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IDEXX Laboratories Announces Fourth Quarter and Full Year Results
Date:1/30/2009

WESTBROOK, Maine, Jan. 30 /PRNewswire-FirstCall/ -- IDEXX Laboratories, Inc. (Nasdaq: IDXX), today reported that revenues for the fourth quarter of 2008 were $243.3 million compared to $245.0 million for the fourth quarter of 2007. Organic revenue growth, which is reported growth adjusted to eliminate the effect of changes in foreign currency exchange rates and revenues from businesses acquired, divested or discontinued since October 1, 2007, was 6.5% for the quarter.

Earnings per diluted share ("EPS") for the quarter ended December 31, 2008 were $0.39, compared to $0.40, for the same period in the prior year. Earnings per share were $0.44 after adjusting to eliminate discrete items related to the disposition of certain pharmaceutical product lines and pharmaceutical assets, discussed further below, which represents an increase of 10% from the same period of the prior year. Please refer to the non-GAAP financial measures table below.

"Despite the considerable challenges facing the economy and the consumer, we were pleased to achieve our organic revenue growth in the quarter," said Jonathan Ayers, Chairman and CEO. "While we experienced slowing demand in several areas of our business, demand held up well in certain other areas. For example, in our Companion Animal Group segment, sales of both Catalyst Dx, our next generation chemistry system, and our digital radiography product lines remained strong. Also, we had 7% organic growth in our Water business, a highly profitable business where demand is not generally affected by economic conditions. While the economy had a more pronounced effect overall on our company's growth in the fourth quarter than in prior quarters in 2008, we also achieved our earnings goals, in part through a disciplined control of operating expenses."

"We expect that the demand levels we experienced in the fourth quarter will continue into 2009, with the impact of muted demand for certain products continuing to be offset by revenue growth generated from recent innovations, such as Catalyst Dx, SNAPshot Dx, and a variety of other product launches, and the bottom line reflecting a continued focus on operating expense control. We also look for strong free cash flow from the business, which will benefit our already strong balance sheet and support our ongoing stock repurchase program."

"Our Companion Animal Group, which comprises about 80% of our revenues, is dependent on the demand for pet health care, which is driven both by pet owners and by veterinarians. Over the long term we are confident that the bond between pets and their owners will remain strong, as will the desire of veterinarians to improve the standard of care they provide and to run efficient, profitable practices. We remain on track with our strategy to provide innovative diagnostic and information technology solutions that benefit both veterinarians and pet owners."

Revenue Performance

Companion Animal Group. Companion Animal Group ("CAG") revenues for the fourth quarter of 2008 were $196.5 million compared to $197.2 million for the fourth quarter of 2007. Organic growth for the segment, as defined above, was 7% for the quarter. Our results reflect increased sales volume in our instruments and consumables, digital radiography and reference laboratory lines of business and, to a lesser extent, higher average unit sales prices on reference laboratory tests, IDEXX VetLab(R) consumables and rapid assay tests. Increased sales volume of instruments was due, in part, to sales of recently launched products including Catalyst Dx(TM) chemistry analyzers and SNAPshot Dx(TM) analyzers, both of which we began shipping to customers in the first quarter of 2008. These increases were more than offset by the unfavorable impact of changes in foreign currency exchange rates, which reduced reported revenues by 5%, and lower revenues from the pharmaceutical business.

Our fourth quarter results were affected by two factors relating to our pharmaceutical business. First, revenues were negatively impacted by the discontinuation of a pharmaceutical product in the second quarter and the divestiture of certain pharmaceutical product lines through a series of transactions in the fourth quarter. Second, the fourth quarter transactions resulted in a net loss of $3.6 million, or $0.06 per share, consisting of a pre-tax loss and restructuring related charges of $1.5 million and a tax provision of $2.1 million, primarily related to the disposition of non-deductible goodwill allocated to the pharmaceutical product lines sold. We have retained certain intellectual property and licenses for developed products as well as certain less significant product lines, which have been reassigned to other business units. Notwithstanding the book loss associated with these transactions, we generated $9.7 million of positive cash flow from the transactions. Please refer to the table below titled "Cash Flow Impact of Pharmaceutical Transactions and Restructuring."

Water. Water segment revenues for the fourth quarter of 2008 were $17.2 million compared to $17.3 million for the fourth quarter of 2007. Water organic growth, as defined above, for the fourth quarter was 7%. The decrease in Water revenues was due to the unfavorable impact of changes in foreign currency exchange rates, which reduced reported revenue by 8%, and unfavorable average unit sales prices, partly offset by higher sales volume. Unfavorable average unit sales price was due primarily to the impact of higher relative sales volume in countries where products sell at lower average prices. Increased sales volume was due, in part, to higher sales volume of our Colilert(R) products, used to detect total coliforms and E. coli in water.

