x
|
QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
¨
|
TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
DELAWARE
|
01-0393723
|
(State
or other jurisdiction of incorporation
or
organization)
|
(IRS
Employer Identification No.)
|
ONE
IDEXX DRIVE, WESTBROOK, MAINE
|
04092
|
(Address
of principal executive offices)
|
(ZIP
Code)
|
Large
accelerated filer
|
x
|
Accelerated
filer
|
¨
|
Non-accelerated
filer
|
¨ (Do not check if a smaller
reporting company)
|
Smaller
reporting company
|
¨
|
Item No.
|
Page
|
|||
PART
I—FINANCIAL INFORMATION
|
||||
Item
1.
|
Financial
Statements (unaudited)
|
|||
Condensed
Consolidated Balance Sheets as of June 30, 2010 and December 31,
2009
|
3
|
|||
Condensed
Consolidated Statements of Operations for the Three and Six Months Ended
June 30, 2010 and 2009
|
4
|
|||
Condensed
Consolidated Statements of Cash Flows for the Six Months Ended June 30,
2010 and 2009
|
5
|
|||
Notes
to Condensed Consolidated Financial Statements
|
6
|
|||
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
19
|
||
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
33
|
||
Item
4.
|
Controls
and Procedures
|
33
|
||
PART
II—OTHER INFORMATION
|
||||
Item
1A.
|
Risk
Factors
|
34
|
||
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
39
|
||
Item
6.
|
Exhibits
|
41
|
||
Signatures
|
42
|
|||
Exhibit Index
|
June 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
ASSETS
|
||||||||
Current
Assets:
|
||||||||
Cash
and cash equivalents
|
$
|
117,975
|
$
|
106,728
|
||||
Accounts
receivable, net of reserves of $2,253 in 2010 and $2,331 in
2009
|
127,138
|
115,107
|
||||||
Inventories,
net
|
122,032
|
110,425
|
||||||
Deferred
income tax assets
|
23,433
|
25,188
|
||||||
Other
current assets
|
19,974
|
18,890
|
||||||
Total
current assets
|
410,552
|
376,338
|
||||||
Long-Term
Assets:
|
||||||||
Property
and equipment, net
|
196,714
|
199,946
|
||||||
Goodwill
|
143,252
|
148,705
|
||||||
Intangible
assets, net
|
57,873
|
63,907
|
||||||
Other
long-term assets, net
|
25,344
|
19,631
|
||||||
Total
long-term assets
|
423,183
|
432,189
|
||||||
TOTAL
ASSETS
|
$
|
833,735
|
$
|
808,527
|
||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
Liabilities:
|
||||||||
Accounts
payable
|
$
|
23,190
|
$
|
19,133
|
||||
Accrued
liabilities
|
99,629
|
104,959
|
||||||
Line
of credit
|
133,862
|
118,790
|
||||||
Current
portion of long-term debt
|
838
|
813
|
||||||
Current
portion of deferred revenue
|
13,681
|
12,610
|
||||||
Total
current liabilities
|
271,200
|
256,305
|
||||||
Long-Term
Liabilities:
|
||||||||
Deferred
income tax liabilities
|
17,940
|
18,283
|
||||||
Long-term
debt, net of current portion
|
3,856
|
4,281
|
||||||
Long-term
deferred revenue, net of current portion
|
4,740
|
3,813
|
||||||
Other
long-term liabilities
|
11,722
|
11,266
|
||||||
Total
long-term liabilities
|
38,258
|
37,643
|
||||||
Total
liabilities
|
309,458
|
293,948
|
||||||
Commitments
and Contingencies (Note 12)
|
||||||||
Stockholders’
Equity:
|
||||||||
Common
stock, $0.10 par value: Authorized: 120,000 shares; Issued: 97,294 and
96,334 shares in 2010 and 2009, respectively
|
9,729
|
9,633
|
||||||
Additional
paid-in capital
|
613,416
|
580,797
|
||||||
Deferred
stock units: Outstanding: 128 and 117 units in 2010 and 2009,
respectively
|
4,798
|
4,301
|
||||||
Retained
earnings
|
894,475
|
824,256
|
||||||
Accumulated
other comprehensive income
|
2,924
|
10,341
|
||||||
Treasury
stock, at cost: 39,680 and 38,118 shares in 2010 and 2009,
respectively
|
(1,001,081
|
)
|
(914,759
|
)
|
||||
Total
IDEXX Laboratories, Inc. stockholders’ equity
|
524,261
|
514,569
|
||||||
Noncontrolling
interest
|
16
|
10
|
||||||
Total
stockholders’ equity
|
524,277
|
514,579
|
||||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
833,735
|
$
|
808,527
|
For the Three Months Ended
June 30,
|
For the Six Months Ended
June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Revenue:
|
||||||||||||||||
Product
revenue
|
$
|
179,813
|
$
|
176,066
|
$
|
356,574
|
$
|
331,961
|
||||||||
Service
revenue
|
101,669
|
89,657
|
193,433
|
170,217
|
||||||||||||
Total
revenue
|
281,482
|
265,723
|
550,007
|
502,178
|
||||||||||||
Cost
of Revenue:
|
||||||||||||||||
Cost
of product revenue
|
72,063
|
71,304
|
140,697
|
130,571
|
||||||||||||
Cost
of service revenue
|
60,135
|
55,979
|
117,665
|
108,734
|
||||||||||||
Total
cost of revenue
|
132,198
|
127,283
|
258,362
|
239,305
|
||||||||||||
Gross
profit
|
149,284
|
138,440
|
291,645
|
262,873
|
||||||||||||
Expenses:
|
||||||||||||||||
Sales
and marketing
|
44,167
|
41,876
|
88,583
|
82,861
|
||||||||||||
General
and administrative
|
33,076
|
30,794
|
65,884
|
59,862
|
||||||||||||
Research
and development
|
17,206
|
16,594
|
33,915
|
32,533
|
||||||||||||
Income
from operations
|
54,835
|
49,176
|
103,263
|
87,617
|
||||||||||||
Interest
expense
|
(689
|
)
|
(459
|
)
|
(1,054
|
)
|
(1,099
|
)
|
||||||||
Interest
income
|
138
|
56
|
191
|
300
|
||||||||||||
Income
before provision for income taxes
|
54,284
|
48,773
|
102,400
|
86,818
|
||||||||||||
Provision
for income taxes
|
17,087
|
15,106
|
32,175
|
27,080
|
||||||||||||
Net
income
|
37,197
|
33,667
|
70,225
|
59,738
|
||||||||||||
Less:
Net income attributable to noncontrolling interest
|
4
|
-
|
6
|
-
|
||||||||||||
Net
income attributable to IDEXX Laboratories, Inc.
