STOCKHOLDERS' EQUITY, EMPLOYEE BENEFIT PLANS AND STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2013 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' |
EMPLOYEE BENEFIT PLANS AND STOCK-BASED COMPENSATION | ' |
NOTE 16 - STOCKHOLDERS' EQUITY, EMPLOYEE BENEFIT PLANS AND STOCK-BASED COMPENSATION |
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Preferred Stock |
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The Company’s Board of Directors has the authority to issue up to 5,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any series or the designation of such series, without further vote or action by the Company’s stockholders. At December 31, 2013 and 2012, there was no preferred stock issued and outstanding. |
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Stock-Based Compensation |
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At December 31, 2013, the Company has one stock-based employee compensation plan pursuant to which grants may be made: the Second Amended and Restated 2006 Equity Incentive Plan (the “Equity Incentive Plan”) which was approved at the Company’s Annual Meeting on May 25, 2006 and amended at the Company’s Annual Meetings on each of May 21, 2009 and May 17, 2012. No further grants shall be made pursuant to the 2000 Long-Term Incentive Plan (the “2000 Plan”), the 2001 Broad-Based Stock Option Plan (the “2001 Plan”) or the 2006 Management Stock Purchase Plan (the “MSPP”), which was terminated effective March 7, 2012. In addition, at December 31, 2013, the Company has one plan pursuant to which discount purchases may be made by the participants in such plan: the Luminex Corporation Employee Stock Purchase Plan (the "ESPP"), which was approved at the Company's Annual Meeting on May 17, 2012. |
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Equity Incentive Plans |
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Under the Company’s Equity Incentive Plan, 2000 Plan, and the 2001 Plan, certain employees, consultants and non-employee directors have been granted RSAs, restricted share units (RSUs) and options to purchase shares of common stock. The options, RSAs, and RSUs generally vest in installments over a four to five year period, and the options expire either five or ten years after the date of grant. Under the Equity Incentive Plan, certain employees, directors of, and consultants to the Company are eligible to be granted RSAs, RSUs, and options to purchase common stock. The ESPP provides for the granting of rights to certain employees of the Company to defer an elected percentage, up to 15%, of their base salary through the purchase of the Company's common stock, discounted by 15%. As of December 31, 2013, there were approximately 3.9 million shares authorized for future issuance under the Company’s Equity Incentive Plan and approximately 393,000 shares eligible for purchase pursuant to the terms and conditions of the ESPP as more fully described below. |
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The Equity Incentive Plan, the ESPP, the 2000 Plan and the 2001 Plan are administered by the Compensation Committee of the Board of Directors. The Compensation Committee has the authority to determine the terms and conditions under which awards will be granted from the Equity Incentive Plan, including the number of shares, vesting schedule and term, as applicable. Any option award exercise prices, as set forth in the Equity Incentive Plan, will be equal to the fair market value on the date of grant. Under certain circumstances, the Company may repurchase previously granted RSAs and RSUs. |
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On March 9, 2010, March 25, 2011, March 7, 2012 and March 19, 2013 the Compensation Committee of the Board adopted the Luminex Corporation 2010 Long Term Incentive Plan (the “2010 LTIP”), the Luminex Corporation 2011 Long Term Incentive Plan (the “2011 LTIP”) the the Luminex Corporation 2012 Long Term Incentive Plan (the "2012 LTIP") and the 2013 Long Term Incentive Plan (the "2013 LTIP"), respectively. Awards under all of the LTIP plans were granted by the Compensation Committee in the form of RSUs and are to be treated as Performance Awards under the Equity Incentive Plan. Grants of RSUs under the LTIP plans shall initially be unvested and represent the maximum amount of shares that participants may receive under the plan, assuming achievement of the maximum level of performance goals established for the grant, and subject to adjustment for certain transactions and other extraordinary or non-recurring events that may affect Luminex or its financial performance. |
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On March 9, 2010, the Company’s Chief Executive Officer was granted an award for an unvested RSU under the 2010 LTIP for up to $2,200,000 worth of shares (grant date fair value) of Luminex common stock, and the Company’s Chief Financial Officer was granted an award for an unvested RSU under the 2010 LTIP for up to $825,000 worth of shares (grant date fair value) of Luminex common stock. The actual maximum number of shares of 132,930 shares and 49,848 shares for the CEO and CFO, respectively, was determined on March 11, 2010, based upon the closing price of the stock on that date. Performance goals under the grants are based on the following components, with the following weights given to each: 50% on the trading price of Luminex common stock at the end of the performance period and 50% on Luminex’s operating cash flows per diluted share at the end of the performance period. |
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The 2010 LTIP performance goals are as described below: |
