking statements as
defined within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and
Section 27A of the Securities Act of 1933, as amended. Forward-looking statements give our current
expectations of forecasts of future events. All statements other than statements of current or
historical fact contained in this report, including statements regarding our future financial
position, business strategy, budgets, projected costs, and plans and objectives of management for
future operations, are forward-looking statements. The words anticipate, believe, continue,
estimate, expect, intend, may, plan, projects, will, and similar expressions, as they
relate to us, are intended to identify forward-looking statements. These statements are based on
our current plans and actual future activities, and our results of operations may be materially
different from those set forth in the forward-looking statements as a result of known or unknown
risks and uncertainties, including, among other things:
|
|
|
risks and uncertainties relating to market demand and acceptance of our products and technology, |
|
|
|
|
dependence on strategic partners for development, commercialization and distribution of products, |
|
|
|
|
concentration of the Companys revenue in a limited number of strategic partners, |
|
|
|
|
fluctuations in quarterly results due to a lengthy and unpredictable sales cycle and
bulk purchases of consumables, |
|
|
|
|
our ability to scale manufacturing operations and manage operating expenses, gross
margins and inventory levels, |
|
|
|
|
potential shortages of components, |
|
|
|
|
competition, |
|
|
|
|
the timing of regulatory approvals, |
|
|
|
|
the implementation, including any modification, of the Companys strategic operating plans, |
|
|
|
|
risks and uncertainties associated with implementing our acquisition strategy and the
ability to integrate acquired companies, including LMD, or selected assets into our
consolidated business operations, including the ability to recognize the benefits of our
acquisitions, |
|
|
|
|
our ability to develop, manufacture and commercialize products within our Assay Segment,
and |
|
|
|
|
the current status of the credit market could effect our ability to obtain debt or
equity funds on favorable terms, if at all. |
Any or all of our forward-looking statements in this report may turn out to be inaccurate. We
have based these forward-looking statements largely on our current expectations and projections
about future events and financial trends that we believe may affect our financial condition,
results of operations, business strategy and financial needs. They can be affected by inaccurate
assumptions we might make or by known or unknown risks, uncertainties and assumptions, including
the risks, uncertainties and assumptions outlined above and referenced in the section titled Risk
Factors below. In light of these risks, uncertainties and assumptions, the forward-looking events
and circumstances discussed in this report may not occur and actual results could differ materially
from those anticipated or implied in the forward-looking statements. When you consider these
forward-looking statements, you should keep in mind these risk factors and other cautionary
statements in this report.
Our forward-looking statements speak only as of the date made. We undertake no obligation to
publicly update or revise forward-looking statements, whether as a result of new information,
future events or otherwise. All subsequent written and oral forward-looking statements attributable
to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary
statements contained in this report. Unless the context requires
13
otherwise, references in this Quarterly Report on Form 10-Q to Luminex, the Company, we, us
and our refer to Luminex Corporation and its subsidiaries.
OVERVIEW
We develop, manufacture and sell proprietary biological testing technologies with applications
throughout the life sciences industry. Our xMAP® technology, an open architecture, multiplexing
technology, allows simultaneous analysis of up to 100 bioassays from a small sample volume,
typically a single drop of fluid, by reading biological tests on the surface of microscopic
polystyrene beads called microspheres. xMAP technology combines this miniaturized liquid array
bioassay capability with small lasers, digital signal processors and proprietary software to create
a system offering advantages in speed, precision, flexibility and cost. Our xMAP technology is
currently being used within various segments of the life sciences industry which includes the
fields of drug discovery and development, clinical diagnostics, genetic analysis, bio-defense,
protein analysis and biomedical research.
Our end-user customers and partners, which include laboratory professionals performing
research, clinical laboratories performing tests on patients as ordered by a physician and other
laboratories, have a fundamental need to perform high quality testing as efficiently as possible.
Luminex has adopted a business model built around strategic partnerships. We have licensed our
xMAP technology to other companies, who then develop products that incorporate the xMAP technology
into products that they sell to the end-user. Luminex develops and manufactures the proprietary
xMAP laboratory instrumentation and the proprietary xMAP microspheres and sells these products to
our partners. Our partners then sell xMAP instrumentation and xMAP-based reagent consumable
products, which run on the instrumentation, to the end-user laboratory. Luminex was founded on
this model, and our success to date has been due to this model. As of June 30, 2007, Luminex had
over 50 strategic partners, 31 of which have released commercialized reagent-based products using
our technology, and these partners have sold and placed over 4,500 xMAP-based instruments in
laboratories worldwide.
Luminex has several forms of revenue that result from this partner model:
|
|
|
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,
often coupled with an optional XY Platform and/or Sheath Delivery System. We currently
expect the average system price to be between $25,000 and $30,000 in a given reporting
period. 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 be facilities such as testing labs, development facilities and
research facilities who buy prepared kits and have specific testing needs or testing
service companies that provide assay results to pharmaceutical research companies or
physicians. |
|
|
|
|
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. |
|
|
|
|
Assay revenue is generated from the sale of our kits which is a combination of chemical
and biological reagents and our proprietary bead technology used to perform diagnostic and
research assays on samples. For the six months ended June 30, 2007, assay revenue includes
revenue since March 1, 2007 from Luminex Molecular Diagnostics, or LMD, formerly Tm
Bioscience Corporation, as a result of our acquisition which was effective March 1, 2007.
Assay revenue generated from the Luminex Bioscience Group, or LBG, is also classified here.
Previously, assay revenue generated from the LBG was recorded in other revenue as it did
not constitute a material amount of total revenue. |
|
|
|
|
Other revenue consists of items such as training, shipping, parts sales, license
revenue, grant revenue, contract research and development fees and milestone revenue and
other items that individually amount to less than 5% of total revenue. |
14
Second Quarter 2007 Highlights
|
|
|
Consolidated revenue of $17.5 million, a 32% increase year over year; and a 6% increase
over the first quarter of 2007 |
|
|
|
|
System shipments surpass 4,500 an increase of 20% from the second quarter of 2006 |
|
|
|
|
Consolidated gross margins of 59% |
|
|
|
|
In July 2007, announced a distribution agreement with Exiqon for the FlexmiR line of
products co-developed by the companies in 2006 |
|
|
|
|
In July 2007, unveiled FlexMAP 3D a next generation bead-based multiplexing system |
|
|
|
|
Completion of manufacturing space update/expansion in response to expanded product offerings |
|
|
|
|
Partner successes, including Bio-Rad BioPlex 2200 Quest deal |
Acquisition of TM Bioscience
As previously discussed in Note 2 Business Combinations, on March 1, 2007, we completed our
acquisition of Tm Bioscience Corporation. The acquired company, now referred to as LMD, is a
DNA-based research and diagnostics company located in Toronto, Canada. In connection with closing
the acquisition, we paid off $13.2 million of Tm Biosciences debt, related fees and paid
transactions expenses of approximately $5.0 million (including $2.9 million of transaction costs
included as part of the purchase price and $2.1 million of LMD transaction costs incurred prior to
March 1, 2007). Primarily as a result of this transaction, our cash, cash equivalents and
investments have been reduced by approximately $25.3 million during the six months ended June 30,
2007. To support our cash and investments position, the Company secured a revolving credit
facility for up to $15.0 in conjunction with the Tm Bioscience acquisition, which, as of June 30,
2007 and subject to the borrowing base requirements, would allow for borrowings of up to
approximately $10.1 million.