stockholders
|
$
|
37,193
|
$
|
33,667
|
$
|
70,219
|
$
|
59,738
|
||||||||
Earnings
per Share:
|
||||||||||||||||
Basic
|
$
|
0.64
|
$
|
0.57
|
$
|
1.21
|
$
|
1.01
|
||||||||
Diluted
|
$
|
0.62
|
$
|
0.55
|
$
|
1.17
|
$
|
0.98
|
||||||||
Weighted
Average Shares Outstanding:
|
||||||||||||||||
Basic
|
57,747
|
58,911
|
57,890
|
59,041
|
||||||||||||
Diluted
|
59,646
|
60,697
|
59,875
|
60,688
|
For the Six Months Ended
June 30,
|
||||||||
2010
|
2009
|
|||||||
Cash
Flows from Operating Activities:
|
||||||||
Net
income
|
$
|
70,225
|
$
|
59,738
|
||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation
and amortization
|
22,632
|
24,712
|
||||||
Loss
on disposal of property and equipment
|
1,442
|
2,177
|
||||||
Increase
(decrease) in deferred compensation liability
|
(71
|
)
|
159
|
|||||
Write-down
of marketable securities
|
-
|
150
|
||||||
Provision
for uncollectible accounts
|
596
|
654
|
||||||
Provision
for (benefit of) deferred income taxes
|
(112
|
)
|
1,239
|
|||||
Share-based
compensation expense
|
6,602
|
5,941
|
||||||
Tax
benefit from exercises of stock options and vesting of restricted stock
units
|
(9,372
|
)
|
(1,355
|
)
|
||||
Changes
in assets and liabilities, net of acquisitions:
|
||||||||
Accounts
receivable
|
(16,544
|
)
|
(7,101
|
)
|
||||
Inventories
|
(12,977
|
)
|
(6,876
|
)
|
||||
Other
assets
|
(1,634
|
)
|
(2,768
|
)
|
||||
Accounts
payable
|
4,308
|
(1,684
|
)
|
|||||
Accrued
liabilities
|
7,432
|
(3,423
|
)
|
|||||
Deferred
revenue
|
2,558
|
(682
|
)
|
|||||
Net
cash provided by operating activities
|
75,085
|
70,881
|
||||||
Cash
Flows from Investing Activities:
|
||||||||
Purchases
of property and equipment
|
(17,437
|
)
|
(21,360
|
)
|
||||
Proceeds
from disposition of pharmaceutical product lines
|
-
|
1,377
|
||||||
Proceeds
from sale of property and equipment
|
64
|
1,076
|
||||||
Acquisitions
of intangible assets
|
(144
|
)
|
-
|
|||||
Net
cash used by investing activities
|
(17,517
|
)
|
(18,907
|
)
|
||||
Cash
Flows from Financing Activities:
|
||||||||
Borrowings
on revolving credit facilities, net
|
15,099
|
3,782
|
||||||
Payment
of other notes payable
|
(400
|
)
|
(436
|
)
|
||||
Purchase
of treasury stock
|
(83,724
|
)
|
(39,725
|
)
|
||||
Proceeds
from exercises of stock options and employee stock purchase
plans
|
16,446
|
6,888
|
||||||
Tax
benefit from exercises of stock options and vesting of restricted stock
units
|
9,372
|
1,355
|
||||||
Net
cash used by financing activities
|
(43,207
|
)
|
(28,136
|
)
|
||||
Net
effect of changes in exchange rates on cash
|
(3,114
|
)
|
1,038
|
|||||
Net
increase in cash and cash equivalents
|
11,247
|
24,876
|
||||||
Cash
and cash equivalents at beginning of period
|
106,728
|
78,868
|
||||||
Cash
and cash equivalents at end of period
|
$
|
117,975
|
$
|
103,744
|
|
·
|
We
recognize revenue at the time of shipment to U.S. distributors for
substantially all products sold through distributors because title and
risk of loss pass to the distributors on delivery to the common carrier.
Our distributors do not have the right to return products. We recognize
revenue for the remainder of our customers when the product is delivered
to the customer, except as noted
below.
|
|
·
|
We
recognize revenue from the sales of instruments, non-cancelable software
licenses and hardware systems upon installation (and completion of
training if applicable) and the customer’s acceptance of the instrument or
system as we have no significant further obligations after this point in
time.
|
|
·
|
We
recognize service revenue at the time the service is
performed.
|
|
·
|
We
recognize revenue associated with extended maintenance agreements (“EMAs”)
over the life of the contracts using the straight-line method, which
approximates the expected timing in which applicable services are
performed. Amounts collected in advance of revenue recognition are
recorded as a current or long-term liability based on the time from the
balance sheet date to the future date of revenue
recognition.
|
|
·
|
We
recognize revenue on certain instrument systems under rental programs over
the life of the rental agreement using the straight-line method. Amounts
collected in advance of revenue recognition are recorded as a current or
long-term liability based on the time from the balance sheet date to the
future date of revenue recognition.
|
|
·
|
We
recognize revenue on practice information management systems sales either
by allocating the revenue to each element of the sale based on relative
fair values of the elements, including post-contract support when fair
value for all elements is available, or by use of the residual method when
only the fair value of the post-contract support is available. We
recognize revenue for the system on installation and customer acceptance
and recognize revenue equal to the fair value of the post-contract support
over the support period.
|
|
·
|
Shipping
costs reimbursed by the customer are included in
revenue.
