þ | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended | |
June 30, 2018 | or | |
o | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ____ to ____. |
DELAWARE | 72-2747608 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
12212 TECHNOLOGY BLVD., AUSTIN, TEXAS | 78727 | |
(Address of principal executive offices) | (Zip 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. | |||
þ Yes | ¨ No | ||
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). | |||
þ Yes | ¨ No |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. | |||||
Large accelerated filer | þ | Accelerated filer | ¨ | ||
Non-accelerated filer | ¨ | (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | |
Emerging growth company | ¨ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | |||
¨ | |||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). | |||
¨ Yes | þ No |
Page | |
LUMINEX CORPORATION | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(in thousands, except share amounts) | |||||||
June 30, 2018 | December 31, 2017 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 138,996 | $ | 127,112 | |||
Accounts receivable, net | 46,778 | 40,648 | |||||
Inventories, net | 52,085 | 49,478 | |||||
Prepaids and other | 7,984 | 7,403 | |||||
Total current assets | 245,843 | 224,641 | |||||
Property and equipment, net | 59,642 | 58,258 | |||||
Intangible assets, net | 71,653 | 75,985 | |||||
Deferred income taxes | 32,538 | 37,552 | |||||
Goodwill | 85,481 | 85,481 | |||||
Other | 15,071 | 8,599 | |||||
Total assets | $ | 510,228 | $ | 490,516 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 12,599 | $ | 14,537 | |||
Accrued liabilities | 18,236 | 25,990 | |||||
Deferred revenue | 5,546 | 4,721 | |||||
Total current liabilities | 36,381 | 45,248 | |||||
Deferred revenue | 1,326 | 1,498 | |||||
Other | 6,992 | 5,863 | |||||
Total liabilities | 44,699 | 52,609 | |||||
Stockholders’ equity: | |||||||
Common stock, $.001 par value, 200,000,000 shares authorized; issued and outstanding: 43,830,115 shares at June 30, 2018; 43,404,493 shares at December 31, 2017 | 44 | 43 | |||||
Preferred stock, $.001 par value, 5,000,000 shares authorized; no shares issued and outstanding | — | — | |||||
Additional paid-in capital | 357,076 | 350,834 | |||||
Accumulated other comprehensive loss | (944 | ) | (625 | ) | |||
Retained earnings | 109,353 | 87,655 | |||||
Total stockholders’ equity | 465,529 | 437,907 | |||||
Total liabilities and stockholders’ equity | $ | 510,228 | $ | 490,516 | |||
See the accompanying notes which are an integral part of these | |||||||
Condensed Consolidated Financial Statements. |
LUMINEX CORPORATION | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(unaudited) | (unaudited) | ||||||||||||||
Revenue | $ | 79,578 | $ | 76,457 | $ | 162,240 | $ | 154,236 | |||||||
Cost of revenue | 30,272 | 26,396 | 59,346 | 51,389 | |||||||||||
Gross profit | 49,306 | 50,061 | 102,894 | 102,847 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 11,672 | 12,260 | 21,998 | 24,680 | |||||||||||
Selling, general and administrative | 27,610 | 28,153 | 53,440 | 52,150 | |||||||||||
Amortization of acquired intangible assets | 2,166 | 2,166 | 4,332 | 4,523 | |||||||||||
Total operating expenses | 41,448 | 42,579 | 79,770 | 81,353 | |||||||||||
Income from operations | 7,858 | 7,482 | 23,124 | 21,494 | |||||||||||
Other income (expense), net | 8 | 1 | 457 | (5 | ) | ||||||||||
Income before income taxes | 7,866 | 7,483 | 23,581 | 21,489 | |||||||||||
Income tax expense | (2,197 | ) | (1,939 | ) | (4,515 | ) | (6,714 | ) | |||||||
Net income | $ | 5,669 | $ | 5,544 | $ | 19,066 | $ | 14,775 | |||||||
Net income attributable to common stock holders | |||||||||||||||
Basic | $ | 5,571 | $ | 5,441 | $ | 18,741 | $ | 14,499 | |||||||
Diluted | 5,571 | 5,441 | 18,742 | 14,499 | |||||||||||
Net income per share attributable to common stock holders | |||||||||||||||
Basic | $ | 0.13 | $ | 0.13 | $ | 0.43 | $ | 0.34 | |||||||
Diluted | $ | 0.13 | $ | 0.13 | $ | 0.43 | $ | 0.34 | |||||||
Weighted-average shares used in computing net income per share | |||||||||||||||
Basic | 43,734 | 43,160 | 43,599 | 43,030 | |||||||||||
Diluted | 44,246 | 43,259 | 43,871 | 43,128 | |||||||||||
Dividends declared per share | $ | 0.06 | $ | 0.06 | $ | 0.12 | $ | 0.12 | |||||||
Other comprehensive income: | |||||||||||||||
Foreign currency translation adjustments | (711 | ) | 339 | (319 | ) | 602 | |||||||||
Other comprehensive income (loss) | (711 | ) | 339 | (319 | ) | 602 | |||||||||
Comprehensive income | $ | 4,958 | $ | 5,883 | $ | 18,747 | $ | 15,377 | |||||||
See the accompanying notes which are an integral part of these | |||||||||||||||
Condensed Consolidated Financial Statements. |
LUMINEX CORPORATION | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(in thousands) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(unaudited) | (unaudited) | ||||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income | $ | 5,669 | $ | 5,544 | $ | 19,066 | $ | 14,775 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||
Depreciation and amortization | 6,130 | 5,651 | 12,023 | 11,270 | |||||||||||
Stock-based compensation | 3,547 | 4,026 | 4,808 | 4,748 | |||||||||||
Deferred income tax expense | 2,308 | 4,332 | 3,761 | 7,267 | |||||||||||
Loss on sale or disposal of assets | 111 | — | 111 | — | |||||||||||
Other | (1,158 | ) | 478 | (1,127 | ) | 922 | |||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Accounts receivable, net | (503 | ) | 3,911 | 5,053 | (758 | ) | |||||||||
Inventories, net | 133 | (3,417 | ) | (2,602 | ) | (6,304 | ) | ||||||||
Other assets | (353 | ) | (1,892 | ) | (556 | ) | (1,197 | ) | |||||||
Accounts payable | (1,981 | ) | 1,337 | (1,661 | ) | (2,369 | ) | ||||||||
Accrued liabilities | 3,366 | 2,661 | (8,073 | ) | (7,411 | ) | |||||||||
Deferred revenue | 231 | (547 | ) | 653 | (350 | ) | |||||||||
Net cash provided by operating activities | 17,500 | 22,084 | 31,456 | 20,593 | |||||||||||
Cash flows from investing activities: | |||||||||||||||
Purchase of property and equipment | (4,968 | ) | (2,970 | ) | (9,036 | ) | (6,403 | ) | |||||||
Issuance of note receivable | (500 | ) | — | (1,000 | ) | — | |||||||||
Purchase of investment | (1,782 | ) | (500 | ) | (1,782 | ) | (1,000 | ) | |||||||
Acquired technology rights | — | — | (4,000 | ) | — | ||||||||||
Net cash used in investing activities | (7,250 | ) | (3,470 | ) | (15,818 | ) | (7,403 | ) | |||||||
Cash flows from financing activities: | |||||||||||||||
Proceeds from issuance of common stock | 2,290 | 1,495 | 3,416 | 2,229 | |||||||||||
Shares surrendered for tax withholding | (13 | ) | (40 | ) | (2,016 | ) | (2,096 | ) | |||||||
Dividends paid | (2,678 | ) | (2,636 | ) | (5,302 | ) | (2,636 | ) | |||||||
Net cash used in financing activities | (401 | ) | (1,181 | ) | (3,902 | ) | (2,503 | ) | |||||||
Effect of foreign currency exchange rate on cash | 492 | (194 | ) | 148 | (434 | ) | |||||||||
Change in cash and cash equivalents | 10,341 | 17,239 | 11,884 | 10,253 | |||||||||||
Cash and cash equivalents, beginning of period | 128,655 | 86,466 | 127,112 | 93,452 | |||||||||||
Cash and cash equivalents, end of period | $ | 138,996 | $ | 103,705 | $ | 138,996 | $ | 103,705 | |||||||
See the accompanying notes which are an integral part of these | |||||||||||||||
Condensed Consolidated Financial Statements. |
LUMINEX CORPORATION | ||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||
(in thousands, except share data) | ||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||
Common Stock | ||||||||||||||||||||||
Number of Shares | Amount | Additional Paid-In Capital | Accumulated Other Comprehensive (Loss) | Retained Earnings | Total Stockholders' Equity | |||||||||||||||||
Balance at December 31, 2017 | 43,404,493 | $ | 43 | $ | 350,834 | $ | (625 | ) | $ | 87,655 | $ | 437,907 | ||||||||||
Exercise of stock options | 40,142 | — | 697 | — | — | 697 | ||||||||||||||||
Issuances of restricted stock, net of shares withheld for taxes | 222,534 | 1 | (2,003 | ) | — | — | (2,002 | ) | ||||||||||||||
Stock compensation | — | — | 1,235 | — | — | 1,235 | ||||||||||||||||
Issuance of common shares under ESPP | — | — | — | — | — | — | ||||||||||||||||
Net income | — | — | — | — | 13,397 | 13,397 | ||||||||||||||||
Foreign currency translation adjustments | — | — | — | 392 | — | 392 | ||||||||||||||||