Production Animal Segment. Production Animal Segment ("PAS") revenues for the fourth quarter of 2008 were $20.3 million compared to $22.2 million for the fourth quarter of 2007. The decrease in PAS revenues was due to the unfavorable impact of changes in foreign currency exchange rates, which reduced reported revenues by 7%, and lower average unit sales prices resulting from increased price competition. These unfavorable impacts were partly offset by higher livestock diagnostics sales volume.

Full-Year Results

Revenues for the year ended December 31, 2008 increased 11% to $1.024 billion from $922.6 million for the year ended December 31, 2007. Organic revenue growth, as defined above, for the year ended December 31, 2008, was 9%. Acquisitions, net of divestitures and discontinued products, and exchange each contributed 1% to revenue growth.

Earnings per diluted share for the year ended December 31, 2008 increased 28% to $1.87 from $1.46 for the year ended December 31, 2007. Non-GAAP adjusted diluted EPS for the year ended December 31, 2008 grew 20% to $1.90 from $1.58 for the year ended December 31, 2007. Please refer to the non-GAAP financial measures table below.

Additional Operating Results for the Fourth Quarter

Gross profit for the fourth quarter of 2008 decreased $1.7 million, or 1%, to $120.5 million from $122.2 million for the fourth quarter of 2007. As a percentage of total revenue, gross profit was constant at 50%. Year-over-year, the gross profit percentage was unfavorably impacted by greater relative sales of lower margin products and services, including IDEXX VetLab(R) instruments and laboratory and consulting services, and higher manufacturing costs of our instruments, including our Catalyst Dx(TM) chemistry analyzer. Decreases in the gross profit percentage were offset by the favorable net impact of foreign currency exchange rates, as gains on foreign exchange hedge contracts more than offset the unfavorable impact on revenue of changes in foreign currency exchange rates, and higher average sales prices in certain businesses.

Research and development ("R&D") expense for the fourth quarter of 2008 was $17.1 million, compared to $16.8 million for the fourth quarter of 2007, representing 7% of revenue in both periods.

Selling, general and administrative ("SG&A") expense for the fourth quarter of 2008 was $66.1 million, compared to $68.7 million for the fourth quarter of 2007, representing 27% of revenue in 2008 and 28% of revenue in 2007. The decrease in SG&A expense resulted primarily from the favorable impact of exchange rates on foreign currency denominated expenses, a decrease in sales and distributor commissions and decreased spending related to employee related incentives and benefits. These favorable items were partly offset by increased headcount and worldwide expansion of sales, marketing and customer support resources and higher spending related to general support functions.

Additionally, operating expenses for the fourth quarter of 2008 were negatively impacted by $1.5 million related to the disposition of certain pharmaceutical product lines and the related restructuring of the remaining pharmaceutical business, as discussed above.

Supplementary Analysis of Results

The accompanying financial tables provide more information concerning our revenues and other operating results for the three and twelve months ended December 31, 2008, as well as a reconciliation of non-GAAP diluted EPS to earnings per share.

Outlook for 2009

The Company provides the following updated guidance for the full year of 2009. This guidance reflects an assumption that the value of the U.S. dollar relative to other currencies will remain at its current level for the balance of 2009. Fluctuations in foreign currency exchange rates from current levels could have a significant positive or negative impact on our actual results of operations in 2009.

  • Revenues are expected to be $1.02 to $1.04 billion, which represents reported growth of 0% to 2% compared to 2008 revenues. The implied organic growth is 7% to 9% as compared to 9% for 2008. This guidance is down from the previous guidance of $1.05 to $1.07 billion provided in October, 2008, due primarily to our observation of worsening economic conditions in the fourth quarter.
  • Diluted EPS are expected to be between $1.84 to $1.90 as compared to the previous guidance of $1.82 to $1.92 given in October, 2008, which reflects lower anticipated revenues accompanied by tight operating expense control.
  • Free cash flow is expected to be approximately 100% of net income.

Conference Call and Webcast Information

IDEXX Laboratories will be hosting a conference call today at 9:00 a.m. (eastern) to discuss its fourth quarter results. To participate in the conference call, dial 800-288-8975 or 612-234-9959 and reference confirmation code 983183. An audio replay will be available through February 6, 2009 by dialing 320-365-3844 and referencing replay code 983183.

The call will also be available via live or archived Webcast on the IDEXX Laboratories' web site at www.idexx.com.