|
For the Three Months Ended
June 30,
|
For the Six Months Ended
June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Fair
value of share-based compensation awards
|
$
|
354
|
$
|
116
|
$
|
15,355
|
$
|
15,255
|
||||||||
Share-based
compensation expense
|
3,168
|
2,944
|
6,512
|
5,806
|
For the Six Months Ended
June 30,
|
||||||||
2010
|
2009
|
|||||||
Expected
stock price volatility
|
31 | % | 30 | % | ||||
Expected
term, in years
|
4.9 | 4.8 | ||||||
Risk-free
interest rate
|
2.3 | % | 1.6 | % | ||||
Weighted
average fair value of options granted
|
$ | 16.56 | $ | 9.97 |
June 30,
|
December 31,
|
|||||||
2010
|
2009
|
|||||||
Raw
materials
|
$
|
29,999
|
$
|
28,426
|
||||
Work-in-process
|
14,706
|
17,761
|
||||||
Finished
goods
|
77,327
|
64,238
|
||||||
$
|
122,032
|
$
|
110,425
|
June 30,
2010
|
December 31,
2009
|
|||||||
Accrued
expenses
|
$
|
31,548
|
$
|
33,094
|
||||
Accrued
employee compensation and related expenses
|
40,864
|
44,497
|
||||||
Accrued
taxes
|
5,082
|
9,980
|
||||||
Accrued
customer programs
|
22,135
|
17,388
|
||||||
$
|
99,629
|
$
|
104,959
|
For the Three Months Ended
June 30,
|
For the Six Months Ended
June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Balance,
beginning of period
|
$
|
2,614
|
$
|
3,106
|
$
|
3,086
|
$
|
2,837
|
||||||||
Provision
for warranty expense
|
1,020
|
1,328
|
1,941
|
2,317
|
||||||||||||
Change
in estimate
|
(90
|
)
|
(425
|
)
|
(570
|
)
|
(420
|
)
|
||||||||
Settlement
of warranty liability
|
(947
|
)
|
(910
|
)
|
(1,860
|
)
|
(1,635
|
)
|
||||||||
Balance,
end of period
|
$
|
2,597
|
$
|
3,099
|
$
|
2,597
|
$
|
3,099
|
For the Three Months Ended
June 30,
|
For the Six Months Ended
June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Shares
acquired
|
422 | 593 | 1,562 | 1,092 | ||||||||||||
Total
cost of shares acquired
|
$ | 26,020 | $ | 24,758 | $ | 86,322 | $ | 40,816 | ||||||||
Average
cost per share
|
$ | 61.66 | $ | 41.72 | $ | 55.26 | $ | 37.37 |
For the Three Months Ended
June 30,
|
For the Six Months Ended
June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Effective
income tax rate
|
31.5
|
%
|
31.0
|
%
|
31.4
|
%
|
31.2
|
%
|
For the Three Months Ended
June 30,
|
For the Six Months Ended
June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Net
income
|
$
|
37,197
|
$
|
33,667
|
$
|
70,225
|
$
|
59,738
|
||||||||
Less:
Net income attributable to noncontrolling interest
|
4
|
-
|
6
|
-
|
||||||||||||
Net
income attributable to IDEXX Laboratories, Inc.
stockholders
|
37,193
|
33,667
|
70,219
|
59,738
|
||||||||||||
Other
comprehensive income (loss) attributable to IDEXX Laboratories, Inc.
stockholders:
|
||||||||||||||||
Foreign
currency translation adjustments
|
(7,339
|
)
|
14,063
|
(12,887
|
)
|
6,971
|
||||||||||
Change
in fair value of foreign currency contracts classified as hedges, net of
tax
|
4,020
|
(7,170
|
)
|
6,295
|
(8,457
|
)
|
||||||||||
Change
in fair value of interest rate swaps classified as hedges, net of
tax
|
(191
|
)
|
549
|
(773
|
)
|
335
|
||||||||||
Change
in fair market value of investments, net of tax
|
(109
|
)
|
305
|
(52
|
)
|
242
|
||||||||||
Comprehensive
income attributable to IDEXX Laboratories, Inc.
stockholders
|
$
|
33,574
|
$
|
41,414
|
$
|
62,802
|
$
|
58,829
|
For the Three Months Ended
June 30,
|
For the Six Months Ended
June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Shares
Outstanding for Basic Earnings per Share:
|
||||||||||||||||
Weighted
average shares outstanding
|
57,619
|
58,797
|
57,765
|
58,930
|
||||||||||||
Weighted
average vested deferred stock units outstanding
|
128
|
114
|
125
|
111
|
||||||||||||
57,747
|
58,911
|
57,890
|
59,041
|
|||||||||||||
Shares
Outstanding for Diluted Earnings per Share:
|
||||||||||||||||
Shares
outstanding for basic earnings per share
|
57,747
|
58,911
|
57,890
|
59,041
|
||||||||||||
Dilutive
effect of options issued
|
1,764
|
1,711
|
1,801
|
1,569
|
||||||||||||
Dilutive
effect of restricted stock units issued
|
134
|
67
|
182
|
71
|
||||||||||||
Dilutive
effect of unvested deferred stock units issued
|
1
|
8
|
2
|
7
|
||||||||||||
59,646
|
60,697
|
59,875
|
60,688
|
For the Three Months Ended
June 30,
|
For the Six Months Ended
June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Weighted
average number of shares underlying anti-dilutive options
|
547
|
1,442
|
624
|
1,526
|
||||||||||||
Weighted
average exercise price per underlying share of anti-dilutive
options
|
$
|
54.19
|
$
|
44.18
|
$
|
55.11
|
$
|
44.00
|
||||||||
Weighted
average number of shares underlying anti-dilutive restricted stock
units
|
-
|
127
|
-
|
17
|
June 30,
|
||||||||
2010
|
2009
|
|||||||
Closing
price per share of our common stock
|
$
|
60.90
|
$
|
46.20
|
||||
Number
of shares underlying options with exercise prices below the closing
price
|
4,378
|
4,714
|
||||||
Number
of shares underlying options with exercise prices equal to or above the
closing price
|
4
|
571
|
||||||
Total
number of shares underlying outstanding options
|
4,382
|
5,285
|
For the Three Months Ended June 30,
|
||||||||||||||||||||||||
CAG
|
Water
|
LPD
|
Other
|
Unallocated
Amounts
|
Consolidated
Total
|
|||||||||||||||||||
2010
|
||||||||||||||||||||||||
Revenue
|
$ | 232,320 | $ | 19,448 | $ | 19,160 | $ | 10,554 | $ | - | $ | 281,482 | ||||||||||||
Income
(loss) from operations
|
$ | 44,879 | $ | 7,917 | $ | 4,188 | $ | 202 | $ | (2,351 | ) | $ | 54,835 | |||||||||||
Interest
expense, net
|
551 | |||||||||||||||||||||||
Income
before provision for income taxes
|
54,284 | |||||||||||||||||||||||
Provision
for income taxes
|
17,087 | |||||||||||||||||||||||
Net
income
|
37,197 | |||||||||||||||||||||||
Net
income attributable to noncontrolling interest
|
4 | |||||||||||||||||||||||
Net
income attributable to IDEXX Laboratories, Inc.