Dividends | — | — | 47 | — | (2,690 | ) | (2,643 | ) | ||||||||||||||
Other | — | — | — | — | 8,023 | 8,023 | ||||||||||||||||
Balance at March 31, 2018 | 43,667,169 | $ | 44 | $ | 350,810 | $ | (233 | ) | $ | 106,385 | $ | 457,006 | ||||||||||
Exercise of stock options | 102,976 | — | 1,874 | — | — | 1,874 | ||||||||||||||||
Issuances of restricted stock, net of shares withheld for taxes | 12,670 | — | (13 | ) | — | — | (13 | ) | ||||||||||||||
Stock compensation | — | — | 3,563 | — | — | 3,563 | ||||||||||||||||
Issuance of common shares under ESPP | 47,300 | — | 854 | — | — | 854 | ||||||||||||||||
Net income | — | — | — | — | 5,669 | 5,669 | ||||||||||||||||
Foreign currency translation adjustments | — | — | — | (711 | ) | — | (711 | ) | ||||||||||||||
Dividends | — | — | (12 | ) | — | (2,701 | ) | (2,713 | ) | |||||||||||||
Other | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
Balance at June 30, 2018 | 43,830,115 | $ | 44 | $ | 357,076 | $ | (944 | ) | $ | 109,353 | $ | 465,529 | ||||||||||
See the accompanying notes which are an integral part of these | ||||||||||||||||||||||
Condensed Consolidated Financial Statements. |
Amortized Cost | Gains in Accumulated Other Comprehensive Income | Losses in Accumulated Other Comprehensive Income | Estimated Fair Value | ||||||||||||
Current: | |||||||||||||||
Cash equivalents | $ | 702 | $ | — | $ | — | $ | 702 | |||||||
Total current securities | 702 | — | — | 702 | |||||||||||
Noncurrent: | |||||||||||||||
Total noncurrent securities | — | — | — | — | |||||||||||
Total available-for-sale securities | $ | 702 | $ | — | $ | — | $ | 702 |
Amortized Cost | Gains in Accumulated Other Comprehensive Income | Losses in Accumulated Other Comprehensive Income | Estimated Fair Value | ||||||||||||
Current: | |||||||||||||||
Cash equivalents | $ | 701 | $ | — | $ | — | $ | 701 | |||||||
Total current securities | 701 | — | — | 701 | |||||||||||
Noncurrent: | |||||||||||||||
Total noncurrent securities | — | — | — | — | |||||||||||
Total available-for-sale securities | $ | 701 | $ | — | $ | — | $ | 701 |
June 30, 2018 | December 31, 2017 | ||||||
Purchased technology rights (net of accumulated amortization of $7,305 and $7,012 as of June 30, 2018 and December 31, 2017, respectively) | $ | 6,856 | $ | 3,149 | |||
Investments | 4,782 | 3,000 | |||||
Notes receivable (1) | 2,400 | 1,400 | |||||
Other | 1,033 | 1,050 | |||||
$ | 15,071 | $ | 8,599 |
June 30, 2018 | December 31, 2017 | ||||||
Parts and supplies | $ | 31,458 | $ | 29,266 | |||
Work-in-progress | 9,895 | 8,712 | |||||
Finished goods | 10,732 | 11,500 | |||||
$ | 52,085 | $ | 49,478 |
Level 1 – | Quoted prices in active markets for identical assets or liabilities. |
Level 2 – | Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
Level 3 – | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
Fair Value Measurements as of June 30, 2018 Using | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | |||||||||||||||
Money Market funds | $ | 702 | $ | — | $ | — | $ | 702 |
Fair Value Measurements as of December 31, 2017 Using | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | |||||||||||||||
Money Market funds | $ | 701 | $ | — | $ | — | $ | 701 |
June 30, 2018 | December 31, 2017 | ||||||
Balance at beginning of year | $ | 85,481 | $ | 85,481 | |||
Balance at end of period | $ | 85,481 | $ | 85,481 |
Finite-lived | Indefinite-lived | ||||||||||||||||||
Technology, trade secrets and know-how | Customer lists and contracts | Other identifiable intangible assets | IP R&D | Total | |||||||||||||||
2017 | |||||||||||||||||||
Balance as of December 31, 2016 | $ | 81,385 | $ | 19,097 | $ | 5,664 | $ | 12,982 | $ | 119,128 | |||||||||
Balance as of December 31, 2017 | 81,385 | 19,097 | 5,664 | 12,982 | 119,128 | ||||||||||||||
Less: accumulated amortization: | |||||||||||||||||||
Accumulated amortization balance as of December 31, 2016 | (28,137 | ) | (5,038 | ) | (1,112 | ) | — | (34,287 | ) | ||||||||||
Amortization expense | (6,277 | ) | (1,999 | ) | (580 | ) | — | (8,856 | ) | ||||||||||
Accumulated amortization balance as of December 31, 2017 | (34,414 | ) | (7,037 | ) | (1,692 | ) | — | (43,143 | ) | ||||||||||
Net balance as of December 31, 2017 | $ | 46,971 | $ | 12,060 | $ | 3,972 | $ | 12,982 | $ | 75,985 | |||||||||
Weighted average life (in years) | 11 | 10 | 10 | ||||||||||||||||
2018 | |||||||||||||||||||
Balance as of December 31, 2017 | $ | 81,385 | $ | 19,097 | $ | 5,664 | $ | 12,982 | $ | 119,128 | |||||||||
Balance as of June 30, 2018 | 81,385 | 19,097 | 5,664 | 12,982 | 119,128 | ||||||||||||||
Less: accumulated amortization: | |||||||||||||||||||
Accumulated amortization balance as of December 31, 2017 | (34,414 | ) | (7,037 | ) | (1,692 | ) | — | (43,143 | ) | ||||||||||
Amortization expense | (3,044 | ) | (999 | ) | (289 | ) | — | (4,332 | ) | ||||||||||
Accumulated amortization balance as of June 30, 2018 | (37,458 | ) | (8,036 | ) | (1,981 | ) | — | (47,475 | ) | ||||||||||
Net balance as of June 30, 2018 | $ | 43,927 | $ | 11,061 | $ | 3,683 | $ | 12,982 | $ | 71,653 | |||||||||
Weighted average life (in years) | 11 | 10 | 10 |
2018 (six months) | $ | 4,333 | |
2019 | 8,666 | ||
2020 | 8,666 | ||
2021 | 8,307 | ||
2022 | 7,060 | ||
Thereafter | 21,639 | ||
$ | 58,671 | ||
IP R&D | 12,982 | ||
$ | 71,653 |
Foreign Currency Items | Available-for-Sale Investments | Accumulated Other Comprehensive Income (Loss) Items | |||||||||
Balance as of December 31, 2017 | $ | (625 | ) | $ | — | $ | (625 | ) | |||
Other comprehensive income before reclassifications | (319 | ) | — | (319 | ) | ||||||
Net current-period other comprehensive loss | (319 | ) | — | (319 | ) | ||||||
Balance as of June 30, 2018 | $ | (944 | ) | $ | — | $ | (944 | ) |
Three Months Ended June 30, 2018 | Six Months Ended June 30, 2018 | ||||||||||||||||||||||
Before Tax | Tax Benefit | Net of Tax | Before Tax | Tax Benefit | Net of Tax | ||||||||||||||||||
Foreign currency translation adjustments | $ | (711 | ) | $ | — | $ | (711 | ) | $ | (319 | ) | $ | — | $ | (319 | ) | |||||||
Unrealized gains on available-for-sale investments | — | — | — | — | — | — | |||||||||||||||||
Other comprehensive loss | $ | (711 | ) | $ | — | $ | (711 | ) | $ | (319 | ) | $ | — | $ | (319 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Basic: | |||||||||||||||
Net income | $ | 5,669 | $ | 5,544 | $ | 19,066 | $ | 14,775 | |||||||
Less: allocation to participating securities | (98 | ) | (103 | ) | (325 | ) | (276 | ) | |||||||
Net income attributable to common stockholders | $ | 5,571 | $ | 5,441 | $ | 18,741 | $ | 14,499 | |||||||
Weighted average common stock outstanding | 43,734 | 43,160 | 43,599 | 43,030 | |||||||||||
Net income per share attributable to common stockholders | $ | 0.13 | $ | 0.13 | $ | 0.43 | $ | 0.34 | |||||||
Diluted: | |||||||||||||||
Net income | $ | 5,669 | $ | 5,544 | $ | 19,066 | $ | 14,775 | |||||||
Less: allocation to participating securities | (98 | ) | (103 | ) | (324 | ) | (276 | ) | |||||||
Net income attributable to common stockholders | $ | 5,571 | $ | 5,441 | $ | 18,742 | $ | 14,499 | |||||||
Weighted average common stock outstanding | 43,734 | 43,160 | 43,599 | 43,030 | |||||||||||
Effect of dilutive securities: stock options and awards | 512 | 99 | 272 | 98 | |||||||||||
Weighted-average shares used in computing net income per share | 44,246 | 43,259 | 43,871 | 43,128 | |||||||||||
Net income per share attributable to common stockholders | $ | 0.13 | $ | 0.13 | $ | 0.43 | $ | 0.34 |
Stock Options (shares in thousands) | Shares | Weighted Average Exercise Price | ||||
Outstanding as of December 31, 2017 | 3,086 | $ | 18.10 | |||
Granted | 761 | 22.06 | ||||
Exercised | (143 | ) | 17.96 | |||
Cancelled or expired | (372 | ) | 18.48 | |||
Outstanding as of June 30, 2018 | 3,332 | $ | 19.01 |
Restricted Stock Awards (shares in thousands) | Shares | Weighted Average Grant Price | ||||
Non-vested as of December 31, 2017 | 715 | $ | 18.46 | |||
Granted | 383 | 22.14 | ||||
Vested | (284 | ) | 18.47 | |||
Cancelled or expired | (39 | ) | 19.25 | |||
Non-vested as of June 30, 2018 | 775 | $ | 20.24 | |||
Restricted Stock Units (in thousands) | Shares | |||||
Non-vested as of December 31, 2017 | 423 | |||||
Granted | 92 | |||||
Vested | (49 | ) | ||||
Cancelled or expired | (3 | ) | ||||