Segment Information
As described in Note 7 Segment Information, management has chosen to organize the Company by
business segments, and as a result has determined we have two segments for financial reporting
purposes: the Technology Segment and the Assay Segment.
Future Operations
We expect continued revenue growth for 2007 to be driven by sustained adoption of our core
technology coupled with assay introduction and commercialization by the Assay Segment. The
anticipated continued shift in revenue concentration towards higher margin items, such as assays,
consumables and royalties, should provide favorable gross margins. Additionally, we believe that a
sustained investment into R&D is necessary in order to meet the needs of our marketplace and
estimate that spending on R&D for the full year of 2007 will approximate 20% of total revenues.
We expect our primary challenges throughout the remainder of 2007 to be increased traction of
partner products incorporating Luminex technology, realizing the anticipated synergies of the Tm
Bioscience acquisition and associated integration risks, commercialization and market adoption of
output from the Assay Segment and expanding our footprint and reputation within our identified
target market segments.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The discussion and analysis of our financial condition and results of operations are based
upon our condensed consolidated financial statements, which have been prepared in accordance with
United States generally accepted accounting principles. The preparation of these financial
statements requires us to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We
base our estimates on historical experience and on various other assumptions that are believed to
be reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily apparent from other
sources. Estimates and
15
assumptions are reviewed periodically. Actual results may differ from these estimates under
different assumptions or conditions.
Revenue Recognition. Revenue on sales of our products is recognized when persuasive evidence
of an agreement exists, delivery has occurred, the fee is fixed and determinable and collectibility
is probable. Generally, these criteria are met at the time our product is shipped. If the
criteria for revenue recognition are not met at the time of shipment, the revenue is deferred until
all criteria are met. Royalty revenue is generated when a partner sells products incorporating our
technology, provides testing services to third parties using our technology or resells our
consumables. Royalty revenue is recognized as it is reported to us by our partners; therefore, the
underlying end-user sales may be related to prior periods. We also sell extended service contracts
for maintenance and support of our products. Revenue for service contracts is recognized ratably
over the term of the agreement.
Total deferred revenue as of June 30, 2007 was $6.6 million and primarily consisted of (i)
unamortized license fees for non-exclusive licenses and patent rights to certain Luminex
technologies in the amount of $3.8 million, (ii) unamortized revenue related to extended service
contracts in the amount of $2.1 million, and (iii) upfront payments from strategic partners to be
used for the purchase of products or to be applied towards future royalty payments in the amount of
$548,000. Upfront payments from our strategic partners are nonrefundable and will be recognized as
revenue as our strategic partners purchase products or apply such amounts against royalty payments.
Nonrefundable license fees are amortized into revenue over the estimated life of the license
agreements.
Inventory Valuation. Inventories are valued at the lower of cost or market value and have
been reduced by an allowance for excess and obsolete inventories. At June 30, 2007, the two major
components of the allowance for excess and obsolete inventory were (i) a specific reserve for
inventory items that we no longer use in the manufacture of our products or that no longer meet our
specifications and (ii) a reserve against slow moving items for potential obsolescence. The total
estimated allowance is reviewed on a regular basis and adjusted based on managements review of
inventories on hand compared to estimated future usage and sales. While management believes that
adequate write-downs for inventory obsolescence have been made in the consolidated financial
statements, scientific and technological advances will continue and the Company could experience
additional inventory write-downs in the future. However, the Company does not believe this
estimate is subject to significant variability.
Warranties. We provide for the estimated cost of product warranties at the time revenue is
recognized. While we engage in product quality programs and processes, our warranty obligation is
affected by product failure rates, material usage and service delivery costs incurred in correcting
a product failure. Should actual product failure rates, material usage or service delivery costs
differ from our estimates, revisions to the estimated warranty liability would be required.
However, the Company does not believe this estimate is subject to significant variability.
Accounts Receivable and Allowance for Doubtful Accounts. We continuously monitor collections
and payments from our customers and maintain allowances for doubtful accounts based upon our
historical experience and any specific customer collection issues that we have identified. While
such credit losses historically have been within our expectations, there can be no assurance that
we will continue to experience the same level of credit losses that we have in the past. A
significant change in the liquidity or financial position of any one of our significant customers,
or a deterioration in the economic environment, in general, could have a material adverse impact on
the collectibility of our accounts receivable and our future operating results, including a
reduction in future revenues and additional allowances for doubtful accounts. However, the Company
does not believe this estimate is subject to significant variability.
Purchase
Price Allocation and Goodwill. The purchase price allocation for
acquisitions requires extensive use of accounting estimates and
judgments to allocate the purchase price to the identifiable tangible
and intangible assets acquired, including in-process research and
development (IPR&D), and liabilities assumed based on their
respective fair values.
On
March 1, 2007, we acquired Tm Bioscience Corp. or Tm, for an
aggregate purchase price of approximately $47.7 million, net of cash
acquired. The purchase price for the acquisition was allocated to
tangible and intangible assets acquired and liabilities assumed based
on their estimated fair values at the acquisition dates. We are in the
16
process of determining the
estimated fair values of IPR&D, identifiable intangible assets and
certain tangible assets. Such a valuation requires significant
estimates and assumptions, including but not limited to, determining
the timing and estimated costs to complete the in-process projects,
projecting regulatory approvals, estimating future cash flows, and
developing appropriate discount rates. We believe the estimated fair
values assigned to the assets acquired and liabilities assumed are
based on reasonable assumptions. However, the fair value estimates
for the purchase price allocations may change during the allowable
allocation period, if additional information becomes available.
We
evaluate the impairment of goodwill under the guidance of SFAS No.