stockholders
|
$ | 37,193 | ||||||||||||||||||||||
2009
|
||||||||||||||||||||||||
Revenue
|
$ | 217,289 | $ | 19,165 | $ | 19,639 | $ | 9,630 | $ | - | $ | 265,723 | ||||||||||||
Income
(loss) from operations
|
$ | 39,912 | $ | 8,608 | $ | 5,108 | $ | (30 | ) | $ | (4,422 | ) | $ | 49,176 | ||||||||||
Interest
expense, net
|
403 | |||||||||||||||||||||||
Income
before provision for income taxes
|
48,773 | |||||||||||||||||||||||
Provision
for income taxes
|
15,106 | |||||||||||||||||||||||
Net
income
|
33,667 | |||||||||||||||||||||||
Net
income attributable to noncontrolling interest
|
- | |||||||||||||||||||||||
Net
income attributable to IDEXX Laboratories, Inc.
stockholders
|
$ | 33,667 |
For the Six Months Ended June 30,
|
||||||||||||||||||||||||
CAG
|
Water
|
LPD
|
Other
|
Unallocated
Amounts
|
Consolidated
Total
|
|||||||||||||||||||
2010
|
||||||||||||||||||||||||
Revenue
|
$ | 453,737 | $ | 37,312 | $ | 39,101 | $ | 19,857 | $ | - | $ | 550,007 | ||||||||||||
Income
(loss) from operations
|
$ | 84,646 | $ | 15,040 | $ | 8,922 | $ | 462 | $ | (5,807 | ) | $ | 103,263 | |||||||||||
Interest
expense, net
|
863 | |||||||||||||||||||||||
Income
before provision for income taxes
|
102,400 | |||||||||||||||||||||||
Provision
for income taxes
|
32,175 | |||||||||||||||||||||||
Net
income
|
70,225 | |||||||||||||||||||||||
Net
income attributable to noncontrolling interest
|
6 | |||||||||||||||||||||||
Net
income attributable to IDEXX Laboratories, Inc.
stockholders
|
$ | 70,219 | ||||||||||||||||||||||
2009
|
||||||||||||||||||||||||
Revenue
|
$ | 410,981 | $ | 35,016 | $ | 37,905 | $ | 18,276 | $ | - | $ | 502,178 | ||||||||||||
Income
(loss) from operations
|
$ | 68,991 | $ | 15,920 | $ | 10,058 | $ | 99 | $ | (7,451 | ) | $ | 87,617 | |||||||||||
Interest
expense, net
|
799 | |||||||||||||||||||||||
Income
before provision for income taxes
|
86,818 | |||||||||||||||||||||||
Provision
for income taxes
|
27,080 | |||||||||||||||||||||||
Net
income
|
59,738 | |||||||||||||||||||||||
Net
income attributable to noncontrolling interest
|
- | |||||||||||||||||||||||
Net
income attributable to IDEXX Laboratories, Inc.
stockholders
|
$ | 59,738 |
For the Three Months Ended
June 30,
|
For the Six Months Ended
June 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
CAG
segment revenue:
|
||||||||||||||||
Instruments
and consumables
|
$
|
86,455
|
$
|
83,732
|
$
|
169,837
|
$
|
155,967
|
||||||||
Rapid
assay products
|
40,481
|
41,567
|
79,924
|
79,244
|
||||||||||||
Laboratory
diagnostic and consulting services
|
86,048
|
77,876
|
165,888
|
146,568
|
||||||||||||
Practice
information systems and digital radiography
|
19,336
|
14,114
|
38,088
|
29,148
|
||||||||||||
Pharmaceutical
products
|
-
|
-
|
-
|
54
|
||||||||||||
CAG
segment revenue
|
232,320
|
217,289
|
453,737
|
410,981
|
||||||||||||
Water
segment revenue
|
19,448
|
19,165
|
37,312
|
35,016
|
||||||||||||
LPD
segment revenue
|
19,160
|
19,639
|
39,101
|
37,905
|
||||||||||||
Other
segment revenue
|
10,554
|
9,630
|
19,857
|
18,276
|
||||||||||||
Total
revenue
|
$
|
281,482
|
$
|
265,723
|
$
|
550,007
|
$
|
502,178
|
Level 1
|
Quoted
prices in active markets for identical assets or
liabilities.
|
Level 2
|
Observable
inputs other than Level 1 prices, 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. Foreign
currency exchange contracts classified as derivative instruments are
valued based on the present value of the forward rate less the contract
rate multiplied by the notional amount. Interest rate swaps classified as
derivative instruments are valued utilizing a discounted cash flow
analysis based on the terms of the contract and the interest rate
curve.
|
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. At June 30,
2010 and December 31, 2009, we had no Level 3 assets or
liabilities.