About IDEXX Laboratories

IDEXX Laboratories, Inc. is a leader in pet healthcare innovation, serving practicing veterinarians around the world with a broad range of diagnostic and information technology-based products and services. IDEXX products enhance the ability of veterinarians to provide advanced medical care, improve staff efficiency and to build more economically successful practices. IDEXX is also a worldwide leader in providing diagnostic tests and information for the production animal industry and tests for the quality and safety of water and milk. Headquartered in Maine, IDEXX Laboratories employs more than 4,500 people and offers products to customers in over 100 countries.

Note Regarding Forward-Looking Statements

This press release contains statements about the Company's business prospects and estimates of the Company's financial results for future periods that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on management's expectations of future events as of the date of this press release, and the Company assumes no obligation to update any forward-looking statements as a result of new information or future events or developments. Actual results could differ materially from management's expectations. Factors that could cause or contribute to such differences include the following: the Company's ability to develop, manufacture, introduce and market new products and enhancements to existing products; the impact of a weak economy on demand for the Company's products and services; the impact of disruptions in financial and currency markets; the effectiveness of the Company's sales and marketing activities; disruptions, shortages or pricing changes that affect the Company's purchases of products and materials from third parties, including from sole source suppliers; the Company's ability to identify acquisition opportunities, complete acquisitions and integrate acquired businesses; the impact of competition, technological change, and veterinary hospital consolidation on the markets for the Company's products; the Company's ability to manufacture complex biologic products; the effect of government regulation on the Company's business, including government decisions about whether and when to approve the Company's products and decisions regarding labeling, manufacturing and marketing products; the impact of distributor purchasing decisions on sales of the Company's products that are sold through distribution; changes or trends in veterinary medicine that affect the rate of use of the Company's products and services by veterinarians; the Company's ability to obtain patent and other intellectual property protection for its products, successfully enforce its intellectual property rights and defend itself against third party claims against the Company; the effects of operations outside the U.S., including from currency fluctuations, different regulatory, political and economic conditions, and different market conditions; and the loss of key employees. A further description of these and other factors can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2007, and quarterly report on Form 10-Q for the quarter ended September 30, 2008, in the section captioned "Risk Factors."

Contact: Merilee Raines, Chief Financial Officer, (207) 556-8155

    IDEXX Laboratories, Inc. and Subsidiaries
    Consolidated Statement of Operations
    Amounts in thousands except per share data (Unaudited)

                                Three Months Ended      Twelve Months Ended
                                December    December    December    December
                                   31,         31,         31,         31,
                                  2008        2007        2008        2007
    Revenue: Revenue           $243,293    $244,969  $1,024,030    $922,555
    Expenses
     and
    Income:  Cost of revenue    122,772     122,725     494,264     459,033
             Gross profit       120,521     122,244     529,766     463,522
             Sales and
              marketing          39,951      41,796     169,693     151,882
             General and
              administrative     26,179      26,937     115,586     108,119
             Research and
              development        17,063      16,769      70,552      67,338
             Loss on disposition
              of pharmaceutical
              product lines
              and related
              restructuring       1,479           -       1,479           -
             Income from
              operations         35,849      36,742     172,456     136,183
             Interest income
              (expense),
              net                  (581)        (19)     (2,269)     (1,340)
             Income before
              provision for
              income taxes       35,268      36,723     170,187     134,843
             Provision for
              income taxes       11,713      11,195      54,018      40,829
    Net
     Income: Net income         $23,555     $25,528    $116,169     $94,014
             Earnings per
              share: Basic        $0.40       $0.42       $1.94       $1.53
             Earnings per
              share: Diluted      $0.39       $0.40       $1.87       $1.46
             Shares outstanding:
              Basic              59,453      61,186      59,953      61,560
             Shares outstanding:
              Diluted            61,083      64,156      62,249      64,455



    IDEXX Laboratories, Inc. and Subsidiaries
    Key Operating Information (Unaudited)

                                      Three Months Ended  Twelve Months Ended
                                     December   December December   December
                                        31,        31,      31,        31,
                                        2008      2007      2008      2007
    Key Operating   Gross profit       49.5%     49.9%     51.7%     50.2%
    Ratios (as a    Sales, marketing,
    percentage of    general and
    revenue):        administrative
                     expense           27.2%     28.1%     27.9%     28.2%
                    Research and
                     development
                     expense            7.0%      6.8%      6.9%      7.3%
                    Loss on
                     disposition of
                     pharmaceutical
                     product lines
                     and related
                     restructuring      0.6%         -      0.1%         -
                    Income from
                     operations(1)     14.7%     15.0%     16.8%     14.8%


    International   International
                     revenue (in
                     thousands)      $97,071  $106,251  $413,973  $370,422
    Revenue:        International
                     revenue as
                     percentage of
                     total revenue     39.9%     43.4%     40.4%     40.2%

    (1) The sum of individual items may not equal the total due to rounding.