142 Goodwill and Other Intangible Assets for each of our
reporting units. During the first quarter of 2007, we established our
initial goodwill balance related to our acquisition of LMD. The
Company will begin testing of this goodwill balance on an annual
basis and on an interim basis if circumstances indicate that
necessity.
Intangible
assets acquired are amortized over the assets estimated useful
lives using the straight-line method. The Company periodically
reviews the estimated useful lives of its identifiable intangible
assets, taking into consideration any events or circumstances that
might result in a diminished fair value or revised useful life.
IPR&D
represents the value, on closing of a business combination, of
acquired research and development projects which were not
technologically feasible as of the acquisition date and had no
alternative future use. Projects that were deemed not technologically
feasible was charged to net profit (loss) during the period ended
June 30, 2007 as IPR&D expenses.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2007 COMPARED TO THREE MONTHS ENDED JUNE 30, 2006
Consolidated
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
June 30, |
|
|
2007 |
|
2006 |
Revenue |
|
$ |
17,548 |
|
|
$ |
13,268 |
|
Gross profit |
|
$ |
10,337 |
|
|
$ |
7,660 |
|
Gross margin percentage |
|
|
59 |
% |
|
|
58 |
% |
Operating expenses |
|
$ |
22,581 |
|
|
$ |
7,927 |
|
Net operating loss |
|
$ |
(12,244 |
) |
|
$ |
(267 |
) |
Total revenue increased 32% to $17.5 million for the three months ended June 30, 2007 from
$13.3 million for the comparable period in 2006. The increase in revenue was primarily attributable
to the Assay Segment including the acquisition of LMD which contributed $3.5 million of the overall
increase. Operating expenses increased primarily as a result of the acquisition of LMD which
contributed $12.6 million of the increase. This $12.6 million includes an $8.0 million write-off
of in-process research and development, see Note 2 Business Combinations for more information.
The Technology Segment contributed $1.9 million of the increase in operating expenses which was
primarily attributable to increased headcount. Net operating income decreased due to the dilutive
effect of the LMD acquisition. See additional discussions by segment below.
We manage our operations through two business segments: the Technology Segment and the Assay
Segment.
Technology Segment
Selected financial data for the three months ended June 30, 2007 and 2006 of our
Technology Segment is as follows (dollars in thousands):
17
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
June 30, |
|
|
2007 |
|
2006 |
Revenue |
|
$ |
13,565 |
|
|
$ |
13,254 |
|
Gross profit |
|
$ |
7,739 |
|
|
$ |
7,641 |
|
Gross margin percentage |
|
|
57 |
% |
|
|
58 |
% |
Operating expenses |
|
$ |
9,347 |
|
|
$ |
7,410 |
|
Net operating income (loss) |
|
$ |
(1,608 |
) |
|
$ |
231 |
|
Revenue. Total revenue increased 2% to $13.5 million for the three months ended June 30, 2007
from $13.3 million for the comparable period in 2006. The increase in revenue was primarily
attributable to an increase in service and consumables revenues as well as continued acceptance and
utilization of our technology in the marketplace as evidenced by our continued increase in royalty
revenue. This increase was partially offset by a decrease in system sales. As previously
disclosed in our Annual Report on Form 10-K, we continue to experience revenue concentration in a
limited number of strategic partners. Three customers accounted for 45% of total revenue in the
second quarter of 2007 (23%, 12%, and 10% respectively). For comparative purposes, these same
three customers accounted for 41% of total revenue (20%, 12% and 10%, respectively) in the second
quarter of 2006. No other customer accounted for more than 10% of total revenue in this quarter.
A breakdown of revenue in the Technology Segment for the three months ended June 30, 2007 and
2006 is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
System sales |
|
$ |
5,397 |
|
|
$ |
5,811 |
|
Consumable sales |
|
|
3,305 |
|
|
|
3,053 |
|
Royalty revenue |
|
|
2,210 |
|
|
|
2,001 |
|
Service contracts |
|
|
1,087 |
|
|
|
811 |
|
Other revenue |
|
|
1,566 |
|
|
|
1,578 |
|
|
|
|
|
|
|
|
|
|
$ |
13,565 |
|
|
$ |
13,254 |
|
|
|
|
|
|
|
|
System and peripheral component sales decreased 7% to $5.4 million for the three months ended
June 30, 2007 from $5.8 million for the comparable period of 2006. The decrease in revenue is
primarily attributable to a decrease in average system price attributable to partner mix for the
three months ended June 30, 2007 as compared to the three months ended June 30, 2006 and to a
lesser extent a decrease in the number of units sold. System sales for the second quarter of 2007
decreased to 200 LX Systems from 206 (205 LX Systems 1 HTS) for the corresponding prior year period
bringing total system sales since inception to over 4,500 as of June 30, 2007. For the three
months ended June 30, 2007, four of our partners accounted for 165, or 81%, of total system sales
for the period. These four partners purchased 145, or 70%, of total system sales in the three
months ended June 30, 2006.
Consumable sales comprised of microspheres and sheath fluid, increased 8% to $3.3 million for
the three months ended June 30, 2007 from $3.1 million for the three months ended June 30, 2006.
The increase is primarily the result of an increase in bulk purchases. During the three months
ended June 30, 2007, we had nine bulk purchases totaling approximately $2.1 million as compared
with six bulk purchases totaling approximately $1.8 million during the three months ended June 30,
2006. A bulk purchase is defined as the purchase of $100,000 or more of consumables in a quarter.
Partners who reported royalty bearing sales accounted for $2.5 million, or 75%, of total consumable
sales for the three months ended June 30, 2007.
Royalty revenue increased 10% to $2.2 million for the three months ended June 30, 2007
compared with $2.0 million for the three months ended June 30, 2006. For the three months ended
June 30, 2007, we had 31 commercial partners submitting royalties as compared to 27 for the three
months ended June 30, 2006. One of our partners reported royalties totaling approximately
$738,000, or 33% of total royalties for the current
quarter. Two other customers reported
royalties totaling approximately $575,000, or 26% (14% and 13%, respectively) of total royalties
for the current quarter. No other customer accounted for more than 10% of total royalty
revenue for the current
18
quarter. Total royalty bearing sales were over $36 million for the quarter
ended June 30, 2007 and over $146 million on an annualized basis, compared with over $32 million
for the quarter ended June 30, 2006 and over $125 million on an annualized basis.