|
As
of June 30, 2010
|
Quoted
Prices
in
Active
Markets
for
Identical Assets
(Level
1)
|
Significant
Other
Observable
Inputs
(Level
2)
|
Significant
Unobservable
Inputs
(Level
3)
|
Balance
at
June
30, 2010
|
||||||||||||
Assets
|
||||||||||||||||
Money
market funds(1)
|
$ | 32,027 | $ | - | $ | - | $ | 32,027 | ||||||||
Equity
mutual funds(2)
|
1,823 | - | - | 1,823 | ||||||||||||
Foreign
currency exchange contracts(3)
|
- | 4,903 | - | 4,903 | ||||||||||||
Liabilities
|
||||||||||||||||
Deferred
compensation(4)
|
1,823 | - | - | 1,823 | ||||||||||||
Interest
rate swaps(5)
|
- | 1,817 | - | 1,817 |
As
of December 31, 2009
|
Quoted
Prices
in
Active
Markets
for
Identical Assets
(Level
1)
|
Significant
Other
Observable
Inputs
(Level
2)
|
Significant
Unobservable
Inputs
(Level
3)
|
Balance
at
December 31, 2009
|
||||||||||||
Assets
|
||||||||||||||||
Money
market funds(1)
|
$ | 47,021 | $ | - | $ | - | $ | 47,021 | ||||||||
Equity
mutual funds(2)
|
1,891 | - | - | 1,891 | ||||||||||||
Liabilities
|
||||||||||||||||
Foreign
currency exchange contracts(3)
|
- | 4,221 | - | 4,221 | ||||||||||||
Deferred
compensation(4)
|
1,891 | - | - | 1,891 | ||||||||||||
Interest
rate swaps(5)
|
- | 595 | - | 595 |
(1)
|
Money
market funds are included within Cash and cash
equivalents.
|
(2)
|
Equity
mutual funds relate to a deferred compensation plan that was assumed as
part of a previous business combination. This amount is included within
Other long-term assets, net. See footnote 4 below for a discussion of the
related deferred compensation
liability.
|
(3)
|
Foreign
currency exchange contracts are included within Other current assets and
Other long-term assets, net as of June 30, 2010 and within Accrued
liabilities as of December 31,
2009.
|
(4)
|
Deferred
compensation plans are included within Other long-term liabilities. The
fair value of our deferred compensation plan is indexed to the performance
of the underlying equity mutual funds discussed in footnote 2
above.
|
(5)
|
Interest
rate swaps are included within Accrued
liabilities.
|
Currency
Sold
|
U.S.
Dollar Equivalent
|
|||||||||
June
30,
|
December 31,
|
June
30,
|
||||||||
2010
|
2009
|
2009
|
||||||||
Euro
|
$
|
46,988
|
$
|
53,091
|
$
|
40,922
|
||||
British
Pound
|
22,546
|
19,238
|
20,200
|
|||||||
Canadian
Dollar
|
20,096
|
18,849
|
21,515
|
|||||||
Australian
Dollar
|
6,620
|
7,086
|
5,676
|
|||||||
Japanese
Yen
|
10,169
|
9,795
|
6,799
|
|||||||
$
|
106,419
|
$
|
108,059
|
$
|
95,112
|
Currency
Purchased
|
U.S.
Dollar Equivalent
|
|||||||||
June
30,
|
December
31,
|
June
30,
|
||||||||
2010
|
2009
|
2009
|
||||||||
Swiss
Franc
|
$
|
9,754
|
$
|
8,808
|
$
|
6,391
|
U.S.
Dollar Equivalent
|
||||||||||
June
30,
|
December
31,
|
June
30,
|
||||||||
2010
|
2009
|
2009
|
||||||||
Interest
rate swap
|
$
|
80,000
|
$
|
80,000
|
$
|
80,000
|
Asset
Derivatives
|
|||||||||||
June
30, 2010
|
December
31, 2009
|
||||||||||
Balance
Sheet
Classification
|
Fair
Value
|
Balance
Sheet
Classification
|
Fair
Value
|
||||||||
Derivatives
designated as hedging instruments
|
|||||||||||
Foreign
currency exchange contracts
|
Other
current assets
|
$
|
3,575
|
Other
current assets
|
$
|
-
|
|||||
Foreign
currency exchange contracts
|
Other
long-term assets, net
|
1,328
|
Other
long-term assets, net
|
-
|
|||||||
$
|
4,903
|
$
|
-
|
Liability
Derivatives
|
|||||||||||
June
30, 2010
|
December
31, 2009
|
||||||||||
Balance
Sheet
Classification
|
Fair
Value
|
Balance
Sheet
Classification
|
Fair
Value
|
||||||||
Derivatives
designated as hedging instruments
|
|||||||||||
Foreign
currency exchange contracts
|
Accrued
expenses
|
$
|
-
|
Accrued
expenses
|
$
|
4,221
|
|||||
Interest
rate swaps
|
Accrued
expenses
|
1,817
|
Accrued
expenses
|
595
|
|||||||
Total
derivative instruments
|
$
|
1,817
|
$
|
4,816
|
Gain (Loss) Recognized in OCI on Derivative Instruments (Effective Portion)
|
||||||||||||||
For
the Three Months Ended
June
30,
|
For
the Six Months Ended
June
30,
|
|||||||||||||
Derivative
instruments
|
2010
|
2009
|
2010
|
2009
|
||||||||||
Foreign
exchange contracts, net of tax
|
$ |
4,020
|
$ |
(7,170
|
)
|
$
|
6,295
|
$
|
(8,457
|
)
|
||||
Interest
rate swaps, net of tax
|
(191
|
)
|
549
|
(773
|
)
|
335
|
||||||||
Total
loss, net of tax
|
$ |
3,829
|
$ |
(6,621
|
)
|
$
|
5,522
|
$
|
(8,122
|
)
|
Classification
of
|
Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
|
|||||||||||||||||
Gain
(Loss)
|
For the Three Months Ended
|
For the Six Months Ended
|
||||||||||||||||
Reclassified
from
|
June
30,
|
June
30,
|
||||||||||||||||
OCI
into Income
|