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• | Partial or complete achievement of the trading price goal is dependent upon the average closing price of Luminex’s common stock for the twenty consecutive trading days ending December 31, 2012, inclusive, subject to certain adjustments as described in the 2010 LTIP. There is a range of trading price targets as follows: a minimum threshold of $22.22 per share, a target of $25.25 per share, and a maximum goal of $40.09 per share. No shares were earned for this goal under the 2010 LTIP. | | | | | | | | | | | |
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• | Partial or complete achievement of the operating cash flow goal is dependent upon the total operating cash flows per diluted share for the four quarters ended December 31, 2012, as further described in the 2010 LTIP. Total operating cash flows means Luminex’s GAAP net cash provided by operating activities as shown on its financial statements for the 12 month period ended December 31, 2012, as further described in the 2010 LTIP. There is a range of targets as follows: a minimum threshold of $0.212 per share, a target of $0.241 per share, and a maximum goal of $0.382 per share. The final determination and certification of the shares earned for this goal was made by the compensation committee of the Board of Directors on February 27, 2013 resulting in the Chief Executive Officer earning 18,835 shares and the Chief Financial Officer earning 7,063 shares. | | | | | | | | | | | |
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On March 25, 2011, the Company’s Chief Executive Officer was granted an award for an unvested RSU under the 2011 LTIP for up to $2,200,000 worth of shares (grant date fair value) of Luminex common stock, and the Company’s Chief Financial Officer was granted an award for an unvested RSU under the 2011 LTIP for up to $825,000 worth of shares (grant date fair value) of Luminex common stock. The actual maximum number of shares of 119,304 shares and 44,740 shares for the CEO and CFO, respectively, was determined on March 25, 2011, based upon the closing price of the stock on that date. Performance goals under the grants are based on the following components, with the following weights given to each: 50% on the trading price of Luminex common stock at the end of the performance period and 50% on Luminex’s total income from operations per diluted share at the end of the performance period. |
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The 2011 LTIP performance goals are as described below: |
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• | Partial or complete achievement of the trading price goal is dependent upon the average closing price of Luminex’s common stock for the twenty consecutive trading days ending December 31, 2013, inclusive, subject to certain adjustments as described in the 2011 LTIP. There is a range of trading price targets as follows: a minimum threshold of $28.50 per share, a target of $32.38 per share, and a maximum goal of $51.42 per share. No shares were earned for this goal under the 2011 LTIP. | | | | | | | | | | | |
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• | Partial or complete achievement of the income from operations goal is dependent upon the total income from operations per diluted share for the year ended December 31, 2013, as further described in the 2011 LTIP. Total income from operations means Luminex’s income from operations as reflected on the Company’s Consolidated Statement of Comprehensive Operations for the year ended December 31, 2013, as further described in the 2011 LTIP. There is a range of targets as follows: a minimum threshold of $0.73 per share, a target of $0.81 per share, and a maximum goal of $1.19 per share. The final determination and certification of the shares earned for this goal will be made by the compensation committee after the filing of this Annual Report on Form 10-K. | | | | | | | | | | | |
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On March 7, 2012, the Company’s Chief Executive Officer was granted an award for an unvested RSU under the 2012 LTIP for up to $2,200,000 worth of shares (grant date fair value) of Luminex common stock, and the Company’s Chief Financial Officer was granted an award for an unvested RSU under the 2012 LTIP for up to $550,000 worth of shares (grant date fair value) of Luminex common stock. The actual maximum number of shares of 98,434 shares and 24,608 shares for the CEO and CFO, respectively, was determined on March 7, 2012, based upon the closing price of the stock on that date. Performance goals under the grants are based on the following components, with the following weights given to each: 50% on the trading price of Luminex common stock at the end of the performance period and 50% on Luminex’s total income from operations at the end of the performance period. |
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The 2012 LTIP performance goals are as described below: |
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• | Partial or complete achievement of the trading price goal is dependent upon the average closing price of Luminex’s common stock for the twenty consecutive trading days ending December 31, 2014, inclusive, subject to certain adjustments as described in the 2012 LTIP. There is a range of trading price targets as follows: a minimum threshold of $29.29 per share, a target of $32.54 per share, and a maximum goal of $39.75 per share. | | | | | | | | | | | |
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• | Partial or complete achievement of the total income from operations goal is dependent upon the total income from operations for the year ended December 31, 2014, as further described in the 2012 LTIP. Total income from operations means Luminex’s income from operations as reflected on the Company’s Consolidated Statement of Comprehensive Operations for the year ended December 31, 2014, as further described in the 2012 LTIP. There is a range of targets as follows: a minimum threshold of $58,663,000, a target of $67,286,000, and a maximum goal of $85,831,000. | | | | | | | | | | | |