Service contracts comprised of extended warranty contracts earned ratably over the term of the
agreement, increased 34% to $1.1 million for the second quarter of 2007 from $811,000 for the
second quarter of 2006. This increase is attributable to increased sales of extended service
agreements, which are primarily a result of the increase in the commercial base of Luminex systems
as compared to the prior year period. At June 30, 2007, we had 804 Luminex systems covered under
extended service agreements and $2.1 million in deferred revenue related to those contracts. At
June 30, 2006, we had 676 Luminex systems covered under extended service agreements and $1.8
million in deferred revenue related to those contracts.
Other revenues, comprised of training revenue, shipping revenue, miscellaneous parts sales,
amortized license fees, and grant revenue, decreased slightly for the three months ended June 30,
2007 from the three months ended June 30, 2006. This decrease is primarily the result of a decrease
in miscellaneous part sales and a milestone payment of $300,000 received in the three months ended
June 30, 2006. This decrease was offset by the addition of grant revenue. For the quarter ended
June 30, 2007, we had $543,000 of parts sales, $605,000 of grant revenue, $129,000 of shipping
revenue, $133,000 of license revenue and $156,000 of other revenue.
Gross profit. The gross margin rate (gross profit as a percentage of total revenue) decreased
slightly to 57% for the three months ended June 30, 2007 from 58% for the three months ended June
30, 2006. Gross profit was flat at $7.7 million for the three months ended June 30, 2007, as
compared to $7.6 million for the three months ended June 30, 2006. The decrease in gross margin
rate was primarily attributable to the elimination of intercompany sales. A total of $1.3 million
of intercompany sales were eliminated from technology group sales in the current quarter.
Consumables and royalties comprised $5.5 million, or 41%, of revenue for the current quarter and
$5.1 million, or 38%, for the quarter ended June 30, 2006. We anticipate continued fluctuation in
gross margin rate and related gross profit primarily as a result of variability in partner bulk
purchases and absolute number of sales of quarterly system sales.
Operating expenses. Research and development expenses increased to $2.2 million for the three
months ended June 30, 2007 from $1.5 million for the comparable period in 2006. The increase was
primarily related to additional personnel costs associated with the increase in employees to 59 at
June 30, 2007 from 51 at June 30, 2006. The increase in the number of employees has allowed us to
increase our focus on development of our system, consumable and software products and the expansion
of applications for use on our platforms.
Selling, general and administrative expenses increased to $7.2 million for the three months
ended June 30, 2007 from $5.9 million for the comparable period in 2006. The increase was
primarily related to additional personnel costs associated with the increase in employees to 75 at
June 30, 2007 from 64 at June 30, 2006 and an increase in stock compensation expense attributable
to additional issuances.
Assay Segment
Selected financial data for the three months ended June 30, 2007 and 2006 of our Assay Segment
results follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
June 30, |
|
|
2007 |
|
2006 |
Revenue |
|
$ |
3,983 |
|
|
$ |
14 |
|
Gross profit |
|
$ |
2,598 |
|
|
$ |
19 |
|
Gross margin percentage |
|
|
65 |
% |
|
|
136 |
% |
Operating expenses |
|
$ |
13,234 |
|
|
$ |
517 |
|
Net operating loss |
|
$ |
(10,636 |
) |
|
$ |
(498 |
) |
19
A breakdown of revenue in the Assay Segment for the three months ended June 30, 2007 and 2006
is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
Assays |
|
$ |
3,737 |
|
|
$ |
14 |
|
Other revenue |
|
|
246 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,983 |
|
|
$ |
14 |
|
|
|
|
|
|
|
|
Revenue. Revenues for the three months ended June 30, 2007 were derived from LMD and LBG and
from LBG only for the three months ended June 30, 2006. Assay revenue consists primarily of kits,
of which the majority relate to our Cystic Fibrosis products. System sales during the second
quarter of 2007 in the Assay Segment were four LX Systems. Other revenue includes contract research
and development fees and milestone revenue. Two customers accounted for 47% of revenue for the
second quarter of 2007 (37% and 10%, respectively). No other customer accounted for more than 10%
of total revenue in this quarter.
Operating Expenses. Research and development expenses were $1.7 million and $271,000 for the
three months ended June 30, 2007 and 2006, respectively. The increase in research and development
can be primarily attributed to the addition of the acquisition of LMD and to a lesser extent
increased activity by the LBG primarily as a result of increased activity related to product
development. LMD contributed approximately 76% of all research and development expenses. The LBG
division contributed the remaining 24%. The LBG division research and development expenses
increased 51% to $409,000.
Selling, general and administrative expenses were $3.3 million and $246,000 for the three
months ended June 30, 2007 and 2006, respectively. The overall increase in selling, general and
administrative expenses can be primarily attributed to the addition of the acquisition of LMD. LMD
contributed approximately 93% of all selling, general and administrative expenses. The LBG
division contributed the remaining 7%.
In-process research and development of $8.0 million was
written-off during the quarter ended June 30, 2007. See Note 2 Business Combinations for more
information.
SIX MONTHS ENDED JUNE 30, 2007 COMPARED TO SIX MONTHS ENDED JUNE 30, 2006
Consolidated
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
June 30, |
|
|
2007 |
|
2006 |
Revenue |
|
$ |
34,155 |
|
|
$ |
26,265 |
|
Gross profit |
|
$ |
20,767 |
|
|
$ |
15,919 |
|
Gross margin percentage |
|
|
61 |
% |
|
|
61 |
% |
Operating expenses |
|
$ |
33,383 |
|
|
$ |
16,073 |
|
Net operating loss |
|
$ |
(12,616 |
) |
|
$ |
(154 |
) |
Total revenue increased 30% to $34.2 million for the six months ended June 30, 2007 from $26.3
million for the comparable period in 2006. The increase in revenue was primarily attributable to
the Assay Segment, including the
acquisition of LMD and increased activity by LBG, which contributed $5.2 million of the
increase. Operating expenses increased primarily as a result of the acquisition of LMD, which
contributed approximately $14.0 million
20
of the increase. This $14.0 million includes an $8.0
million write-off of in-process research and development. See additional discussions by segment
below.