    IDEXX Laboratories, Inc. and Subsidiaries
    Non-GAAP Financial Measures
    Amounts in thousands except per share data (Unaudited)

                                                Three Months Ended
                                                            Income from
                                         Gross Profit        Operations
                                     Dec. 31,   Dec. 31,  Dec. 31,  Dec. 31,
                                       2008      2007      2008      2007

    GAAP measurement                $120,521  $122,244   $35,849   $36,742
       % of revenue                    49.5%     49.9%     14.7%     15.0%
    Acquisition-related purchase
     accounting, and acquisition
     integration costs (1)                 -         -         -       101
    Disposition of pharmaceutical
     product lines and related
     restructuring(2)                      -         -     1,479         -
    Non-GAAP comparative
     measurements(3)                $120,521  $122,244   $37,328   $36,843
       % of revenue                    49.5%     49.9%     15.3%     15.0%

                                              Three Months Ended
                                                          Earnings per Share
                                         Net Income            Diluted
                                    Dec. 31,  Dec. 31,   Dec. 31,  Dec. 31,
                                      2008      2007       2008      2007

    GAAP measurement                 $23,555   $25,528     $0.39     $0.40
       % of revenue                     9.7%     10.4%
    Acquisition-related purchase
     accounting, and acquisition
     integration costs (1)                 -        65         -         -
    Disposition of pharmaceutical
     product lines and related
     restructuring(2)                  3,598         -      0.06         -
    Non-GAAP comparative
     measurements(3)                 $27,153   $25,593     $0.44     $0.40
       % of revenue                    11.2%     10.4%


    Management believes adjusted diluted EPS is a useful non-GAAP financial
    measure to evaluate the results of ongoing operations, excluding
    significant specified events, period over period, and therefore believes
    that investors may find this information useful in addition to the GAAP
    results.

    We use these supplemental non-GAAP financial measures to evaluate the
    Company's comparative financial performance. The specified items that
    are excluded in these non-GAAP measures are actual charges that impact
    net income and cash flows, however, we believe that it is useful to
    evaluate our core business performance period over period excluding
    these specified items, in addition to relying upon GAAP financial
    measures.

    (1) We believe that the change from period to period due to specific
    acquisition-related purchase accounting and integration costs is not
    representative of ongoing operations and is not indicative of future
    performance. Specific acquisition-related discrete costs do not include
    amortization expense related to acquired intangible assets. We applied
    the statutory income tax rates of the applicable tax jurisdictions to
    calculate the after-tax impact of these discrete items.

    (2) We believe that the impact of the disposition of certain
    pharmaceutical product lines and the related restructuring of the
    remaining pharmaceutical business in the fourth quarter is not
    indicative of future performance because significant transactions and
    related costs of a similar nature are not likely to recur within a
    reasonable period. In the fourth quarter of 2008 we completed a
    transaction to sell our ACAREXX and SURPASS pharmaceutical products and
    a product currently under development, which were a part of our CAG
    segment, and subsequently restructured the remaining pharmaceutical
    business.

    (3) The sum of the individual items may not equal the non-GAAP
    measurement due to rounding of the individual items in this presentation.

    IDEXX Laboratories, Inc. and Subsidiaries
    Non-GAAP Financial Measures
    Amounts in thousands except per share data (Unaudited)

                                               Twelve Months Ended
                                                             Income from
                                        Gross Profit         Operations
                                     Dec. 31,   Dec. 31,  Dec. 31,   Dec. 31,
                                       2008     2007       2008      2007

    GAAP measurement                $529,766  $463,522  $172,456  $136,183
       % of revenue                    51.7%     50.2%     16.8%     14.8%
    Write-downs of certain
     pharmaceutical assets (1)             -    10,138         -    10,138
    Acquisition-related purchase
     Accounting and acquisition
     integration costs (2)                 -     1,979         -     2,482
    Disposition of pharmaceutical
     product lines and
     restructuring(3)                      -         -     1,479         -
    Discrete income tax benefits(4)        -         -         -         -
    Non-GAAP comparative
     measurements(5)                $529,766  $475,639  $173,935  $148,803
       % of revenue                    51.7%     51.6%     17.0%     16.1%