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On March 19, 2013, the Company’s Chief Executive Officer was granted an award for an unvested RSU under the 2013 LTIP for up to $1,200,000 worth of shares (grant date fair value) of Luminex common stock, and the Company’s Chief Financial Officer was granted an award for an unvested RSU under the 2013 LTIP for up to $300,000 worth of shares (grant date fair value) of Luminex common stock. The actual maximum number of shares of 71,727 shares and 17,931 shares for the CEO and CFO, respectively, was determined on March 19, 2013, based upon the closing price of the stock on that date. The performance goal under the grants is based on Luminex’s fully diluted earnings per share at the end of the performance period (Adjusted EPS Goal). |
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The 2013 LTIP performance goal is as described below: |
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• | Partial or complete achievement of the Adjusted EPS Goal is dependent upon Luminex's fully diluted earnings per share for the year ended December 31, 2015, as further described in the 2013 LTIP. There is a range of targets as follows: a minimum threshold of $1.06 per share, a target of $1.18 per share, and a maximum goal of $1.36 per share. | | | | | | | | | | | |
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In the event that a participant achieves less than the maximum level of the performance goal, the total number of shares represented by such RSU shall be reduced to reflect where actual performance lies in the range of performance goals and weighted aggregate corresponding payout opportunities established for the grant. Calculation of shares between threshold and maximum performance shall be determined based on straight-line interpolation. |
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Accounting for Stock Compensation |
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Stock-based compensation costs are generally based on the fair value calculated from the Black-Scholes option-pricing model on the date of grant for stock options and market value on the date of grant for RSAs. The fair values of stock are amortized as compensation expense on a straight-line basis over the vesting period of the grants. |
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In accordance with ASC 718 the Company evaluates the assumptions used in the Black-Scholes model at each grant date using a consistent methodology for computing expected volatility, expected term and risk-free rate of return. Calculation of expected volatility is based on historical volatility. The expected term is calculated using the contractual term of the options as well as an analysis of the Company’s historical exercises of stock options. The estimate of the risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The Company has never paid cash dividends and does not currently intend to pay cash dividends, and thus has assumed a 0% dividend yield. The assumptions used are summarized in the following table: |
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| 2013 | | 2012 | | 2011 | |
Dividend yield | — | % | | — | % | | — | % | |
Expected volatility | 0.5 | | | 0.5 | | | 0.5 | | |
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Risk-free rate of return | 1.2 | % | | 1.2 | % | | 2.3 | % | |
Expected life | 7 years | | | 7 years | | | 7 years | | |
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Weighted average fair value at grant date | $ | 8.79 | | | $ | 7.78 | | | $ | 7.67 | | |
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As part of the requirements of ASC 718, the Company is required to estimate potential forfeitures of stock grants and adjust compensation cost recorded accordingly. The estimate of forfeitures is based on historical forfeiture performance and will be adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of evaluation and will also impact the amount of stock compensation expense to be recognized in future periods. |
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The Company’s stock option activity for the years ended December 31, 2011, 2012 and 2013 is as follows: |
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Stock Options | Shares | | Weighted Average Exercise Price | | Weighted Average Remaining Contractual Life | | Aggregate Intrinsic Value (in thousands) |
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Outstanding at December 31, 2010 | 2,367 | | | $ | 10.82 | | | | | | |
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Granted | 84 | | | 18.26 | | | | | |
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Exercised | (304 | ) | | 11.65 | | | | | | |
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Cancelled or expired | (127 | ) | | 23.74 | | | | | |
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Outstanding at December 31, 2011 | 2,020 | | | $ | 10.19 | | | | | | |
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Granted | 160 | | | 22.53 | | | | | |
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Exercised | (487 | ) | | 7.22 | | | | | | |
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Cancelled or expired | (17 | ) | | 20.37 | | | | | |
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Outstanding at December 31, 2012 | 1,676 | | | $ | 12.13 | | | | | | |
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Granted | 159 | | | 17.24 | | | | | |
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Exercised | (835 | ) | | 9.06 | | | | | | |
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Cancelled or expired | (33 | ) | | 19.8 | | | | | |
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Outstanding at December 31, 2013 | 967 | | | $ | 15.35 | | | 4.65 | | $ | 4,417 | |
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Vested at December 31, 2013 and expected to vest | 965 | | | $ | 15.34 | | | 4.64 | | $ | 4,413 | |