Technology Segment
Selected financial data for the six months ended June 30, 2007 and 2006 of our Technology
Segment is as follows (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
June 30, |
|
|
2007 |
|
2006 |
Revenue |
|
$ |
28,980 |
|
|
$ |
26,251 |
|
Gross profit |
|
$ |
17,442 |
|
|
$ |
15,907 |
|
Gross margin percentage |
|
|
60 |
% |
|
|
61 |
% |
Operating expenses |
|
$ |
18,217 |
|
|
$ |
15,121 |
|
Net
operating income (loss) |
|
$ |
(775 |
) |
|
$ |
786 |
|
Revenue. Total revenue increased 10% to $29.0 million for the six months ended June 30, 2007
from $26.3 million for the comparable period in 2006. The increase in revenue was primarily
attributable to an increase in system sales as well as the continued acceptance and utilization of
our technology in the marketplace as evidenced by our continued increase in royalty revenue and to
a lesser extent increases in service and grant revenues. Two customers accounted for 35% of total
revenue in the six months ended June 30, 2007 (23% and 12%, respectively). No other customer
accounted for more than 10% of total revenue in this quarter. For comparative purposes, these same
two customers accounted for 39% of total revenue (20% and 19%, respectively) in the six months
ended June 30, 2006.
A breakdown of revenue in the Technology Segment for the six months ended June 30, 2007 and
2006 is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
System sales |
|
$ |
11,089 |
|
|
$ |
9,803 |
|
Consumable sales |
|
|
8,116 |
|
|
|
8,555 |
|
Royalty revenue |
|
|
4,742 |
|
|
|
3,791 |
|
Service contracts |
|
|
2,090 |
|
|
|
1,618 |
|
Other revenue |
|
|
2,943 |
|
|
|
2,484 |
|
|
|
|
|
|
|
|
|
|
$ |
28,980 |
|
|
$ |
26,251 |
|
|
|
|
|
|
|
|
System and peripheral component sales increased 13% to $11.1 million for the six months ended
June 30, 2007 from $9.8 million for the comparable period of 2006. System sales for the first half
of 2007 increased to 404 LX Systems from 348 LX Systems for the corresponding prior year period
bringing total system sales since inception to over 4,500 as of June 30, 2007. For the six months
ended June 30, 2007, four of our partners accounted for 309, or 75%, of total system sales for the
period. These four partners purchased 237, or 68%, of total system sales in the six months ended
June 30, 2006.
Consumable sales comprised of microspheres and sheath fluid, decreased 5% to $8.1 million for
the six months ended June 30, 2007 from $8.5 million for the comparable period of 2006. The
decrease is primarily the result of
the elimination of intercompany sales to LMD, and to a lesser extent, a decrease in bulk
purchases versus the prior year period which included a $2.8 million bulk purchase by a single
customer. During the six months ended June 30, 2007, we had 20 bulk purchases of consumables
totaling approximately $5.5 million as compared with 14 bulk
21
purchases totaling approximately $6.1
million in the six months ended June 30, 2006. Partners who reported royalty bearing sales
accounted for $6.6 million, or 81%, of total consumable sales for the six months ended June 30,
2007. As the number of applications available on our platform expands, we anticipate that the
overall level of consumable sales, and related bulk purchases, will continue to fluctuate.
Royalty revenue increased 25% to $4.7 million for the six months ended June 30, 2007 compared
with $3.8 million for the three months ended June 30, 2006. We believe this increase is primarily
the result of the increased use and acceptance of our technology. For the six months ended June
30, 2007, we had 31 commercial partners submitting royalties as compared to 27 for the six months
ended June 30, 2006. One of our partners reported royalties totaling approximately $1.5 million,
or 31% of total royalties for the period. Three other customers reported royalties totaling
approximately $1.6 million or 33% (12%, 11% and 10%, respectively) of total royalties for the six months
ended 2007. No other customer accounted for more than 10% of total royalty revenue for the current
period. Total royalty bearing sales by our partners were over $78 million for the first half of
2007 and over $156 million on an annualized basis, compared with over $58 million for the first
half of 2006 and over $129 million on an annualized basis.
Service contracts, comprised of extended warranty contracts earned ratably over the term of
the agreement, increased 29% to $2.1 million for the six months ended June 30, 2007 from $1.6
million for the six months ended June 30, 2006. This increase is attributable to increased sales of
extended service agreements, which are primarily a result of the increase in the commercial base of
Luminex systems as compared to the prior year period.
Other revenues, comprised of training revenue, shipping revenue, miscellaneous parts sales,
amortized license fees, and grant revenue, increased 18% to $2.9 million for the six months ended
June 30, 2007 from $2.5 million for the six months ended June 30, 2006. This increase is primarily
the result of the addition of grant revenue. This increase was offset slightly by a milestone
payment of $300,000 received in the three months ended June 30, 2006. For the six months ended
June 30, 2007, we had $1.4 million of parts sales, $802,000 of grant revenue, $286,000 of shipping
revenue, $266,000 of license revenue and $231,000 of other revenue.
Gross profit. The gross margin rate (gross profit as a percentage of total revenue) decreased
slightly to 60% for the six months ended June 30, 2007 from 61% for the six months ended June 30,
2006. Gross profit, in dollar amount, increased to $17.4 million for the six months ended June 30,
2007, as compared to $15.9 million for the six months ended June 30, 2006. The decrease in gross
margin rate was primarily attributable to the elimination of intercompany sales to LMD. The
increase in gross profit, in dollar amount, was primarily attributable to the overall increase in
revenue coupled with only a slight decrease in gross margin. Consumables and royalties comprised
$12.9 million, or 44%, of revenue for the first half of 2007 and $12.3 million, or 47%, for the
first half ended June 30, 2006. We anticipate continued fluctuation in gross margin rate and
related gross profit primarily as a result of variability in partner bulk purchases and absolute
number of sales of quarterly system sales.
Operating expenses. Research and development expenses increased to $4.2 million for the six
months ended June 30, 2007 from $3.4 million for the comparable period in 2006. The increase was
primarily related to additional personnel costs associated with the increase in employees to 59 at
June 30, 2007 from 51 at June 30, 2006. This increase was partially offset by a decrease in costs
related to direct materials and consumables utilized in the research and development process. The
increase in the number of employees has allowed us to increase our focus on development of our
system, consumable and software products and the expansion of applications for use on our
platforms.
Selling, general and administrative expenses increased to $14.0 million for the six months
ended June 30, 2007 from $11.7 million for the comparable period in 2006. The increase was
primarily related to additional personnel costs associated with the increase in employees to 75 at
June 30, 2007 from 64 at June 30, 2006, and to a lesser extent, an increase in stock compensation
expense attributable to additional issuances of equity subsequent to the second quarter of 2006.