                                               Twelve Months Ended
                                                          Earnings per Share
                                         Net Income            Diluted
                                     Dec. 31,   Dec. 31,  Dec. 31,   Dec. 31,
                                       2008       2007      2008       2007

    GAAP measurement                $116,169   $94,014     $1.87     $1.46
       % of revenue                    11.3%     10.2%
    Write-downs of certain
     Pharmaceutical assets (1)             -     6,392         -      0.10
    Acquisition-related purchase
     Accounting and acquisition
     integration costs (2)                 -     1,588         -      0.02
    Disposition of pharmaceutical
     product lines and
     restructuring(3)                  3,598         -      0.06
    Discrete income tax benefits(4)   (1,472)        -     (0.02)         -
    Non-GAAP comparative
     measurements(5)                $118,295  $101,994     $1.90     $1.58
       % of revenue                    11.6%     11.1%


    Management believes adjusted diluted EPS is a useful non-GAAP financial
    measure to evaluate the results of ongoing operations, excluding
    significant specified events, period over period, and therefore believes
    that investors may find this information useful in addition to the GAAP
    results.

    We use these supplemental non-GAAP financial measures to evaluate the
    Company's comparative financial performance. The specified items that
    are excluded in these non-GAAP measures are actual charges that impact
    net income and cash flows, however, we believe that it is useful to
    evaluate our core business performance period over period excluding
    these specified items, in addition to relying upon GAAP financial
    measures.

    (1) We believe that the write-down of certain pharmaceutical assets is
    not indicative of future performance because significant costs of a
    similar nature are not likely to recur within a reasonable period. We
    believe that we do not have other large inventory investments where the
    relationship of inventory to current sales volumes creates significant
    exposure to valuation risk. During the second quarter of 2007, we
    recognized a $9.1 million write-down of raw materials inventory and a
    $1.0 million write-off of a prepaid royalty license associated with
    Navigator(R) paste, a nitazoxanide product for the treatment of equine
    protozoal myeloencephalitis. We wrote down these assets in the second
    quarter of 2007 because the third-party contract manufacturer of
    finished goods gave notification that it would discontinue manufacturing
    the product in 2009. Additionally, product sales have been significantly
    lower than projected. Due in part to an estimated production volume
    which is low, we believe that we will not be able to enter into a
    replacement manufacturing arrangement on economically feasible terms and
    that we will not be able to obtain the product after termination of the
    existing manufacturing arrangement. We applied the statutory income tax
    rate of the applicable tax jurisdiction to calculate the after-tax
    impact of this discrete item.

    (2) We believe that the change from period to period due to specific
    acquisition-related purchase accounting and integration costs is not
    representative of ongoing operations and is not indicative of future
    performance. Specific acquisition-related discrete costs do not include
    amortization expense related to acquired intangible assets. We applied
    the statutory income tax rates of the applicable tax jurisdictions to
    calculate the after-tax impact of these discrete items.

    (3) We believe that the impact of the disposition of certain
    pharmaceutical product lines and the related restructuring of the
    remaining pharmaceutical business in the fourth quarter of 2008 is not
    indicative of future performance because significant transactions and
    related costs of a similar nature are not likely to recur within a
    reasonable period. In the fourth quarter of 2008 we completed a
    transaction to sell our ACAREXX and SURPASS pharmaceutical products and
    a product currently under development, which were a part of our CAG
    segment, and subsequently restructured the remaining pharmaceutical
    business.

    (4) We believe that certain significant discrete income tax items create
    impacts on financial measures that are not indicative of future
    performance because the items are not likely to recur within a
    reasonable period. For 2008, the separately identified discrete income
    tax benefit was due to a reduction in international deferred tax
    liabilities due to lower anticipated international tax rates.

    (5) The sum of the individual items may not equal the non-GAAP
    measurement due to rounding of the individual items in this presentation.


    IDEXX Laboratories, Inc. and Subsidiaries
    Segment Information
    Amounts in thousands (Unaudited)

                                 Three Months Ended      Twelve Months Ended
                                 December    December    December    December
                                     31,         31,         31,         31,
                                    2008        2007        2008        2007
    Revenue:      CAG (1)       $196,523    $197,240    $834,056    $750,449
                  Water           17,182      17,294      74,469      66,235
                  PAS             20,310      22,214      80,762      75,085
                  Other (1)        9,278       8,221      34,743      30,786
                  Total         $243,293    $244,969  $1,024,030    $922,555

    Gross Profit: CAG (1)        $90,359     $93,720    $412,199    $362,162
                  Water           11,479      10,696      47,052      41,656
                  PAS             14,307      14,051      55,005      46,728
                  Other (1)        4,289       3,643      15,131      12,455
                  Unallocated         87         134         379         521
                  Total         $120,521    $122,244    $529,766    $463,522