Non-vested as of June 30, 2018 | 463 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Cost of revenue | $ | 406 | $ | 402 | $ | 816 | $ | 737 | |||||||
Research and development | 537 | 759 | 200 | 597 | |||||||||||
Selling, general and administrative | 2,604 | 2,865 | 3,792 | 3,414 | |||||||||||
Stock-based compensation costs reflected in net income | $ | 3,547 | $ | 4,026 | $ | 4,808 | $ | 4,748 |
June 30, 2018 | December 31, 2017 | ||||||
Compensation and employee benefits | $ | 11,149 | $ | 18,218 | |||
Dividends payable | 2,701 | 2,671 | |||||
Income and other taxes | 215 | 1,070 | |||||
Warranty costs | 1,334 | 1,308 | |||||
Other | 2,837 | 2,723 | |||||
$ | 18,236 | $ | 25,990 |
Accrued warranty costs as of December 31, 2017 | $ | 1,308 | |
Warranty adjustments/settlements | (991 | ) | |
Accrual for warranty costs | 1,017 | ||
Accrued warranty costs as of June 30, 2018 | $ | 1,334 |
Balance at Beginning of Period | Balance at End of Period | ||||||
Contract assets: | |||||||
Unbilled receivables - Royalties | $ | 10,643 | $ | 10,962 | |||
Contract liabilities - short-term: | |||||||
Deferred revenue - Service | $ | 4,438 | $ | 5,048 | |||
Deferred revenue - Licenses | 246 | 241 | |||||
Deferred revenue - Other | 37 | 257 | |||||
Total Contract liabilities - short-term | $ | 4,721 | $ | 5,546 | |||
Contract liabilities - long-term: | |||||||
Deferred revenue - Service | $ | 315 | $ | 262 | |||
Deferred revenue - Licenses | 1,099 | 981 | |||||
Deferred revenue - Other | 83 | 83 | |||||
Total Contract liabilities - long-term | $ | 1,497 | $ | 1,326 |
Six Months Ended June 31, | |||
Revenue recognized in the period from: | 2018 | ||
Amounts included as contract liabilities at the beginning of the period | $ | 3,412 | |
Performance obligations satisfied in previous periods | - |
Three Months Ended June 30, 2018 | Six Months Ended June 30, 2018 | |||||||||||||||||||||||
Income Statement | As Reported in this Quarterly Report | Amounts Before Adoption of the Standard | Net Effect of Adoption of the Standard | As Reported in this Quarterly Report | Amounts Before Adoption of the Standard | Net Effect of Adoption of the Standard | ||||||||||||||||||
System sales | $ | 11,820 | $ | 11,215 | $ | 605 | $ | 19,751 | $ | 18,723 | $ | 1,028 | ||||||||||||
Consumable sales | 10,967 | 10,967 | — | 22,839 | 22,839 | — | ||||||||||||||||||
Royalty revenue | 11,567 | 11,677 | (110 | ) | 23,806 | 23,390 | 416 | |||||||||||||||||
Assay revenue | 40,174 | 40,889 | (715 | ) | 86,015 | 87,138 | (1,123 | ) | ||||||||||||||||
Other revenue | 5,050 | 5,050 | — | 9,829 | 9,829 | — | ||||||||||||||||||
Revenue | 79,578 | 79,798 | (220 | ) | 162,240 | — | 161,919 | 321 | ||||||||||||||||
Gross profit | 49,306 | 49,526 | (220 | ) | 102,894 | 103 | 102,573 | 321 | ||||||||||||||||
Income from operations | 7,858 | 8,078 | (220 | ) | 23,124 | 22,803 | 321 | |||||||||||||||||
Income tax benefit (expense) | (2,197 | ) | (2,250 | ) | 53 | (4,515 | ) | (4,438 | ) | (77 | ) | |||||||||||||
Net Income | 5,669 | 5,836 | (167 | ) | 19,066 | 19 | 18,822 | 244 |
As of June 30, 2018 | ||||||||
Balance Sheet | As Reported in this Quarterly Report | Balances Before Adoption of ASC 606 | Effect of Adoption of the Standard | |||||
ASSETS | ||||||||
Accounts receivable, net | 46,778 | 35,814 | 10,964 | |||||
Deferred income taxes | 32,538 | 35,169 | (2,631 | ) | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Retained earnings | 109,353 | 101,020 | 8,333 |
• | concentration of our revenue in a limited number of direct customers and strategic partners, some of which may experience decreased demand for their products utilizing or incorporating our technology, budget or finance constraints in the current economic environment, or periodic variability in their purchasing patterns or practices as a result of material resource planning challenges; |
• | risks and uncertainties relating to market demand and acceptance of our products and technology, including ARIES®, MultiCode®, NxTAG®, xMAP® and VERIGENE®; |
• | the impact on our growth and future results of operations as a result of the loss of the LabCorp women's health business in June 2018 and the potential future loss of other products traditionally sold to LabCorp, other than our Cystic Fibrosis (CF) products; |
• | our ability to scale manufacturing operations and manage operating expenses, gross margins and inventory levels; |
• | our ability to obtain and enforce intellectual property protections on our products and technologies; |
• | our ability to successfully launch new products in a timely manner; |
• | our dependence on strategic partners for development, commercialization and distribution of products; |
• | risks and uncertainties associated with implementing our acquisition strategy, our ability to identify acquisition targets including our ability to obtain financing on acceptable terms, our ability to integrate acquired companies or selected assets into our consolidated business operations, and the ability to fully realize the benefits of our acquisitions; |
• | the timing of and process for regulatory approvals; |
• | competition and competitive technologies utilized by our competitors; |
• | fluctuations in quarterly results due to a lengthy and unpredictable sales cycle, fluctuations in bulk purchases of consumables, fluctuations in product mix, the seasonal nature of some of our assays, and the variability of operating expense timing; |
• | our ability to comply with applicable laws, regulations, policies and procedures; |
• | the impact of the ongoing uncertainty in global finance markets and changes in government and government agency funding, including effects on the capital spending policies of our partners and end users and their ability to finance purchases of our products; |
• | changes in interpretation, assumptions and expectations regarding the Tax Act, including additional guidance that may be issued by federal and state taxing authorities; |
• | changes in principal members of our management staff; |
• | potential shortages, or increases in costs, of components or other disruptions to our manufacturing operations; |
• | our increasing dependency on information technology to enable us to improve the effectiveness of our operations and to monitor financial accuracy and efficiency; |
• | the implementation, including any modifications, of our strategic operating plans; |
• | the uncertainty regarding the outcome or expense of any litigation brought against or initiated by us; and |
• | risks relating to our foreign operations, including fluctuations in exchange rates, tariffs, customs and other barriers to importing/exporting materials and products in a cost-effective and timely manner; difficulties in accounts receivable collections; our ability to monitor and comply with foreign and international laws and treaties; and our ability to comply with changes in international taxation policies. |
• | Placements made by customers within our Licensed Technologies Group (LTG) in which customers either: |
• | license our xMAP technology and develop products that incorporate our xMAP technology into products that they then sell to end users, or |
• | purchase our proprietary xMAP laboratory instrumentation and our proprietary xMAP microspheres and sell xMAP-based assay products and/or xMAP-based testing services, which run on the xMAP instrumentation, and pay a royalty to us; and |
• | A direct sales force that focuses on the sale of molecular diagnostic assays that run on our systems. |
FDA | CE-IVD MARK | |||||||
Clearance | Commercial Launch | Declaration | Commercial Launch | |||||
ARIES® HSV 1&2 Assay | þ | 2015 - Q4 | þ | 2016 - Q1 | ||||
ARIES® Flu A/B & RSV Assay | þ | 2016 - Q2 | þ | 2016 - Q2 | ||||
ARIES® Group B Streptococcus (GBS) Assay | þ | 2017 - Q1 | þ | 2016 - Q4 | ||||
ARIES® Bordetella Assay | þ | 2017 - Q2 | þ | 2017 - Q3 | ||||
ARIES® Norovirus Assay | þ | 2017 - Q2 | ||||||
ARIES® C. Difficile Assay | þ | 2017 - Q3 | þ | 2017 - Q3 | ||||
ARIES® Group A Strep Assay | þ | 2017 - Q4 | þ | 2017 - Q4 | ||||
NxTAG® Respiratory Pathogen Panel (RPP) | þ | 2016 - Q1 | þ | 2015 - Q4 | ||||
VERIGENE® Clostridium Difficile Test (CDF) | þ | 2012 - Q4 | þ | 2013 - Q2 | ||||
VERIGENE® Enteric Pathogens Test (EP) | þ | 2014 - Q4 | þ | 2015 - Q4 | ||||
VERIGENE® Respiratory Pathogens Flex Test (RP Flex) | þ | 2015 - Q4 | þ | 2015 - Q2 | ||||