||||||||||||||||||
Derivative
instruments
|
(Effective
Portion)
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Foreign
exchange contracts
|
Cost
of revenue
|
$
|
846
|
$
|
2,134
|
$
|
435
|
$
|
6,952
|
|
Gain (Loss) Recognized in Income Related to De-designated Cash Flow Hedges
|
|||||||||||||||||
Classification
of
|
For the Three Months Ended
|
For the Six Months Ended
|
||||||||||||||||
Gain
(Loss)
|
June
30,
|
June
30,
|
||||||||||||||||
Reclassified
from
|
||||||||||||||||||
De-designated derivative instruments
|
OCI into Income
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Foreign
exchange contracts
|
General
and administrative expense
|
$
|
-
|
$
|
(42
|
)
|
$
|
-
|
$
|
(42
|
)
|
For
the Three Months Ended June 30,
|
||||||||||||||||||||||||||||
Net
Revenue
(dollars
in thousands)
|
2010
|
2009
|
Dollar
Change
|
Percentage
Change
|
Percentage
Change
from
Currency (1)
|
Percentage
Change
from
Acquisitions/
Divestitures (2)
|
Percentage
Change
Net of
Acquisitions/
Divestitures
and
Currency
Effect
|
|||||||||||||||||||||
CAG
|
$ | 232,320 | $ | 217,289 | $ | 15,031 | 6.9 | % | 0.3 | % | 0.7 | % | 5.9 | % | ||||||||||||||
Water
|
19,448 | 19,165 | 283 | 1.5 | % | 0.3 | % | - | 1.2 | % | ||||||||||||||||||
LPD
|
19,160 | 19,639 | (479 | ) | (2.4 | )% | (2.8 | )% | - | 0.4 | % | |||||||||||||||||
Other
|
10,554 | 9,630 | 924 | 9.6 | % | (0.4 | )% | - | 10.0 | % | ||||||||||||||||||
Total
|
$ | 281,482 | $ | 265,723 | $ | 15,759 | 5.9 | % | 0.0 | % | 0.6 | % | 5.3 | % |
(1)
|
The
percentage change from currency is a non-U.S. GAAP measure. It represents
the percentage change in revenue resulting from the difference between the
average exchange rates during the three months ended June 30, 2010 and the
same period of the prior year applied against foreign currency denominated
revenues for the three months ended June 30,
2010.
|
(2)
|
Represents
the percentage change in revenue during the three months ended June 30,
2010 compared to the three months ended June 30, 2009 attributed to
incremental revenues from businesses acquired or revenues lost from
businesses divested or discontinued subsequent to March 31,
2009.
|
For
the Three Months Ended June 30,
|
||||||||||||||||||||||||||||
Net
Revenue
(dollars
in thousands)
|
2010
|
2009
|
Dollar
Change
|
Percentage
Change
|
Percentage
Change
from
Currency (1)
|
Percentage
Change
from
Acquisitions/
Divestitures (2)
|
Percentage
Change
Net of
Acquisitions/
Divestitures
and
Currency
Effect
|
|||||||||||||||||||||
Instruments
and consumables
|
$ | 86,455 | $ | 83,732 | $ | 2,723 | 3.3 | % | (0.6 | )% | - | 3.9 | % | |||||||||||||||
Rapid
assay products
|
40,481 | 41,567 | (1,086 | ) | (2.6 | )% | 0.4 | % | - | (3.0 | )% | |||||||||||||||||
Laboratory
diagnostic and consulting services
|
86,048 | 77,876 | 8,172 | 10.5 | % | 0.9 | % | 1.8 | % | 7.8 | % | |||||||||||||||||
Practice
information management systems and digital radiography
|
19,336 | 14,114 | 5,222 | 37.0 | % | 1.5 | % | 1.0 | % | 34.5 | % | |||||||||||||||||
Net
CAG revenue
|
$ | 232,320 | $ | 217,289 | $ | 15,031 | 6.9 | % | 0.3 | % | 0.7 | % | 5.9 | % |
(1)
|
The
percentage change from currency is a non-U.S. GAAP measure. It represents
the percentage change in revenue resulting from the difference between the
average exchange rates during the three months ended June 30, 2010 and the
same period of the prior year applied against foreign currency denominated
revenues for the three months ended June 30,
2010.
|
(2)
|
Represents
the percentage change in revenue during the three months ended June 30,
2010 compared to the three months ended June 30, 2009 attributed to
incremental revenues from businesses acquired or revenues lost from
businesses divested or discontinued subsequent to March 31,
2009.
|
For
the Three Months Ended June 30,
|
||||||||||||||||||||||||
Gross
Profit
(dollars
in thousands)
|
2010
|
Percent
of
Revenue
|
2009
|
Percent
of
Revenue
|
Dollar
Change
|
Percentage
Change
|
||||||||||||||||||
CAG
|
$ | 119,632 | 51.5 | % | $ | 108,334 | 49.9 | % | $ | 11,298 | 10.4 | % | ||||||||||||
Water
|
12,229 | 62.9 | % | 12,554 | 65.5 | % | (325 | ) | (2.6 | )% | ||||||||||||||
LPD
|
13,105 | 68.4 | % | 13,299 | 67.7 | % | (194 | ) | (1.5 | )% | ||||||||||||||
Other
|
4,248 | 40.3 | % | 4,193 | 43.5 | % | 55 | 1.3 | % | |||||||||||||||
Unallocated
amounts
|
70 | N/A | 60 | N/A | 10 | 16.7 | % | |||||||||||||||||
Total
Company
|
$ | 149,284 | 53.0 | % | $ | 138,440 | 52.1 | % | $ | 10,844 | 7.8 | % |
For
the Three Months Ended June 30,
|
||||||||||||||||||||||||
Operating
Expenses
(dollars