Assay Segment
Selected financial data for the six months ended June 30, 2007 and 2006 of our Assay Segment
results follows (dollars in thousands):
22
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
June 30, |
|
|
2007 |
|
2006 |
Revenue |
|
$ |
5,175 |
|
|
$ |
14 |
|
Gross profit |
|
$ |
3,325 |
|
|
$ |
12 |
|
Gross margin percentage |
|
|
64 |
% |
|
|
86 |
% |
Operating expenses |
|
$ |
15,166 |
|
|
$ |
952 |
|
Net operating (loss) |
|
$ |
(11,841 |
) |
|
$ |
(940 |
) |
A breakdown of revenue in the Assay Segment for the three months ended June 30, 2007 and 2006
is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
|
2007 |
|
|
2006 |
|
Assays |
|
$ |
4,881 |
|
|
$ |
14 |
|
Other revenue |
|
|
294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
5,175 |
|
|
$ |
14 |
|
|
|
|
|
|
|
|
Revenue. Revenues were derived from LBG for the six months ended June 30, 2007 and 2006 and
from LMD for the current year from March 1, 2007 through June 30, 2007. Assay revenue consists
primarily of kits of which the majority related to our Cystic Fibrosis products. System sales
during the six months ended 2007 in the Assay Segment were five LX Systems. Other revenue includes
contract research and development fees and milestone revenue. Two customers accounted for 52% of
total revenue in the six months ended June 30, 2007 (38% and 14%, respectively).
Operating Expenses. Research and development expenses were $2.4 million and $604,000 for the
six months ended June 30, 2007 and 2006, respectively. The increase in research and development
can be primarily attributed to the addition of the acquisition of LMD. LMD contributed
approximately 70% of all research and development expenses. The LBG division contributed the
remaining 30%. The LBG division research and development expenses increased 16% to $703,000
primarily as a result of increased activity related to product development.
Selling, general and administrative expenses were $4.8 million and $348,000 for the six months
ended June 30, 2007 and 2006, respectively. As previously discussed, the expenses for the six
months ended June 30, 2007 include expenses related to LBG for the entire six months and expenses
related to LMD from March 1, 2007 to June 30, 2007 only. The overall increase in selling, general
and administrative expenses was primarily attributable to the addition of the LMD division and to a
lesser extent increased activity by the LBG. The LMD contributed
$4.3 million of selling, general and administrative expenses, or
90%. The LBG division contributed the remaining 10%. The LBG division selling,
general and administrative expenses increased 40% to $488,000 primarily as a result of increased
headcount.
In-process research and development of $8.0 million was
written-off during the current period. See Note 2 Business Combinations for more information.
LIQUIDITY AND CAPITAL RESOURCES
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
|
|
2007 |
|
|
2006 |
|
Cash and cash equivalents |
|
$ |
11,836 |
|
|
$ |
27,414 |
|
Short-term investments |
|
|
3,314 |
|
|
|
10,956 |
|
Long-term investments |
|
|
5,311 |
|
|
|
7,346 |
|
|
|
|
|
|
|
|
|
|
$ |
20,461 |
|
|
$ |
45,716 |
|
|
|
|
|
|
|
|
23
At June 30, 2007, we held cash, cash equivalents, and short-term and long-term investments of
$20.5 million and had working capital of $20.8 million. At December 31, 2006, we held cash, cash
equivalents, and short-term and long-term investments of $45.7 million and had working capital of
$44.2 million. In connection with closing the Tm Bioscience acquisition, we paid off $13.2 million
of Tm Biosciences debt, related fees and paid transactions expenses of approximately $5.0 million
(including $2.9 million of transaction costs included as part of the purchase price and $2.1
million of LMD transaction costs incurred prior to March 1, 2007). Primarily as a result of this
transaction, our cash, cash equivalents and investments were reduced by approximately $25.3 million
through June 30, 2007.
We have funded our operations to date primarily through the issuance of equity securities. Our
cash reserves are held directly or indirectly in a variety of short-term and long-term,
interest-bearing instruments, including obligations of the United States government or agencies
thereof and U.S. corporate debt securities.
Cash used in operations was $6.9 million for the six months ended June 30, 2007, compared with
cash provided by operations of $110,000 for the six months ended June 30, 2006.
Our operating expenses during the six months ended June 30, 2007 were $33.4 million, of
which $6.6 million was research and development expense, $18.8 million was selling, general and
administrative expense and $8.0 was an in-process research and development write-off. We expect
research and development expenses to be between 20% and 22% of total revenue for the remainder of
2007. Our increase in research and development expenses for 2007 relative to 2006 is a result of
our continued investment in the research and development pipeline to support our content strategy,
expanded focus on product development, and expenses related to the acquisition of LMD and increased
activity in LBG. Our increase in selling, general and administrative expenses over those of 2006
is primarily attributable to the addition of LMD. We believe that the dilutive effect of the LMD
acquisition and the related use of our cash revenues is short term in nature and that the company
will return to profitability and positive cash flow by early 2008.
Our future capital requirements will depend on a number of factors, including our success in
developing and expanding markets for our products, payments under possible future strategic
arrangements, continued progress of our research and development of potential products, the timing
and outcome of regulatory approvals, the need to acquire licenses to new technology, costs
associated with strategic acquisitions including integration costs and assumed liabilities, the
status of competitive products and potential cost associated with both protecting and defending our
intellectual property. Additionally, actions taken based on recommendations of our strategic
consulting study or the ongoing internal evaluation of our business could result in expenditures
not currently contemplated in our estimates for 2007. We believe, however, that our existing cash
and cash equivalents together with availability under our new credit facility as described below
are sufficient to fund our operating expenses, capital equipment requirements and other expected
liquidity requirements for the next 12 months. Based upon our current operating plan and structure,
management anticipates total cash use for the next 12 months to be no more than $5 million, giving
us an anticipated balance in cash, cash equivalents, short-term and long-term investments at June
30, 2008 of $15 million to $20 million. Factors that could affect this estimate, in addition to those
listed above, include: (i) continued collections of accounts receivable consistent with our
historical experience, (ii) our ability to manage our inventory levels consistent with past
practices, (iii) settlement of other accrued liabilities, (iv) signing of partnership agreements
which include significant up front license fees, and (v) unanticipated costs associated with, and
the negative operating cash flows resulting from, the LMD acquisition. See also the Safe Harbor
Cautionary Statement of this report and the Risk Factors in the Companys Annual Report on Form
10-K for the year ended December 31, 2006.