VERIGENE® Gram-Negative Blood Culture Test (BC-GN) | þ | 2014 - Q2 | þ | 2013 - Q1 | ||||
VERIGENE® Gram-Positive Blood Culture Test (BC-GP) | þ | 2012 - Q4 | þ | 2012 - Q1 | ||||
xTAG® CYP2C19 Kit v3 | þ | 2013 - Q4 | þ | 2013 - Q4 | ||||
xTAG® CYP2D6 Kit v3 | þ | 2011 - Q2 | þ | 2013 - Q2 | ||||
xTAG® Cystic Fibrosis (CFTR) 39 Kit v2 | þ | 2009 - Q4 | þ | 2012 - Q1 | ||||
xTAG® Cystic Fibrosis (CFTR) 60 Kit v2 | þ | 2010 - Q1 | ||||||
xTAG® Cystic Fibrosis (CFTR) 71 Kit v2 | þ | 2009 - Q3 | ||||||
xTAG® Gastrointestinal Pathogen Panel (GPP) | þ | 2013 - Q1 | þ | 2011 - Q2 | ||||
xTAG® Respiratory Viral Panel (RVP) | þ | 2008 - Q1 | þ | 2007 - Q4 | ||||
xTAG® Respiratory Viral Panel (RVP) FAST v2 | þ | 2011 - Q4 |
• | Consolidated revenue was $79.6 million for the quarter ended June 30, 2018, representing a 4% increase over revenue for the second quarter of 2017. |
• | Assay revenue was $40.2 million for the quarter ended June 30, 2018, representing a 6% increase over assay revenue for the second quarter of 2017. |
• | Sample-to-answer product revenue growth increased by 35% for the quarter ended June 30, 2018 from the second quarter of 2017. |
• | Royalty revenue was $11.6 million for the quarter ended June 30, 2018, representing a 7% increase over royalty revenue for the second quarter of 2017. |
• | Initiated clinical trials for the VERIGENE® II Gastrointestinal Assay |
• | delivering on our revenue growth goals; |
• | accelerating development and commercialization of the assays on our sample-to-answer diagnostic systems; |
• | increasing the growth of our LTG revenue through enrichment of our existing partner relationships and the addition of new partners; |
• | completing development of and commercializing the next generation sample-to-answer system, VERIGENE II; |
• | improvement of ARIES® and VERIGENE gross margins; |
• | placements of our VERIGENE and ARIES® Systems, our sample-to-answer platforms and assays; |
• | maintenance and improvement of our existing products and the timely development, completion and successful commercial launch of our pipeline products; |
• | adoption and use of our platforms and consumables by our customers for their testing services; |
• | expansion and enhancement of our installed base of systems and our market position within our identified target market segments; and |
• | monitoring and mitigating the effect of the ongoing uncertainty in global finance markets and changes in government funding on planned purchases by end users. |
Three Months Ended June 30, | ||||||||||||||
2018 | 2017 | Variance | Variance (%) | |||||||||||
Revenue | $ | 79,578 | $ | 76,457 | $ | 3,121 | 4 | % | ||||||
Gross profit | $ | 49,306 | $ | 50,061 | (755 | ) | (2 | )% | ||||||
Gross margin percentage | 62 | % | 65 | % | (3 | )% | N/A | |||||||
Operating expenses | $ | 41,448 | $ | 42,579 | (1,131 | ) | (3 | )% | ||||||
Income from operations | $ | 7,858 | $ | 7,482 | 376 | 5 | % |
Three Months Ended June 30, | ||||||||||||||
2018 | 2017 | Variance | Variance (%) | |||||||||||
System sales | $ | 11,820 | $ | 9,905 | $ | 1,915 | 19 | % | ||||||
Consumable sales | 10,967 | 13,310 | (2,343 | ) | (18 | )% | ||||||||
Royalty revenue | 11,567 | 10,813 | 754 | 7 | % | |||||||||
Assay revenue | 40,174 | 37,753 | 2,421 | 6 | % | |||||||||
Service revenue | 3,041 | 2,795 | 246 | 9 | % | |||||||||
Other revenue | 2,009 | 1,881 | 128 | 7 | % | |||||||||
$ | 79,578 | $ | 76,457 | $ | 3,121 | 4 | % |
Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | Variance | Variance (%) | |||||||||||
Revenue | $ | 162,240 | $ | 154,236 | $ | 8,004 | 5 | % | ||||||
Gross profit | $ | 102,894 | $ | 102,847 | 47 | — | % | |||||||
Gross margin percentage | 63 | % | 67 | % | (4 | )% | N/A | |||||||
Operating expenses | $ | 79,770 | $ | 81,353 | (1,583 | ) | (2 | )% | ||||||
Income from operations | $ | 23,124 | $ | 21,494 | 1,630 | 8 | % |
Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | Variance | Variance (%) | |||||||||||
System sales | $ | 19,751 | $ | 18,406 | $ | 1,345 | 7 | % | ||||||
Consumable sales | 22,839 | 28,695 | (5,856 | ) | (20 | )% | ||||||||
Royalty revenue | 23,806 | 22,374 | 1,432 | 6 | % | |||||||||
Assay revenue | 86,015 | 75,160 | 10,855 | 14 | % | |||||||||
Service revenue | 5,919 | 5,700 | 219 | 4 | % | |||||||||
Other revenue | 3,910 | 3,901 | 9 | — | % | |||||||||
$ | 162,240 | $ | 154,236 | $ | 8,004 | 5 | % |
June 30, 2018 | December 31, 2017 | ||||||
(in thousands) | |||||||
Cash and cash equivalents | $ | 138,996 | $ | 127,112 |
ISSUER PURCHASES OF EQUITY SECURITIES | |||||||||||||
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | |||||||||
4/1/18 - 4/30/18 | 120 | $ | 22.18 | — | $ | — | |||||||
5/1/18 - 5/31/18 | — | — | — | — | |||||||||
6/1/18 - 6/30/18 | 342 | 29.53 | — | — | |||||||||
Total Second Quarter | 462 | $ | 27.62 | — | $ | — | |||||||
(1) Total 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. |
Exhibit Number | Description of Documents | |
101 | The following materials from Luminex Corporation's Quarterly Report on Form 10-Q for the three and six months ended June 30, 2018, formatted in XBRL: (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Comprehensive Income; (iii) Condensed Consolidated Statement of Cash Flows; and (iv) Notes to Condensed Consolidated Financial Statements. | |
# | Management contract or compensatory plan or arrangement. |
Shares | Vest Date(s) | |
Units | Vest Date(s) | |
Document and Entity Information - shares |
6 Months Ended | |
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Jun. 30, 2018 |
Aug. 06, 2018 |
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Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | LMNX | |
Entity Registrant Name | Luminex Corp | |
Entity Central Index Key | 0001033905 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 44,608,397 |
BALANCE SHEETS (Parenthetical) - $ / shares |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common Stock, Shares, Issued | 42,708,733 | 42,314,581 |
Common Stock, Shares, Outstanding | 42,708,733 | 42,314,581 |
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
ACCOUNTING POLICIES |
6 Months Ended |
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Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | 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 (U.S. GAAP) for interim financial information and the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP 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, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (the 2017 10-K). |
INVENTORIES |
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INVENTORIES | Inventories are stated at the lower of cost or net realizable value, with cost determined according to the standard cost method, which approximates the first-in, first-out method. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The Company routinely assesses its on-hand inventory for timely identification and measurement of obsolete, slow-moving or otherwise impaired inventory. Net inventories consisted of the following (in thousands):
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FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | The Fair Value Measurements and Disclosures Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) defines fair value, establishes a framework for measuring fair value under U.S. GAAP and enhances disclosures about fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The ASC describes a fair value hierarchy based on the following three levels of inputs that may be used to measure fair value, of which the first two are considered observable and the last unobservable:
The Company determines the fair value of its investment portfolio assets by obtaining non-binding market prices from its third-party portfolio managers on the last day of the quarter, whose sources may use quoted prices in active markets for identical assets (Level 1 inputs) or inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs) in determining fair value. There were no transfers between Level 1, Level 2, or Level 3 measurements for the six-month period ended June 30, 2018. The Company's financial assets and liabilities were all Level 1 money market fund assets and were measured at fair value on a recurring basis. These Level 1 assets were $0.7 million as of June 30, 2018 and December 31, 2017.