in thousands)
|
2010
|
Percent
of
Revenue
|
2009
|
Percent
of
Revenue
|
Dollar
Change
|
Percentage
Change
|
||||||||||||||||||
CAG
|
$ | 74,753 | 32.2 | % | $ | 68,422 | 31.5 | % | $ | 6,331 | 9.3 | % | ||||||||||||
Water
|
4,312 | 22.2 | % | 3,946 | 20.6 | % | 366 | 9.3 | % | |||||||||||||||
LPD
|
8,917 | 46.5 | % | 8,191 | 41.7 | % | 726 | 8.9 | % | |||||||||||||||
Other
|
4,046 | 38.3 | % | 4,223 | 43.9 | % | (177 | ) | (4.2 | )% | ||||||||||||||
Unallocated
amounts
|
2,421 | N/A | 4,482 | N/A | (2,061 | ) | (46.0 | )% | ||||||||||||||||
Total
Company
|
$ | 94,449 | 33.6 | % | $ | 89,264 | 33.6 | % | $ | 5,185 | 5.8 | % |
Operating
Income
(dollars
in thousands)
|
2010
|
Percent
of
Revenue
|
2009
|
Percent
of
Revenue
|
Dollar
Change
|
Percentage
Change
|
||||||||||||||||||
CAG
|
$ | 44,879 | 19.3 | % | $ | 39,912 | 18.4 | % | $ | 4,967 | 12.4 | % | ||||||||||||
Water
|
7,917 | 40.7 | % | 8,608 | 44.9 | % | (691 | ) | (8.0 | )% | ||||||||||||||
LPD
|
4,188 | 21.9 | % | 5,108 | 26.0 | % | (920 | ) | (18.0 | )% | ||||||||||||||
Other
|
202 | 1.9 | % | (30 | ) | (0.3 | )% | 232 | 774.7 | % | ||||||||||||||
Unallocated
amounts
|
(2,351 | ) | N/A | (4,422 | ) | N/A | 2,071 | 46.8 | % | |||||||||||||||
Total
Company
|
$ | 54,835 | 19.5 | % | $ | 49,176 | 18.5 | % | $ | 5,659 | 11.5 | % |
For
the Three Months Ended June 30,
|
||||||||||||||||||||||||
Operating
Expenses
(dollars
in thousands)
|
2010
|
Percent
of
Revenue
|
2009
|
Percent
of
Revenue
|
Dollar
Change
|
Percentage
Change
|
||||||||||||||||||
Sales
and marketing
|
$ | 37,076 | 16.0 | % | $ | 35,371 | 16.3 | % | $ | 1,705 | 4.8 | % | ||||||||||||
General
and administrative
|
26,497 | 11.4 | % | 22,609 | 10.4 | % | 3,888 | 17.2 | % | |||||||||||||||
Research
and development
|
11,180 | 4.8 | % | 10,442 | 4.8 | % | 738 | 7.1 | % | |||||||||||||||
Total
operating expenses
|
$ | 74,753 | 32.2 | % | $ | 68,422 | 31.5 | % | $ | 6,331 | 9.3 | % |
For
the Three Months Ended June 30,
|
||||||||||||||||||||||||
Operating
Expenses
(dollars
in thousands)
|
2010
|
Percent
of
Revenue
|
2009
|
Percent
of
Revenue
|
Dollar
Change
|
Percentage
Change
|
||||||||||||||||||
Sales
and marketing
|
$ | 1,991 | 10.2 | % | $ | 1,869 | 9.8 | % | $ | 122 | 6.5 | % | ||||||||||||
General
and administrative
|
1,717 | 8.8 | % | 1,402 | 7.3 | % | 315 | 22.5 | % | |||||||||||||||
Research
and development
|
604 | 3.1 | % | 675 | 3.5 | % | (71 | ) | (10.5 | )% | ||||||||||||||
Total
operating expenses
|
$ | 4,312 | 22.2 | % | $ | 3,946 | 20.6 | % | $ | 366 | 9.3 | % |
For
the Three Months Ended June 30,
|
||||||||||||||||||||||||
Operating
Expenses
(dollars
in thousands)
|
2010
|
Percent
of
Revenue
|
2009
|
Percent
of
Revenue
|
Dollar
Change
|
Percentage
Change
|
||||||||||||||||||
Sales
and marketing
|
$ | 3,430 | 17.9 | % | $ | 3,112 | 15.8 | % | $ | 318 | 10.2 | % | ||||||||||||
General
and administrative
|
3,264 | 17.0 | % | 2,924 | 14.9 | % | 340 | 11.6 | % | |||||||||||||||
Research
and development
|
2,223 | 11.6 | % | 2,155 | 11.0 | % | 68 | 3.2 | % | |||||||||||||||
Total
operating expenses
|
$ | 8,917 | 46.5 | % | $ | 8,191 | 41.7 | % | $ | 726 | 8.9 | % |
For
the Six Months Ended June 30,
|
||||||||||||||||||||||||||||
Net
Revenue
(dollars
in thousands)
|
2010
|
2009
|
Dollar
Change
|
Percentage
Change
|
Percentage
Change
from
Currency (1)
|
Percentage
Change
from
Acquisitions/
Divestitures (2)
|
Percentage
Change
Net of
Acquisitions/
Divestitures
and
Currency
Effect
|
|||||||||||||||||||||
CAG
|
$ | 453,737 | $ | 410,981 | $ | 42,756 | 10.4 | % | 1.8 | % | 0.8 | % | 7.8 | % | ||||||||||||||
Water
|
37,312 | 35,016 | 2,296 | 6.6 | % | 2.3 | % | - | 4.3 | % | ||||||||||||||||||
LPD
|
39,101 | 37,905 | 1,196 | 3.2 | % | 0.8 | % | - | 2.4 | % | ||||||||||||||||||
Other
|
19,857 | 18,276 | 1,581 | 8.7 | % | 0.6 | % | - | 8.1 | % | ||||||||||||||||||
Total
|
$ | 550,007 | $ | 502,178 | $ | 47,829 | 9.5 | % | 1.7 | % | 0.6 | % | 7.2 | % |
(1)
|
The
percentage change from currency is a non-U.S. GAAP measure. It represents
the percentage change resulting from the difference between the average
exchange rates during the six months ended June 30, 2010 and the same
period of the prior year applied against foreign currency denominated
revenues for the six months ended June 30,
2010.
|
(2)
|
Represents
the percentage change in revenue during the six months ended June 30, 2010
compared to the six months ended June 30, 2009 attributed to incremental
revenues from businesses acquired or revenues lost from businesses
divested or discontinued subsequent to December 31,
2008.