    Income from
    Operations:   CAG (1)        $24,210     $25,878    $129,620    $100,285
                  Water            7,893       6,837      31,330      26,847
                  PAS              6,936       5,170      21,760      15,456
                  Other (1)          919         604       1,555       1,003
                  Unallocated     (4,109)     (1,747)    (11,809)     (7,408)
                  Total          $35,849     $36,742    $172,456    $136,183

    Gross Profit
    (as a
     percentage
     of revenue): CAG               46.0%       47.5%       49.4%       48.3%
                  Water             66.8%       61.8%       63.2%       62.9%
                  PAS               70.4%       63.3%       68.1%       62.2%
                  Other             46.2%       44.3%       43.6%       40.5%

    Income from
    Operations
    (as a
     percentage
     of revenue): CAG               12.3%       13.1%       15.5%       13.4%
                  Water             45.9%       39.5%       42.1%       40.5%
                  PAS               34.2%       23.3%       26.9%       20.6%
                  Other              9.9%        7.3%        4.5%        3.3%


    (1) In connection with restructuring the remaining pharmaceutical
    business, certain product lines were realigned to other business units
    and therefore the related product revenue has been reclassified from the
    CAG segment to Other.  Segment information presented for the year ended
    December 31, 2007 has been restated to conform to our presentation of
    reportable segments for the year ended December 31, 2008.


    IDEXX Laboratories, Inc. and Subsidiaries
    Revenues by Product and Service Categories
    Amounts in thousands (Unaudited)


                                       Three Months Ended
                                                                       Per-
                                                                     centage
                                                                      Change
                                                                        Net
                                                                        of
                                                                 Per-   Acq-
                                                               centage uisi-
                                                               Change  tions/
                                                                from Divesti-
                                                         Per-   Acq-    tures
                                                        centage uisi-   and
                                                        Change  tions/  Curr-
                                                Per-     from  Divesti-  ency
    Net         Dec. 31,   Dec. 31,   Dollar   centage Currency tures  Effect
    Revenue        2008      2007     Change   Change    (1)     (2)    (3)
    CAG (4)     $196,523   $197,240    $(717)   (0.4%)  (5.0%) (2.5%)   7.1%
    Water         17,182     17,294     (112)   (0.6%)  (7.8%)    -     7.2%
    PAS           20,310     22,214   (1,904)   (8.6%)  (6.9%)    -    (1.7%)
    Other (4)      9,278      8,221    1,057    12.9%   (0.5%)    -    13.4%
      Total     $243,293   $244,969  $(1,676)   (0.7%)  (5.2%) (2.0%)   6.5%



                                      Three Months Ended
                                                                       Per-
                                                                     centage
                                                                      Change
                                                                        Net
                                                                        of
                                                                 Per-   Acq-
                                                               centage uisi-
                                                               Change  tions/
                                                                from Divesti-
                                                         Per-   Acq-    tures
                                                        centage uisi-   and
                                                        Change  tions/  Curr-
                                                Per-     from  Divesti-  ency
    Net CAG     Dec. 31,   Dec. 31,   Dollar   centage Currency tures  Effect
    Revenue        2008      2007     Change   Change    (1)     (2)    (3)
    Instruments
     and
     consumables $81,559   $79,382    $2,177     2.7%   (5.6%)    -     8.3%
    Rapid assay
     products(4)  30,240    31,140      (900)   (2.9%)  (1.4%)    -    (1.5%)
    Laboratory
     and
     consulting
     services     65,260    63,843     1,417     2.2%   (6.9%)   0.8%   8.3%
    Practice
     information
     systems and
     digital
     radiography  18,918    16,966     1,952    11.5%   (3.4%)    -    14.9%
    Pharmaceutical
     products (4)    546     5,909    (5,363)  (90.8%)    -    (92.1%)  1.3%
      Net CAG
       revenue  $196,523  $197,240     $(717)   (0.4%)  (5.0%)  (2.5%)  7.1%


    (1) Represents the percentage change in revenue attributed to the effect
    of changes in currency rates from the three months ended December 31,
    2007 to the three months ended December 31, 2008.

    (2) Represents the percentage change in revenue attributed to
    incremental revenues during the three months ended December 31, 2008
    compared to the three months ended December 31, 2007 from businesses
    acquired, divested or discontinued since October 1, 2007.

    (3) Organic Growth

    (4) In connection with restructuring the remaining pharmaceutical
    business, certain product lines were realigned to other business units
    and therefore the related product revenue has been reclassified from the
    CAG segment to Other and from the Pharmaceutical product category to the
    Rapid Assay product category.