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INTANGIBLE ASSETS |
6 Months Ended |
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Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Research, Development, and Computer Software Disclosure [Text Block] | The in-process research and development (IP R&D) project is the development of the next generation VERIGENE® system, VERIGENE II, on which we began clinical trials in May 2018. We believe the VERIGENE II will launch commercially in 2019. The estimated cost to complete this project is less than $1.0 million. |
ACCUMULATED OTHER COMPREHENSIVE INCOME |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income, Policy [Policy Text Block] | Other comprehensive income (loss) represents a measure of all changes in equity that result from recognized transactions and other economic events other than those resulting from investments by and distributions to shareholders. Other comprehensive income (loss) for the Company includes foreign currency translation adjustments. The following table presents the changes in each component of accumulated other comprehensive loss, net of tax (in thousands):
The following table presents the tax expense allocated to each component of other comprehensive income (loss) (in thousands):
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EARNINGS PER SHARE |
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EARNINGS PER SHARE | A reconciliation of the denominators used in computing per share net income (EPS) is as follows (in thousands, except per share amounts):
Basic 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. Diluted net income per share is computed by dividing the net income for the period by the weighted average number of common and common equivalent shares outstanding during the period. Stock options to acquire approximately 0.8 million and 2.5 million shares for the three months ended June 30, 2018 and 2017, and 0.6 million and 2.0 million shares for the six months ended June 30, 2018 and 2017, respectively, were excluded from the computations of diluted EPS because the effect of including those stock options would have been anti-dilutive. We apply the two-class method of computing EPS, which requires the calculation of separate EPS amounts for our non-vested, time-based restricted stock awards with non-forfeitable dividends and for our common stock. Our non-vested, time-based restricted stock awards with non-forfeitable dividends are considered securities which participate in undistributed earnings with common stock. Under the two-class computation method, net losses are not allocated to participating securities unless the holder of the security has a contractual obligation to share in the losses. Our non-vested, time-based restricted stock awards with non-forfeitable dividends do not have such an obligation so they are not allocated losses. |
STOCKHOLDERS' EQUITY |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity and Share-based Payments [Text Block] | Dividends On May 18, 2018, the Board of Directors declared a cash dividend on the Company’s common stock of $0.06 per share. The dividend declared was payable to stockholders of record as of June 22, 2018 and was paid on July 13, 2018. The Company’s intent is to pay a continuing dividend on a quarterly basis. Stock-Based Compensation The Company’s stock option activity for the six months ended June 30, 2018 was as follows:
The Company had $14.1 million of total unrecognized compensation costs related to stock options as of June 30, 2018. These costs are expected to be recognized over a weighted average period of 2.64 years. The Company’s restricted share activity for the six months ended June 30, 2018 was as follows:
As of June 30, 2018, there were $15.6 million and $3.2 million of total unrecognized compensation costs related to Restricted Stock Awards (RSAs) and Restricted Stock Units (RSUs), respectively. These costs are expected to be recognized over a weighted average period of 2.82 years for the RSAs and 2.40 years for the RSUs. The Company issues a small number of cash settled RSUs pursuant to the Company's equity incentive plan in certain foreign countries. These grants do not result in the issuance of common stock and are considered immaterial by the Company. The following are the stock-based compensation costs recognized in the Company’s condensed consolidated statements of comprehensive income (in thousands):
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INCOME TAXES |
6 Months Ended |
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Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | NOTE 11 — INCOME TAXES At the end of each interim reporting period, an estimate is made of the effective tax rate expected to be applicable for the full year. The estimated full year’s effective tax rate is used to determine the income tax rate for each applicable interim reporting period. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period of the enactment date. The effective tax rate for the six months ended June 30, 2018 was 19.2%, including amounts recorded for discrete events. This differs from the statutory rate of 21% primarily as a result of the worldwide mix of consolidated earnings and losses before taxes and changes to provisional amounts recorded for certain aspects of the Tax Cuts and Jobs Act (the Tax Act). The Company currently expects a 2018 full year effective tax rate of 25% to 30%, excluding amounts recorded for discrete events. The Company’s tax expense reflects the full federal, various state, and foreign blended statutory rates. The Company will be subject to the Tax Act provisions regarding U.S. federal taxation of foreign intangible income and has included in its estimate of income tax the effects of this tax. The effect of this estimate is still under evaluation as the Company gains a more thorough understanding of these provisions and changes may materially impact income tax expenses. The Company is utilizing its net operating losses (NOLs) and tax credits in the U.S., Canada and the Netherlands and, therefore, cash taxes to be paid are expected to be less than 10% of book tax expense. The Tax Act was enacted on December 22, 2017. The Tax Act includes, among other things, a U.S. federal corporate income tax rate decrease from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and creates new taxes on certain foreign sourced earnings. On December 22, 2017, Staff Accounting Bulletin No. 118 (SAB 118) was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. The Company is applying the guidance in SAB 118 when accounting for the enactment-date effect of the Tax Act. As of June 30, 2018, the Company has not completed its accounting for all of the tax effects of the Tax Act; however, the Company has made a reasonable estimate of the effects. During the three month period ended March 31, 2018 and for the six month period ended June 30, 2018, the Company recognized adjustments totaling $2.2 million to the provisional amounts recorded at December 31, 2017 and included these adjustments as a component of income tax expense from continuing operations. The Company will continue to make and refine its calculations as additional analysis is completed. These changes could be material to income tax expense. Deferred tax assets and liabilities. The Company remeasured certain deferred tax assets and liabilities based on the tax rates at which they are expected to reverse to in the future, which is generally 21%. The Company recorded a provisional amount of $2.7 million at December 31, 2017 related to the remeasurement of certain deferred tax balances. Upon further analyses of certain aspects of the Tax Act and refinement of its calculations during the three month period ended March 31, 2018 and included in the six months ended June 30, 2018, the Company increased its provisional amount by $164,000, which is included as a component of income tax expense from continuing operations. Due to the continued refinement of its calculations for the transition tax, certain aspects of deferred compensation, and the effect these calculations may have on the measurement of NOLs and other carryforwards, the Company will continue to analyze and refine its calculations related to the measurement of these balances. As of June 30, 2018, the Company's deferred tax assets and liabilities continue to have provisional amounts recorded for remeasurement. Foreign tax effects One-time transition tax. The one-time transition tax is based on the Company's total post-1986 earnings and profits (E&P), which the Company had deferred from U.S. income taxes under previous U.S. law. The Company originally recorded a provisional amount for its one-time transition tax liability of $6.7 million at December 31, 2017. Upon further analysis of certain aspects of the E&P of its Canadian subsidiary and refinement of its calculations for its foreign subsidiaries during the six months ended June 30, 2018, the Company decreased this provisional amount by $1.3 million, which was recorded during the three month period ended March 31, 2018 and is included as a component of income tax expense from continuing operations. As of June 30, 2018, the Company continues to have provisional amounts recorded for the one-time tax liability. As the Company continues to refine its E&P analysis, the Company will refine its calculations of the one-time transitions tax, which could affect the measurement of this liability. Deferred tax liabilities for withholding tax. The excess of financial reporting basis over tax basis of the Company’s foreign subsidiaries is considered permanently reinvested with the exception of certain earnings of the Canadian subsidiary. The Company originally recorded a provisional amount of deferred tax liability for withholding and state income taxes associated with the ultimate repatriation from Canada to the U.S. of these certain earnings of $3.2 million at December 31, 2017. Upon further analysis of its calculations of the Canadian withholding tax during the six months ended June 30, 2018, the Company decreased its provisional amount by $2.5 million, which was recorded during the three month period ended March 31, 2018 and is included as a component of income tax expense from continuing operations. The deferred tax liabilities for withholding tax are still provisional as of June 30, 2018 as the Company’s permanent reinvestment assertions for foreign earnings associated with certain aspects of the Tax Act are not yet finalized. In June 2018, the Company recorded an income tax expense of $1.3 million based primarily on the results of a Canadian income tax audit. The expense recorded is the net result of reductions to the scientific research and experimental development expenditure pool and investment tax credit carryforward balances and an increase to non-capital carryforward losses. The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, Australia, Canada, China, Hong Kong, Japan, the Netherlands, and various U.S. states. Due to net operating losses, the U.S., Canadian and Australian tax returns dating back to 2011 can still be reviewed by the taxing authorities. The Netherlands tax returns dating back to 2013 can still be reviewed by the taxing authorities. For the six months ended June 30, 2018, unrecognized tax benefits related to the U.S. transition tax on earnings of certain foreign subsidiaries and deferred tax liabilities for withholding tax of $1.3 million and $140,000, respectively, were recorded. The Company does not expect any material changes to the unrecognized tax benefit liability within the next 12 months. The Company recognizes interest and penalties related to uncertain tax positions in the provision for income taxes. |