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Exercisable at December 31, 2013 | 701 | | | $ | 13.91 | | | 3.14 | | $ | 4,066 | |
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During the years ended December 31, 2013, 2012 and 2011, the total exercise intrinsic value of stock options exercised was $8.7 million, $6.9 million and $2.9 million, respectively, and the total fair value of stock options that vested was $2.5 million, $2.0 million and $1.9 million, respectively. Exercise intrinsic value represents the difference between the market value of the Company's common stock at the time of exercise and the strike price of the stock option. The Company had $1.9 million of total unrecognized compensation costs related to stock options at December 31, 2013 that are expected to be recognized over a weighted-average period of 1.7 years. |
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The Company’s restricted share activity for the years ended December 31, 2011, 2012 and 2013 is as follows: |
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Restricted Stock Awards | Shares | | Weighted Average Grant Price | | | | | | |
(in thousands) | | | | | | |
Non-vested at December 31, 2010 | 1,093 | | | $ | 16.41 | | | | | | | |
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Granted | 239 | | | 18.73 | | | | | | | |
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Vested | (362 | ) | | 16.11 | | | | | | | |
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Cancelled or expired | (67 | ) | | 16.57 | | | | | | | |
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Non-vested at December 31, 2011 | 903 | | | $ | 17.13 | | | | | | | |
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Granted | 329 | | | 22.5 | | | | | | | |
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Vested | (339 | ) | | 16.75 | | | | | | | |
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Cancelled or expired | (75 | ) | | 18.59 | | | | | | | |
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Non-vested at December 31, 2012 | 818 | | | $ | 19.32 | | | | | | | |
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Granted | 354 | | | 17.28 | | | | | | | |
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Vested | (267 | ) | | 18.83 | | | | | | | |
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Cancelled or expired | (79 | ) | | 19.15 | | | | | | | |
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Non-vested at December 31, 2013 | 826 | | | $ | 18.62 | | | | | | | |
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Restricted Stock Units | Shares | | Weighted Average Remaining Contractual Life | | Aggregate Intrinsic Value (in thousands) | | | | |
(in thousands) | | | | |
Non-vested at December 31, 2010 | 768 | | | | | | | | | |
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Granted | 269 | | | | | | | | | |
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Vested | (58 | ) | | | | | | | | |
Cancelled or expired | (152 | ) | | | | | | | | |
Non-vested at December 31, 2011 | 827 | | | | | | | | | |
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Granted | 246 | | | | | | | | | |
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Vested | (80 | ) | | | | | | | | |
Cancelled or expired | (118 | ) | | | | | | | | |
Non-vested at December 31, 2012 | 875 | | | | | | | | | |
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Granted | 199 | | | | | | | | | |
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Vested | (79 | ) | | | | | | | | |
Cancelled or expired | (162 | ) | | | | | | | | |
Non-vested at December 31, 2013 | 833 | | | 1.82 | | $ | 16,167 | | | | | |
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Vested at December 31, 2013 and expected to vest | 578 | | | 1.81 | | $ | 10,439 | | | | | |
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Exercisable at December 31, 2013 | 40 | | | 0 | | $ | 766 | | | | | |
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As of December 31, 2013, there was $17.1 million of unrecognized compensation cost related to RSAs and RSUs. That cost is expected to be recognized over a weighted average-period of 2.6 years. The total fair value of restricted shares vested during the year ended December 31, 2013, 2012 and 2011 was $7.2 million, $8.3 million, and $7.3 million, respectively. |
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RSAs and RSUs may be granted at the discretion of the Board of Directors under the Equity Incentive Plan in connection with the hiring or retention of key employees and are subject to certain conditions. Restrictions expire at certain dates after the grant date in accordance with specific provisions in the applicable agreement. During the year ended December 31, 2013, the Company awarded 353,537 shares of restricted stock awards, which had a fair value at the date of grant ranging from $16.18–$18.11. During the year ended December 31, 2012, the Company awarded 329,096 shares of restricted stock awards, which had a fair value at the date of grant ranging from $17.26–$22.71. During the year ended December 31, 2011, the Company awarded 238,812 shares of restricted stock awards, which had a fair value at the date of grant ranging from $18.26–$21.00. During the year ended December 31, 2013, the Company awarded 199,051 shares of restricted stock units, which had a fair value at the date of grant ranging from $16.73–$20.51. During the year ended December 31, 2012, the Company awarded 246,205 shares of restricted stock units, which had a fair value at the date of grant ranging from $16.16–$23.82. During the year ended December 31, 2011, the Company awarded 268,882 shares of restricted stock units, which had a fair value at the date of grant ranging from $18.26–$20.92. Compensation under these restricted stock awards and units was charged to expense over the restriction period and amounted to $7.5 million, $8.4 million, and $10.2 million in 2013, 2012 and 2011, respectively. |