    IDEXX Laboratories, Inc. and Subsidiaries
    Revenues by Product and Service Categories
    Amounts in thousands (Unaudited)


                                 Twelve Months Ended
                                                                       Per-
                                                                     centage
                                                                      Change
                                                                        Net
                                                                        of
                                                                 Per-   Acq-
                                                               centage uisi-
                                                               Change  tions/
                                                                from Divesti-
                                                         Per-   Acq-    tures
                                                        centage uisi-   and
                                                        Change  tions/  Curr-
                                                Per-     from  Divesti-  ency
    Net         Dec. 31,   Dec. 31,   Dollar   centage Currency tures  Effect
    Revenue        2008      2007     Change   Change    (1)     (2)    (3)

    CAG(4)     $834,056   $750,449   $83,607    11.1%    1.0%    0.8%   9.3%
    Water        74,469     66,235     8,234    12.4%    0.3%     -    12.1%
    PAS          80,762     75,085     5,677     7.6%    4.8%    2.7%   0.1%
    Other(4)     34,743     30,786     3,957    12.9%    2.8%    2.9%   7.2%
     Total   $1,024,030   $922,555  $101,475    11.0%    1.3%    0.9%   8.8%



                                 Twelve Months Ended
                                                                       Per-
                                                                     centage
                                                                      Change
                                                                        Net
                                                                        of
                                                                 Per-   Acq-
                                                               centage uisi-
                                                               Change  tions/
                                                                from Divesti-
                                                         Per-   Acq-    tures
                                                        centage uisi-   and
                                                        Change  tions/  Curr-
                                                Per-     from  Divesti-  ency
    Net CAG     Dec. 31,   Dec. 31,   Dollar   centage Currency tures  Effect
    Revenue        2008      2007     Change   Change    (1)     (2)    (3)
    Instruments
     and
     consumables $318,533  $289,271  $29,262    10.1%    1.0%     -     9.1%
    Rapid assay
     products (4) 146,867   133,508   13,359    10.0%    0.9%     -     9.1%
    Laboratory
     and
     consulting
     services     288,244   255,193   33,051    13.0%    1.5%    2.5%   9.0%
    Practice
     information
     systems and
     digital
     radiography   61,291    53,385    7,906    14.8%   (0.2%)    -    15.0%
    Pharmaceutical
     products(4)   19,121    19,092       29     0.2%     -     (2.5%)  2.7%    Net CAG
     revenue     $834,056  $750,449  $83,607    11.1%    1.0%    0.8%   9.3%

    (1) Represents the percentage change in revenue attributed to the effect
    of changes in currency rates from the twelve months ended December 31,
    2007 to the twelve months ended December 31, 2008.

    (2) Represents the percentage change in revenue attributed to
    incremental revenues during the twelve months ended December 31, 2008
    compared to the twelve months ended December 31, 2007 from businesses
    acquired, divested or discontinued subsequent to January 1, 2007.

    (3) Organic Growth

    (4) In connection with restructuring the remaining pharmaceutical
    business, certain product lines were realigned to other business units
    and therefore the related product revenue has been reclassified from the
    CAG segment to Other and from the Pharmaceutical product category to the
    Rapid Assay product category.


    IDEXX Laboratories, Inc. and Subsidiaries
    Consolidated Balance Sheet
    Amounts in thousands (Unaudited)

                                                      December    December
                                                         31,         31,
                                                        2008        2007
    Assets:          Current Assets:
                     Cash and cash equivalents         $78,868     $60,360
                     Accounts receivable, net          111,498     108,384
                     Inventories                       115,926      98,804
                     Other current assets               49,598      38,115
                     Total current assets              355,890     305,663
                     Property and equipment, at
                      cost                             320,198     255,176
                     Less: accumulated
                      depreciation                     130,552     113,324
                     Property and equipment,
                      net                              189,646     141,852
                     Other long-term assets,
                      net                              219,901     254,664
                     Total assets                     $765,437    $702,179
    Liabilities and
    Stockholders'
    Equity:          Current Liabilities:
                     Accounts payable                  $28,006     $32,510
                     Accrued expenses                  104,616     107,248
                     Debt                              151,385      72,956
                     Deferred revenue                   11,285      10,678
                     Total current liabilities         295,292     223,392
                     Long-term debt, net of
                      current portion                    5,094       5,727
                     Other long-term
                      liabilities                       26,857      34,737
                     Total long-term
                      liabilities                       31,951      40,464