CONTINGENCIES |
6 Months Ended |
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Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | In the normal course of business, the Company is subject to claims, lawsuits and legal proceedings. When and if it appears probable in management's judgment, and based upon consultation with outside counsel, that we will incur monetary damages or other costs in connection with any claims or proceedings, and such costs can be reasonably estimated, we record the estimated liability in the financial statements. If only a range of estimated losses can be estimated, we record an amount within the range that, in management's judgment, reflects the most likely outcome; if none of the estimates within that range is a better estimate than any other amount, we record the liability at the low end of the range of estimates. Any such accrual would be charged to expense in the appropriate period. We disclose significant contingencies when the loss is not probable and/or the amount of the loss is not estimable, when we believe there is at least a reasonable possibility that a loss has been incurred. We recognize costs associated with legal proceedings in the period in which the services were provided. |
RECENT ACCOUNTING PRONOUNCMENTS (Notes) |
6 Months Ended |
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Jun. 30, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Pronouncements and Changes in Accounting Principles [Text Block] | NOTE 13 — RECENT ACCOUNTING PRONOUNCEMENTS Recently adopted accounting guidance In May 2014, the FASB issued the Standard which outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company adopted the Standard effective January 1, 2018, using the modified retrospective approach. Under this method, the Company recorded a cumulative adjustment increasing retained earnings of $10.6 million before related tax impacts or $8.1 million net of related tax impacts. See Note 10, “Revenue Recognition” for additional discussion related to the Company’s adoption of the Standard. Under the Standard, estimated royalty revenue will be recorded each quarter on an accrual basis to more closely coincide with the timing of the end user sale by the strategic partner; with reconciliation made upon submission of the royalty report by the partner indicating actual royalties owed in the following quarter. In addition, the Company began recording the portion of reagent rental revenue associated with the recovery of the cost of providing the system and other hardware in reagent rental agreements as system revenue rather than assay revenue effective January 1, 2018. This change has not and is not expected to have any impact on top line revenue and the Company does not anticipate any material effects to its revenue categorization. In January 2016, the FASB issued guidance that amends various aspects of the recognition, measurement, presentation, and disclosure for financial instruments. This guidance was effective for annual reporting periods, and interim periods within those years beginning after December 15, 2017. The Company adopted this standard during the quarter ended March 31, 2018. The adoption of this new standard resulted in a change to the Company’s accounting policy; however, adoption did not have a material impact on its consolidated financial position or results of operations. In August 2016, the FASB issued specific guidance on eight cash flow classification issues that are not currently addressed by current U.S. GAAP and thereby reduce the current diversity in practice. This guidance is effective for annual periods beginning after December 15, 2017. The Company adopted this standard during the quarter ended March 31, 2018, and its adoption did not have a material impact on its consolidated financial statements. In October 2016, the FASB issued guidance on income taxes which requires companies to recognize the income tax effects of intercompany sales and transfers of assets, other than inventory, in the income statement as income tax expense (or benefit) in the period in which the transfers occur. The new standard became effective for the Company on January 1, 2018. The Company has adopted this new standard using the modified retrospective method through a cumulative-effect adjustment, based on currently enacted tax rates, directly to retained earnings as of the beginning of that date. The adoption of this new standard resulted in a change to the Company's accounting policy; however, adoption did not have a material impact on the Company’s consolidated financial position or results of operations. On January 10, 2018, the FASB issued guidance on the accounting for tax on the global intangible low-taxed income (GILTI) provisions of the Tax Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. Effective January 1, 2018, the Company recognizes the tax on GILTI as a period expense in the period the tax is incurred. Under this policy, the Company has not provided deferred taxes related to temporary differences that upon their reversal will affect the amount of income subject to GILTI in the period. In January 2018, the FASB issued guidance related to reporting comprehensive income, which gives entities the option to reclassify to retained earnings the tax effects resulting from the Tax Act related to items in Additional Other Comprehensive Income (AOCI) that the FASB refers to as having been “stranded” in AOCI. The guidance is effective for annual and interim periods beginning after December 15, 2018, and is applicable to the Company in fiscal year 2019; however, early adoption is permitted. The Company does not have any tax effects resulting from the Tax Act that are stranded in AOCI and therefore this guidance has no impact on its consolidated financial statements. The Company has early adopted this guidance and established the accounting policy for reclassifying to retained earnings any tax effects resulting from the Tax Act that are stranded in AOCI. In June 2018, the FASB issued guidance which simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. For public business entities, the guidance is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods, however, early adoption is permitted. Although nonemployee directors do not satisfy the definition of employee, under FASB guidance, the Company's nonemployee directors acting in their role as members of a board of directors are treated as employees as those directors were elected by the Company's shareholders. Therefore, awards granted to these nonemployee directors for their services as directors already were accounted for as employee awards. The Company has early adopted this guidance, which did not have a material impact on its consolidated financial statements. Recent accounting guidance not yet adopted In January 2017, the FASB issued guidance on intangibles, including goodwill, which simplifies how companies calculate goodwill impairments by eliminating Step 2 of the impairment test. The guidance requires companies to compare the fair value of a reporting unit to its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. The guidance is effective for annual periods beginning after December 15, 2019, and is applicable to the Company in fiscal year 2020; however, early adoption is permitted. The Company does not anticipate that this guidance will have a material impact on its consolidated financial statements. In February 2016, the FASB issued guidance requiring lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases, with the exception of short-term leases. The effective date of the new guidance is for the Company's first quarter of fiscal year 2019; however, early adoption is permitted. The FASB has approved an optional, alternative method to adopt the lease standard by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. While the Company is continuing to assess the effects of adoption, we believe that we will use this alternative transition method. The Company continues to evaluate the impact of the adoption of this requirement on its consolidated financial statements, has completed an inventory of the Company's leases, and does not anticipate that adoption of this guidance will have a material impact on its consolidated financial statements except for the addition of the right-of-use asset and a lease liability to the consolidated balance sheet. |
STOCKHOLDERS' EQUITY DIVIDENDS (Policies) |
6 Months Ended |
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Jun. 30, 2018 | |
Equity [Abstract] | |
Dividends Declared [Table Text Block] | On May 18, 2018, the Board of Directors declared a cash dividend on the Company’s common stock of $0.06 per share. The dividend declared was payable to stockholders of record as of June 22, 2018 and was paid on July 13, 2018. |
STOCKHOLDERS' EQUITY STOCK (Policies) |
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Share-based Compensation, Stock Options, Activity [Table Text Block] | The Company’s stock option activity for the six months ended June 30, 2018 was as follows:
The Company had $14.1 million of total unrecognized compensation costs related to stock options as of June 30, 2018. These costs are expected to be recognized over a weighted average period of 2.64 years. |
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Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block] | The Company’s restricted share activity for the six months ended June 30, 2018 was as follows:
As of June 30, 2018, there were $15.6 million and $3.2 million of total unrecognized compensation costs related to Restricted Stock Awards (RSAs) and Restricted Stock Units (RSUs), respectively. These costs are expected to be recognized over a weighted average period of 2.82 years for the RSAs and 2.40 years for the RSUs. The Company issues a small number of cash settled RSUs pursuant to the Company's equity incentive plan in certain foreign countries. These grants do not result in the issuance of common stock and are considered immaterial by the Company. |
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Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | The following are the stock-based compensation costs recognized in the Company’s condensed consolidated statements of comprehensive income (in thousands):
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INVESTMENTS (Tables) |