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There were no significant stock compensation costs capitalized into assets as of December 31, 2013, 2012 or 2011. |
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The Company received $7.6 million, $3.5 million, and $3.5 million for the exercise of stock options during the years ended December 31, 2013, 2012 and 2011, respectively. Cash was not used to settle any equity instruments previously granted. The Company issued shares pursuant to grants relating to each of the Equity Incentive Plan, 2000 Plan and 2001 Plan from reserves upon the exercise of stock options and vesting of RSAs. |
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Employee Savings Plans and Other Benefit Plans |
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Effective January 1, 2001, the Company began sponsoring a retirement plan authorized by section 401(k) of the Internal Revenue Code for the Company’s employees in the United States. In accordance with the 401(k) plan, all employees are eligible to participate in the plan on the first day of the month following the commencement of full time employment. For 2013, 2012 and 2011, each employee could contribute a percentage of compensation up to a maximum of $17,500, $17,000, and $16,500 per year, respectively, with the Company matching 50% of each employee’s contributions. Effective January 1, 2010, the Company began contributing to a deferred profit sharing plan for its Canadian employees. All Canadian employees are eligible to participate in the plan. The Company’s contributions to these plans for 2013, 2012 and 2011 were $2.4 million, $2.1 million, and $1.6 million, respectively. |
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Several of the Company’s Netherlands employees are covered by a defined benefit plan. The cost and total liability to the Company is not significant. Effective January 1, 2011, all of the Company’s new hires in the Netherlands are eligible to participate in a defined contribution plan. |
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Employee Stock Purchase Plan |
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In May 2012, the Company's stockholders approved the ESPP Plan, which provides for the granting of up to 500,000 shares of the Company's common stock to eligible employees. The ESPP period is semi-annual and allows participants to purchase the Company's common stock at 85% of the lesser of (i) the closing market value per share of the common stock on the first trading date of the option period or (ii) the closing market value per share of the common stock on the last trading date of the option period. The first plan option period began on July 1, 2012. As of December 31, 2013 and 2012, 106,522 shares and 35,296 shares, respectively had been issued out of the ESPP. The related stock-based compensation expense was $0.4 million and $0.2 million for 2013 and 2012, respectively. |
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The Company uses the Black-Scholes model to estimate the fair value of shares to be issued as of the grant date using the following weighted average assumptions: |
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Assumptions: | | | | | | | | | | | |
Risk-free interest rates | .09% to 0.15% | | | | | | | | | | | |
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Expected life | 0.5 years | | | | | | | | | | | |
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Expected volatility | 0.51 | | | | | | | | | | | |
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Dividend yield | — | % | | | | | | | | | | |
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The following are the stock-based compensation costs recognized in the Company’s consolidated statements of comprehensive income (in thousands): |
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| Year Ended December 31, | |
| 2013 | | 2012 | | 2011 | |
Cost of revenue | $ | 856 | | | $ | 947 | | | $ | 917 | | |
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Research and development | 2,553 | | | 2,034 | | | 2,126 | | |
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Selling, general and administrative | 5,812 | | | 6,934 | | | 8,374 | | |
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Stock-based compensation costs reflected in net income | $ | 9,221 | | | $ | 9,915 | | | $ | 11,417 | | |
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Reserved Shares of Common Stock |
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At December 31, 2013 and 2012, the Company had reserved 4,275,753 and 4,827,116 shares of common stock, respectively, for the issuance of common stock upon the exercise of options, issuance of RSAs, RSUs, purchase of common stock pursuant to the ESPP or other awards issued pursuant to the Company’s equity plans and arrangements. The following table summarizes the reserved shares by plan as of December 31, 2013: |
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| Options Outstanding | | Shares Available for Future Issuance | | Total Shares Reserved | | | | |
2000 Plan | 97,000 | | | — | | | 97,000 | | | | | |
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2001 Plan | 27,060 | | | — | | | 27,060 | | | | | |
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2006 Equity Incentive Plan | 1,715,876 | | | 3,882,275 | | | 5,598,151 | | | | | |
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ESPP Plan | — | | | 393,478 | | | 393,478 | | | | | |
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Balthrop Option | 200,000 | | | — | | | 200,000 | | | | | |
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| 2,039,936 | | | 4,275,753 | | | 6,315,689 | | | | | |
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