                     Stockholders' Equity:
                     Common stock                        9,539       9,450
                     Additional paid-in capital        548,661     514,773
                     Deferred stock units                2,678       2,201
                     Retained earnings                 702,031     585,862
                     Treasury stock, at cost          (830,390)   (696,668)
                     Accumulated other
                      comprehensive income               5,675      22,705
                     Total stockholders' equity        438,194     438,323
                      Total liabilities and
                       stockholders' equity           $765,437    $702,179



     IDEXX Laboratories, Inc. and Subsidiaries
     Key Balance Sheet Information
      (Unaudited)

                                                       December    December
                                                           31,         31,
                                                          2008        2007
    Key
    Balance          Days sales outstanding               41.9        39.4
     Sheet
    Information:     Inventory turns                       2.0         2.3




    IDEXX Laboratories, Inc. and Subsidiaries
    Consolidated Statement of Cash Flows
    Amounts in thousands (Unaudited)

                                                      Twelve Months Ended
                                                   December 31, December 31,
                                                           2008        2007
    Operating:  Cash Flows from Operating Activities:
                Net income                             $116,169     $94,014
                Non-cash charges                         60,380      41,906
                Changes in current assets and
                 liabilities, net of acquisitions
                 and disposals                          (33,206)       (796)
                Net cash provided by
                 operating activities                  $143,343    $135,124
    Investing:  Cash Flows from Investing Activities:
                Decrease in investments, net                  -      35,000
                Purchase of property and
                 equipment                              (89,237)    (65,138)
                Acquisition of businesses and
                 intangible assets                       (8,649)    (89,884)
                Proceeds from sale of assets              7,025           -
                Acquisition of equipment leased
                 to customers                              (734)     (1,106)
                Net cash used by investing
                 activities                            $(91,595)  $(121,128)
    Financing:  Cash Flows from Financing Activities:
                Borrowings under notes payable,
                 net                                     78,955      69,992
                Purchase of treasury stock             (132,342)   (118,387)
                Proceeds from the exercise of
                 stock options                           16,360      20,941
                Tax benefit from exercise of
                 stock options                            6,237       9,267
                Net cash used by financing
                 activities                            $(30,790)   $(18,187)
                Net effect of exchange rate
                 changes                                 (2,450)      2,885
                Net decrease in cash and cash
                 equivalents                             18,508      (1,306)
                Cash and cash equivalents,
                 beginning of period                     60,360      61,666
                Cash and cash equivalents,
                 end of period                          $78,868     $60,360



    IDEXX Laboratories, Inc. and Subsidiaries
    Free Cash Flow
    Amounts in thousands (Unaudited)

                                                    Twelve Months Ended
                                                  December 31, December 31,
                                                          2008        2007
    Free Cash
    Flow:      Net cash provided by operating
                activities                             $143,343    $135,124
               Financing cash flows attributable
                to tax benefits from exercise of
                stock options                             6,237       9,267
               Purchase of fixed assets                 (89,237)    (65,138)
               Acquisition of equipment leased
                to customers                               (734)     (1,106)
               Free cash flow                           $59,609     $78,147

    Free cash flow indicates the cash generated from operations and tax
    benefits attributable to stock option exercises, reduced by investments
    in fixed assets. We feel free cash flow is a useful measure because it
    indicates the cash the operations of the business are generating after
    appropriate reinvestment for recurring investments in fixed assets that
    are required to operate the business. We believe this is a common
    financial measure useful to further evaluate the results of operations.


     IDEXX Laboratories, Inc. and Subsidiaries
     Cash Flow Impact of Pharmaceutical Transactions and Restructuring
     Amounts in thousands (Unaudited)
                                                         December 31,
                                                             2008
       Proceeds                                             8,402
       Restructuring and transaction expenses
        incurred                                             (671)
       Tax charge related to disposal of
        nondeductible goodwill                             (2,666)
       Realization of deferred tax assets                   4,228
       Tax benefit realized from transaction
        loss                                                  401
       Net cash flow realized from
         transaction and restructuring                      9,694




    IDEXX Laboratories, Inc. and Subsidiaries
    Common Stock Repurchases
    Amounts in thousands except per share data (Unaudited)

                                       Three Months Ended Twelve Months Ended
                                       December  December December December
                                           31,      31,      31,       31,
                                           2008    2007      2008      2007
     Share repurchases during
       the period                           297     318     2,640     2,577
     Average price paid per share        $33.41  $60.20    $50.14    $45.94

        Shares remaining under
         repurchase authorization
         as of December 31, 2008                            4,213



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SOURCE IDEXX Laboratories, Inc.
Copyright©2009 PR Newswire.
All rights reserved


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