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Marketable Securities, Policy [Policy Text Block] | The Company determines the appropriate classification of its investments in debt and equity securities at the time of purchase and re-evaluates such determinations at each balance sheet date. Marketable securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and are reported at fair value, with unrealized gains and losses recognized in earnings. Debt securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost, which approximates the fair value of these investments. Debt securities for which the Company does not have the intent or ability to hold to maturity are classified as available-for-sale. Debt and marketable equity securities not classified as held-to-maturity or as trading are classified as available-for-sale, and are carried at fair market value, with the unrealized gains and losses included in the determination of comprehensive income and reported in stockholders’ equity. As of June 30, 2018 and December 31, 2017, all of the Company’s marketable securities were classified as available-for-sale. Marketable securities are recorded as either short-term or long-term on the balance sheet based on the contractual maturity date. The fair value of all securities is determined by quoted market prices, market interest rate inputs, or other than quoted prices that are observable either directly or indirectly (as of the end of the reporting period). Declines in fair value below the Company’s carrying value deemed to be other than temporary are charged against net earnings. As of June 30, 2018, the Company had no short or long-term investments |
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Schedule of Available-for-sale Securities Reconciliation [Table Text Block] | Available-for-sale securities consisted of the following as of June 30, 2018 (in thousands):
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Available-for-sale Securities [Table Text Block] | There were no proceeds from the sales of available-for-sale securities during the three and six months ended June 30, 2018. Realized gains and losses on sales of investments are determined using the specific identification method. Realized gains and losses are included in Other Income, net in the Consolidated Statements of Comprehensive Income. All of the Company's available-for-sale securities with gross unrealized holding losses as of June 30, 2018 and December 31, 2017 have been in a loss position for less than 12 months. There were no available-for-sale debt securities as of June 30, 2018 and December 31, 2017. |
INVESTMENTS AND OTHER ASSETS OTHER ASSETS (Tables) |
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Investments and Other Noncurrent Assets [Text Block] | During the three months ended June 30, 2018, the Company made a $1.8 million investment in a private company. Based in the U.S. and not publicly traded, this minority investment is included at cost in other long-term assets of the Company’s Consolidated Balance Sheets. The Company does not have significant influence over the investee since the Company owns less than 20% of the voting equity in the investee. Further, the Company does not participate in policy-making processes or interchange managerial personnel. During each of the years ended December 31, 2017 and December 31, 2016, the Company made a $1.0 million minority interest investment (an aggregate of $2.0 million), in a second private company based in the U.S. that is focused on development of next generation technologies. This minority interest is included at cost in other long-term assets on the Company’s Consolidated Balance Sheets as the Company does not have significant influence over the investee. The Company owns less than 20% of the voting equity in the investee, which is not publicly traded, and the Company does not participate in policy-making processes. Although we may invest further in this entity over the course of the next several quarters, we do not anticipate our ownership interest to exceed 20% in the short-term. During the year ended December 31, 2017, the Company also entered into a $1.4 million promissory note with this same private company. The promissory note is payable at the annual interest rate of 1.95% with a maturity date of 5 years from the date of issuance. The Company loaned an additional $1.0 million to the private company in the six months ended June 30, 2018, resulting in a notes receivable balance of $2.4 million as of June 30, 2018. The Company owns a minority interest in a third private company based in the U.S. through its investment of $1.0 million in the third quarter of 2012. This minority interest is included at cost in other long-term assets on the Company’s Consolidated Balance Sheets as the Company does not have significant influence over the investee since the Company owns less than 20% of the voting equity in the investee and the investee is not publicly traded. Further, the Company does not participate in policy-making processes or interchange managerial personnel. These investments do not have readily determinable fair values. Therefore, the Company has elected the measurement alternative for these minority interests and the investments are recorded at cost, less any impairment, including changes resulting from observable price changes. The Company regularly evaluates the carrying value of its investment for impairment and whether any events or circumstances are identified that would significantly harm the fair value of the investment. The primary indicators the Company utilizes to identify these events and circumstances are the investee's ability to remain in business, such as the investee's liquidity and rate of cash use, and the investee’s ability to secure additional funding and the value of that additional funding. In the event a decline in fair value is less than the investment's carrying value, the Company will record an impairment charge in Other Income, net in the Consolidated Statements of Comprehensive Income. As of June 30, 2018, the Company has not recorded any impairment charges related to the investments discussed above. As the inputs utilized for the Company's periodic impairment assessment are not based on observable market data, the determination of fair value of this investment is classified within Level 3 of the fair value hierarchy. See Note 4 - Fair Value Measurement to our Condensed Consolidated Financial Statements for further information on the fair value hierarchy and the three classification levels. To determine the fair value of these investments, the Company uses all available financial information related to the entities, including information based on recent or pending third-party equity investments in these entities. In certain instances, an investment's fair value is not estimated as there are no identified events or changes in the circumstances that may have a significant adverse effect on the fair value of the investments and to do so would be impractical. |
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Schedule of Other Assets, Noncurrent [Table Text Block] | Other long-term assets consisted of the following (in thousands):
(1) During the six months ended June 30, 2018, the Company increased the principal amount of the promissory note with a private company, in which it made an aggregate $2.0 million minority interest investment, as discussed above. |
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Estimated Future Amortization Expense Related to Intangible Assets | For the six months ending June 30, 2018 and year ended December 31, 2017, the Company recognized amortization expense related to the amortization of purchased technology rights of approximately $293,000 and $559,000, respectively. Future amortization expense is estimated to be $302,000 in the two remaining quarters of 2018, $603,000 in 2019, $497,000 in 2020, $470,000 in 2021, $464,000 in 2022, $456,000 in 2023 and $3,712,000 thereafter. The estimated aggregate amortization expense for the next five fiscal years and thereafter is as follows (in thousands):
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GOODWILL (Tables) |
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Goodwill Disclosure [Text Block] | Goodwill is reviewed for impairment at least annually at the beginning of the fourth quarter, or more frequently if impairment indicators arise. The Company's goodwill is not expected to be deductible for tax purposes. There were no changes in the carrying amount of the Company’s goodwill during the six months ended June 30, 2018 and twelve months ended December 31, 2017 as follows (in thousands):
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INTANGIBLE ASSETS (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets Disclosure [Text Block] | The Company’s intangible assets are reflected in the table below (in thousands, except weighted average lives):
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Estimated Future Amortization Expense Related to Intangible Assets | For the six months ending June 30, 2018 and year ended December 31, 2017, the Company recognized amortization expense related to the amortization of purchased technology rights of approximately $293,000 and $559,000, respectively. Future amortization expense is estimated to be $302,000 in the two remaining quarters of 2018, $603,000 in 2019, $497,000 in 2020, $470,000 in 2021, $464,000 in 2022, $456,000 in 2023 and $3,712,000 thereafter. The estimated aggregate amortization expense for the next five fiscal years and thereafter is as follows (in thousands):
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ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Changes in Accumulated Other Comprehensive Income by Component | The following table presents the changes in each component of accumulated other comprehensive loss, net of tax (in thousands):
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Comprehensive Income (Loss) Note [Text Block] | The following table presents the tax expense allocated to each component of other comprehensive income (loss) (in thousands):
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EARNINGS PER SHARE (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and Diluted Earnings Per Share | A reconciliation of the denominators used in computing per share net income (EPS) is as follows (in thousands, except per share amounts):
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ACCRUED LIABILITIES (Tables) |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Liabilities [Table Text Block] | Accrued liabilities consisted of the following (in thousands):
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Schedule of Product Warranty Liability [Table Text Block] | The following table summarizes the changes in the warranty accrual (in thousands):
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Investments - Cost Method - Additional Information (Detail) - USD ($) $ in Millions |
12 Months Ended | 24 Months Ended |
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Dec. 31, 2017 |