On March 1, 2007, the Company entered into a senior revolving credit facility with JPMorgan
Chase Bank, N.A., which provides borrowings of up to a maximum aggregate principal amount
outstanding of $15.0 million based on
availability under a borrowing base consisting of eligible accounts and inventory. The
obligations under the senior revolving credit facility are guaranteed by the wholly-owned domestic
subsidiaries of the Company and secured by all of the accounts, equipment inventory and general
intangibles (excluding intellectual property) of the Company and the guarantors including the
pledge of an intercompany note from Tm Bioscience and payable to the Company. Loans under the
senior credit facility accrue interest on the basis of either a base rate or a LIBOR rate. The
base rate is calculated daily and is the greater of (i) prime minus 1.00% and (ii) federal funds
rate plus .50%. Borrowings at the LIBOR rate are based on one, two or three month periods and
interest is calculated by taking the sum of (i) the
24
product of LIBOR for such period and statutory
reserves plus (ii) 1.75%. We pay a fee of 0.125% per annum on the unfunded portion of the lenders
aggregate commitment under the facility. Approximately $10.1 million is available for borrowing at
June 30, 2007.
The senior credit facility contains conditions to making loans, representations, warranties
and covenants, including financial covenants customary for a transaction of this type. Financial
covenants include (i) a tangible net worth covenant of $45.0 million prior to the acquisition Tm
Bioscience and $25.0 million following the acquisition and (ii) a liquidity requirement of
availability not less than the funded debt of the Company and its subsidiaries (including Tm
Bioscience) calculated using the unencumbered cash, cash equivalents and marketable securities of
the Company and the guarantors. The senior credit facility also contains customary events of
default as well as restrictions on undertaking certain specified corporate actions, including,
among others, asset dispositions, acquisitions and other investments, dividends, fundamental
corporate changes such as mergers and consolidations, incurrence of additional indebtedness,
creation of liens and negative pledges, transactions with affiliates and agreements as to certain
subsidiary restrictions and the creation of additional subsidiaries. If an event of default occurs
that is not otherwise waived or cured, the lender may terminate its obligations to make loans under
the senior credit facility and may declare the loans then outstanding under the senior credit
facility to be due and payable. We believe we are currently in compliance with our financial and
other covenants under the senior credit facility. As of June 30, 2007, no amounts were outstanding
under the senior revolving credit facility.
To the extent capital resources are insufficient to meet future capital requirements, we will
have to raise additional funds to continue the development and deployment of our technologies.
There can be no assurance that debt or equity funds will be available on favorable terms, if at
all. To the extent that additional capital is raised through the sale of equity or convertible debt
securities, the issuance of those securities could result in dilution to our stockholders.
Moreover, incurring debt financing (under our new credit facility or otherwise) could result in a
substantial portion of our operating cash flow being dedicated to the payment of principal and
interest on such indebtedness, could render us more vulnerable to competitive pressures and
economic downturns and could impose restrictions on our operations. If adequate funds are not
available, we may be required to curtail operations significantly or to obtain funds through
entering into agreements on unattractive terms.
Contractual Obligations
We currently have approximately $6.0 million in non-cancelable obligations for the next 12
months. These obligations are included in our estimated cash usage described above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment Due By Period |
|
|
|
|
|
|
|
Less Than |
|
|
|
|
|
|
|
|
|
|
More Than |
|
Contractual Obligations |
|
Total |
|
|
1 Year |
|
|
1-3 Years |
|
|
3-5 Years |
|
|
5 Years |
|
Non-cancelable rental
obligations |
|
$ |
5,284 |
|
|
$ |
2,257 |
|
|
$ |
3,027 |
|
|
$ |
|
|
|
$ |
|
|
Non-cancelable purchase
obligations (1) |
|
|
4,250 |
|
|
|
3,650 |
|
|
|
600 |
|
|
|
|
|
|
|
|
|
Long-term debt
obligations (2) |
|
|
6,908 |
|
|
|
137 |
|
|
|
3,183 |
|
|
|
3,588 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
16,442 |
|
|
$ |
6,044 |
|
|
$ |
6,810 |
|
|
$ |
3,588 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Purchase obligations include contractual arrangements in the form of purchase
orders primarily a result of normal inventory purchases or minimum payments due resulting
when minimum purchase commitments are not met. 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. |
25
|
|
|
(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.) $7,300,000 relating to the development of several genetic tests. Funds
were advanced from Technology Partnerships Canada (TPC), a special operating program.
The actual payments received by the Company were predicated on eligible expenditures made
during the project period which ended July 31, 2006. LMD has received Cdn. $5,739,000
from TPC which is expected to be repaid along with approximately Cdn. $1,577,000 of
imputed interest for a total of approximately Cdn. $7,316,000. |
LMD has agreed to repay the TPC funding through a royalty on specific assay revenue related
to the funded product development. Royalty payments commence 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. 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk. Our interest income is sensitive to changes in the general level of
domestic interest rates, particularly since our investments are in short-term and long-term
instruments held to maturity. A 50 basis point fluctuation from average investment returns at June
30, 2007 would yield an approximate 10% variance in overall investment return. Due to the nature of
our investments, we have concluded that there is no material market risk exposure.
Our revolving credit facility also will be affected by fluctuations in interest rates as it is
based on prime minus 1% or the Federal Funds Effective Rate in effect plus 0.50%. As of June 30,
2007, the Company has not drawn on this facility.
Foreign Exchange Risk. As of June 30, 2007, as a result of our foreign operations, we have
costs, assets and liabilities that are denominated in foreign currencies, primarily Canadian
dollars and to a lesser extent the Euro. For example, some fixed asset purchases and certain
expenses of our Canadian subsidiary, LMD, are denominated in Canadian dollars while sales of
products are primarily denominated in U.S. dollars. All transactions in our Netherlands subsidiary
are denominated in Euros. As a consequence, movements in exchange rates could cause our foreign
currency denominated expenses to fluctuate as a percentage of net revenue, affecting our
profitability and cash flows.
In addition, the indirect effect of fluctuations in interest rates and foreign currency
exchange rates could have a material adverse effect on our business financial condition and results
of operations. For example, currency exchange rate fluctuations could affect international demand
for our products. In addition, interest rates fluctuations could affect our customers buying
patterns. Furthermore, interest rate and currency exchange rate fluctuations may broadly influence
the United States and foreign economies resulting in a material adverse effect on our business,
financial condition and results of operations. As a result, we cannot give any assurance as to the
effect that future changes in foreign currency rates will have on our consolidated financial
position, results of operations or cash flows; however, foreign currency fluctuations did not have
a material effect on our consolidated results for the six months ended June 30, 2007.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our senior management, including our
President and Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of
the effectiveness of our disclosure
26
controls and procedures, as defined in Rules 13a-15(e) and
15d-15(e) promulgated under the Securities Exchange Act of 1934 (the Exchange Act), as of the end
of the period covered by this quarterly report. Based on that evaluation, our senior management,
including our President and Chief Executive Officer and Chief Financial Officer, concluded that as
of the end of the period covered by this quarterly report our disclosure controls and procedures
effectively and timely provide them with material information relating to the Company (and its
consolidated subsidiaries) required to be disclosed in the reports the Company files or submits
under the Exchange Act.