Dec. 31, 2017 |
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Chandlertech [Member] | ||
Schedule of Cost-method Investments [Line Items] | ||
Payments to Noncontrolling Interests | $ 1.0 | $ 2.0 |
Genometry [Member] | ||
Schedule of Cost-method Investments [Line Items] | ||
Payments to Noncontrolling Interests | $ 1.0 |
INVENTORIES INVENTORIES (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
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Inventory Disclosure [Abstract] | ||
Inventory, Raw Materials, Net of Reserves | $ 31,458 | $ 29,266 |
Inventory, Work in Process, Net of Reserves | 9,895 | 8,712 |
Inventory, Finished Goods, Net of Reserves | 10,732 | 11,500 |
Inventory, Net | $ 52,085 | $ 49,478 |
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
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Cash and Cash Equivalents, Fair Value Disclosure | $ 702 | $ 701 |
Fair Value, Inputs, Level 1 [Member] | ||
Cash and Cash Equivalents, Fair Value Disclosure | 702 | 701 |
Fair Value, Inputs, Level 2 [Member] | ||
Cash and Cash Equivalents, Fair Value Disclosure | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | ||
Cash and Cash Equivalents, Fair Value Disclosure | $ 0 | $ 0 |
GOODWILL GOODWILL (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||
Goodwill | $ 85,481 | $ 85,481 | $ 85,481 |
ACCRUED LIABILITIES (Details) - USD ($) $ in Thousands |
6 Months Ended | |
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Jun. 30, 2018 |
Dec. 31, 2017 |
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Accrued Liabilities [Abstract] | ||
Standard Product Warranty Accrual | $ 1,334 | $ 1,308 |
Employee-related Liabilities, Current | 11,149 | 18,218 |
Dividends Payable, Current | 2,701 | 2,671 |
Taxes Payable, Current | 215 | 1,070 |
Product Warranty Accrual, Current | 1,334 | 1,308 |
Standard Product Warranty Accrual, Decrease for Payments | (991) | |
Standard Product Warranty Accrual, Increase for Warranties Issued | 1,017 | |
Other Accrued Liabilities, Current | 2,837 | 2,723 |
Accrued Liabilities, Current | $ 18,236 | $ 25,990 |
REVENUE RECOGNITION (Details) - USD ($) $ in Thousands |
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Revenue Recognition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition Accounting Policy, Gross and Net Revenue Disclosure [Policy Text Block] | NOTE 10 — REVENUE RECOGNITION On January 1, 2018, the Company adopted a new standard on revenue recognition, Accounting Standards Codification 606 (the Standard), using the modified retrospective transition method consistent with the guidance issued by the FASB in May 2014. Under this method, the Company applied the guidance retrospectively, only to those contracts which were not completed as of the date of initial application, and recognized the cumulative effect of initially applying the Standard as an adjustment to the opening balance of retained earnings as of January 1, 2018. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under the Standard, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of the Standard, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of the Standard, the Company assesses the goods or services promised within each contract, identifies the performance obligations and assesses whether each promised good or service is distinct. The Company allocates the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or service underlying each performance obligation and recognizes as revenue when such performance obligation is satisfied. Revenue is generated primarily from the sale of the Company’s products and related services, which are primarily support and maintenance services on the Company's systems. The Company recognizes product revenue when the Customer obtains control of the Company’s product, which typically occurs upon shipment or delivery to the Customer depending upon the shipping terms. We treat shipping and handling costs performed after a customer obtains control of the good as a fulfillment cost. Our customers do not typically have any contractual rights of return outside of our warranty provisions. The Company has allowed few returns to date and believes that returns of its products will be minimal. Royalties: For arrangements that include sales-based royalties, including minimum payments, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation, to which some or all of the royalty has been allocated, has been satisfied. This is a change from how the Company has historically treated royalty payments, by recognizing royalty revenue when our strategic partners reported the end-user sales to the Company, and is primarily the basis for our cumulative adjustment to retained earnings of $10.6 million before related tax impacts or $8.1 million net of related tax impacts. Royalty payments are typically received when our strategic partners report the end-user sales to the Company. Reagent Rentals: The Company provides systems and certain other hardware to customers through reagent rental agreements under which the customers commit to purchasing minimum quantities of disposable products at a stated price over a defined contract term, which is normally two to three years. Instead of rental payments, the Company recovers the cost of providing the system and other hardware in the amount charged for assays. Revenue is recognized over the defined contract term as assays are shipped. The depreciation costs associated with the system and other hardware are charged to cost of sales on a straight-line basis over the estimated life of the system. The costs to maintain these instruments in the field are charged to cost of sales as incurred. Under the Standard, the Company has reclassified the portion of reagent rental revenue associated with the recovery of the cost of providing the system and other hardware in reagent rental agreements from assay revenue to system revenue effective January 1, 2018. This change will not have any impact on top line revenue and the Company does not anticipate any material effects to its revenue categorization. Warranties: The Company provides a limited, assurance-type warranty, typically for twelve months from installation for the systems sold to end customers and fifteen months for the systems sold to partners. The Company accrues for the estimated cost of initial product warranties at the time revenue is recognized. The actual warranty expense could differ from the estimates made by the Company based on product performance. Warranty expenses are evaluated and adjusted periodically. License Revenues: The Company enters into out-licensing agreements which are within the scope of the Standard, under which it licenses certain rights to its technology to third parties. These licenses are typically not distinct, as the customer cannot benefit from the license on its own, and do not have significant standalone functionality, but represent single performance obligations together with the sales of our consumables, systems and assays. The terms of these arrangements typically include payment to the Company of non-refundable, up-front license fees and can extend up to twenty years, although some of our current agreements extend through 2027. Each of these payments results in license revenues which are recognized ratably over time and are included in other revenues, except for revenues from royalties on net sales of licensed products, which are classified as royalty revenues. Deferred revenues related to these out-licensing agreements are shown in contract liabilities in the table below. Performance Obligations: Revenue from extended service agreements is deferred when payment is received in advance of the performance obligation being satisfied or completed. Luminex provides an integrated service of maintenance and related activities for equipment sold to customers, where the nature of the overall promise is to provide a stand-ready service. As such, the performance obligation is recognized as a series of distinct service periods and the service revenue is recognized ratably over the term of the agreement. The extended service agreements typically range from one to four years and payment is typically received up-front. Reserves for Variable Consideration: Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established and which result from discounts and any other allowances that are offered within contracts between the Company and its customers relating to the Company’s sales of its products. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable. Where appropriate, these estimates take into consideration a range of possible outcomes which are probability-weighted for relevant factors such as the Company’s historical experience, current contractual requirements, industry data and forecasted customer buying and payment patterns. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of each contract. The amount of variable consideration which is included in the transaction price may be constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates, which would affect net product revenue and earnings in the period when such variances become known. Contract assets are included within Accounts receivables, net and contract liabilities are included in Deferred revenue on the Company's Balance Sheet. The following table presents the opening and closing balances of the Company’s contract assets and liabilities for the six months ended June 30, 2018 (in thousands):
During the six months ended June 30, 2018, the Company recognized the following revenues as a result of changes in the contract asset and contract liability balances in the period (in thousands):
In accordance with the Standard, the disclosure of the impact of adoption on our consolidated income statement and balance sheet was as follows (in thousands):
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Revenue Recognition Unbilled Receivables | $ 10,962 | $ 10,643 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition Short-Term Deferred Revenue | 5,546 | 4,721 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition Long-Term Deferred Revenue | 1,326 | 1,497 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nonsoftware Service, Support and Maintenance Arrangement [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition Short-Term Deferred Revenue | 5,048 | 4,438 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition Long-Term Deferred Revenue | 262 | 315 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Royalty Arrangement [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition Short-Term Deferred Revenue | 257 | 37 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition Long-Term Deferred Revenue | 83 | 83 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nonsoftware License Arrangement [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition Short-Term Deferred Revenue | 241 | 246 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition Long-Term Deferred Revenue | $ 981 | $ 1,099 |
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