Due to the acquisition of LMD, we were required to implement processes and controls over
transactions related to those operations. As of June 30, 2007, we have not tested the operating
effectiveness of the internal controls related to the integration of LMD. In compliance with PCAOB
regulations, evaluation of LMD controls under Sarbanes-Oxley are not required until the fourth
quarter of 2008.
Changes in Internal Control over Financial Reporting
Other than stated above, there were no changes in internal control over financial reporting
identified in connection with the evaluation required by Exchange Act Rule 13a-15(d) during the
period covered by this quarterly report that have materially affected, or are reasonably likely to
materially affect, our existing internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On April 26, 2005, the Company was served with a complaint, filed by Rules Based Medicine,
Inc. (RBM) in state district court in Travis County, Texas seeking a declaratory judgment that
the formation of HealthMAP Laboratories, Inc. (subsequently renamed the Biophysical Corporation)
did not constitute a usurpation of an RBM corporate opportunity and that RBM has the necessary
contractual license rights under its existing agreement with the Company to perform certain testing
services on behalf of BioPhysical Corporation. On May 19, 2005, we filed an answer to this
complaint denying all claims brought by RBM. On June 21, 2005, the parties entered into an
agreement, which was subsequently entered with the court on June 22, 2005. Pursuant to this
agreement, the parties agreed that RBM would not file any claims related to this matter against the
Company until August 1, 2005, and that the Company would not file any claims related to this matter
against RBM until August 16, 2005, in order to continue to pursue settlement negotiations. The
parties were unable to reach agreement on the terms of settlement. RBM re-filed a lawsuit against
us on August 12, 2005, seeking a declaratory judgment against the Company as set forth above. In
response, we filed an answer and counterclaims against RBM, as well as new claims against Mark
Chandler and Craig Benson, officers of RBM, on August 19, 2005. The parties continued with
discovery until late January 2007, at which point settlement discussions began. A confidential
settlement agreement has been entered into, the terms of which are subject to certain conditions.
If all conditions called for are met, this matter will be formally dismissed in October of 2007.
Currently the parties anticipate that the matter will be abated at that time.
ITEM 1A. RISK FACTORS
Reference is made to the factors set forth under the caption Safe Harbor Cautionary
Statement in Part I Item 2 of this report and other risk factors described in our Annual Report on
Form 10-K and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2007, which are
incorporated herein by reference.
27
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The stock repurchase activity for the second quarter of 2007 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ISSUER PURCHASES OF EQUITY SECURITIES |
|
|
|
|
|
|
|
|
|
|
Total Number of Shares |
|
Appromixate Dollar Value of |
|
|
Total Number of |
|
Average Price |
|
Purchased as Part of |
|
Shares that May Yet Be |
|
|
Shares |
|
Paid per Share |
|
Publicly Announced |
|
Purchased |
Period |
|
Purchased |
|
(1)($) |
|
Plans of Programs |
|
Under the Plans or Programs |
|
04/01/07 - 04/30/07 |
|
|
7,981 |
|
|
|
14.09 |
|
|
|
|
|
|
|
|
|
05/01/07 - 05/31/07 |
|
|
2,356 |
|
|
|
12.27 |
|
|
|
|
|
|
|
|
|
06/01/07 -06/30/07 |
|
|
142 |
|
|
|
12.20 |
|
|
|
|
|
|
|
|
|
|
Total Second Quarter |
|
|
10,479 |
|
|
$ |
13.66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
At the Companys 2007 Annual Meeting of Stockholders, which was held on May 24, 2007, the
stockholders of the Company elected Robert J. Cresci, Thomas W. Erickson, and Gerard Vaillant
to serve as Class I directors for a term of three years by the following votes:
|
|
|
|
|
|
|
|
|
|
|
Number of Shares |
|
|
Voted For |
|
Withheld |
Robert J. Cresci |
|
|
29,984,721 |
|
|
|
366,376 |
|
Thomas W. Erickson |
|
|
30,169,964 |
|
|
|
181,133 |
|
Gerard Vaillant |
|
|
30,205,770 |
|
|
|
145,327 |
|
The other directors whose terms of office as a director continued after the meeting were as
follows: Patrick J. Balthrop, Fred C. Goad, Jr., Jay B. Johnston, Jim D. Kever, G. Walter
Loewenbaum II, Kevin M. McNamara and J. Stark Thompson.
The following item was also presented to the stockholders with the following results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares |
|
|
|
|
|
|
|
|
Voted |
|
|
|
|
|
Broker |
|
|
Voted For |
|
Against |
|
Abstained |
|
Non-Votes |
To ratify the
appointment by the
Companys Audit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Committee of Ernst &
Young LLP as the |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Companys
independent
registered public
accounting firm for
fiscal 2007 |
|
|
30,306,416 |
|
|
|
29,242 |
|
|
|
15,437 |
|
|
|
2 |
|
28
ITEM 6. EXHIBITS
The following exhibits are filed herewith:
|
|
|
Exhibit |
|
|
Number |
|
Description of Documents |
|
|
|
10.1
|
|
Amendment to Luminex Corporation 2000 Amended and Restated Long-Term Incentive Plan dated as
of May 24, 2007. |
|
|
|
10.2
|
|
Amendment to Luminex Corporation 2001 Broad-Based Stock Option Plan dated as of May 24, 2007. |
|
|
|
10.3
|
|
Amendment to Luminex Corporation 2006 Management Stock Purchase Plan dated as of May 24,
2007. |
|
|
|
10.4
|
|
Amendment to Luminex Corporation 2006 Equity Incentive Plan dated as of May 24, 2007. |
|
|
|
10.5
|
|
Form of Amendments to Equity Award Agreements. |
|
|
|
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
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|
|
|
|
LUMINEX CORPORATION
|
|
Date: August 9, 2007 |
By: |
/s/ HARRISS T. CURRIE
|
|
|
|
Harriss T. Currie |
|
|
|
Vice President, Finance and Chief
Financial Officer (Principal Financial Officer) |
|
|
|
|
|
|
By: |
/s/ PATRICK J. BALTHROP
|
|
|
|
Patrick J. Balthrop |
|
|
|
President and Chief Executive Officer
(Principal Executive Officer) |
|
|
S-1