|
For
the Six Months Ended June 30,
|
||||||||||||||||||||||||||||
Net
Revenue
(dollars
in thousands)
|
2010
|
2009
|
Dollar
Change
|
Percentage
Change
|
Percentage
Change
from
Currency (1)
|
Percentage
Change
from
Acquisitions/
Divestitures (2)
|
Percentage
Change
Net of
Acquisitions/
Divestitures
and
Currency
Effect
|
|||||||||||||||||||||
Instruments
and consumables
|
$ | 169,837 | $ | 155,967 | $ | 13,870 | 8.9 | % | 1.4 | % | - | 7.5 | % | |||||||||||||||
Rapid
assay products
|
79,924 | 79,244 | 680 | 0.9 | % | 0.9 | % | - | 0.0 | % | ||||||||||||||||||
Laboratory
diagnostic and consulting services
|
165,888 | 146,568 | 19,320 | 13.2 | % | 2.9 | % | 1.9 | % | 8.4 | % | |||||||||||||||||
Practice
information management
systems and
digital radiography
|
38,088 | 29,148 | 8,940 | 30.7 | % | 1.8 | % | 0.8 | % | 28.1 | % | |||||||||||||||||
Pharmaceutical
products
|
- | 54 | (54 | ) | (100.0 | )% | - | (100.0 | )% | - | ||||||||||||||||||
Net
CAG revenue
|
$ | 453,737 | $ | 410,981 | $ | 42,756 | 10.4 | % | 1.8 | % | 0.8 | % | 7.8 | % |
(1)
|
The
percentage change from currency is a non-U.S. GAAP measure. It represents
the percentage change resulting from the difference between the average
exchange rates during the six months ended June 30, 2010 and the same
period of the prior year applied against foreign currency denominated
revenues for the six months ended June 30,
2010.
|
(2)
|
Represents
the percentage change in revenue during the six months ended June 30, 2010
compared to the six months ended June 30, 2009 attributed to incremental
revenues from businesses acquired or revenues lost from businesses
divested or discontinued subsequent to December 31,
2008.
|
For
the Six Months Ended June 30,
|
||||||||||||||||||||||||
Gross Profit (dollars in thousands)
|
2010
|
Percent
of
Revenue
|
2009
|
Percent
of
Revenue
|
Dollar
Change
|
Percentage
Change
|
||||||||||||||||||
CAG
|
$ | 232,962 | 51.3 | % | $ | 204,776 | 49.8 | % | $ | 28,186 | 13.8 | % | ||||||||||||
Water
|
23,443 | 62.8 | % | 23,710 | 67.7 | % | (267 | ) | (1.1 | )% | ||||||||||||||
LPD
|
26,579 | 68.0 | % | 26,407 | 69.7 | % | 172 | 0.7 | % | |||||||||||||||
Other
|
8,401 | 42.3 | % | 7,741 | 42.4 | % | 660 | 8.5 | % | |||||||||||||||
Unallocated
amounts
|
260 | N/A | 239 | N/A | 21 | 8.6 | % | |||||||||||||||||
Total
Company
|
$ | 291,645 | 53.0 | % | $ | 262,873 | 52.3 | % | $ | 28,772 | 10.9 | % |
For
the Six Months Ended June 30,
|
||||||||||||||||||||||||
Operating
Expenses
(dollars
in thousands)
|
2010
|
Percent
of
Revenue
|
2009
|
Percent
of
Revenue
|
Dollar
Change
|
Percentage
Change
|
||||||||||||||||||
CAG
|
$ | 148,316 | 32.7 | % | $ | 135,785 | 33.0 | % | $ | 12,531 | 9.2 | % | ||||||||||||
Water
|
8,403 | 22.5 | % | 7,790 | 22.2 | % | 613 | 7.9 | % | |||||||||||||||
LPD
|
17,657 | 45.2 | % | 16,349 | 43.1 | % | 1,308 | 8.0 | % | |||||||||||||||
Other
|
7,939 | 40.0 | % | 7,642 | 41.8 | % | 297 | 3.9 | % | |||||||||||||||
Unallocated
amounts
|
6,067 | N/A | 7,690 | N/A | (1,623 | ) | (21.1 | )% | ||||||||||||||||
Total
Company
|
$ | 188,382 | 34.3 | % | $ | 175,256 | 34.9 | % | $ | 13,126 | 7.5 | % |
Operating Income
(dollars in thousands)
|
2010
|
Percent of
Revenue
|
2009
|
Percent of
Revenue
|
Dollar
Change
|
Percentage
Change
|
||||||||||||||||||
CAG
|
$ | 84,646 | 18.7 | % | $ | 68,991 | 16.8 | % | $ | 15,655 | 22.7 | % | ||||||||||||
Water
|
15,040 | 40.3 | % | 15,920 | 45.5 | % | (880 | ) | (5.5 | )% | ||||||||||||||
LPD
|
8,922 | 22.8 | % | 10,058 | 26.5 | % | (1,136 | ) | (11.3 | )% | ||||||||||||||
Other
|
462 | 2.3 | % | 99 | 0.5 | % | 363 | 366.7 | % | |||||||||||||||
Unallocated
amounts
|
(5,807 | ) | N/A | (7,451 | ) | N/A | 1,644 | 22.1 | % | |||||||||||||||
Total
Company
|
$ | 103,263 | 18.8 | % | $ | 87,617 | 17.4 | % | $ | 15,646 | 17.9 | % |
For
the Six Months Ended June 30,
|
||||||||||||||||||||||||
Operating
Expenses
(dollars
in thousands)
|
2010
|
Percent
of
Revenue
|
2009
|
Percent
of
Revenue
|
Dollar
Change
|
Percentage
Change
|
||||||||||||||||||
Sales
and marketing
|
$ | 74,835 | 16.5 | % | $ | 70,215 | 17.1 | % | $ | 4,620 | 6.6 | % | ||||||||||||
General
and administrative
|
51,402 | 11.3 | % | 45,431 | 11.1 | % | 5,971 | 13.1 | % | |||||||||||||||
Research
and development
|
22,079 | 4.9 | % | 20,139 | 4.9 | % | 1,940 | 9.6 | % | |||||||||||||||
Total
operating expenses
|
$ | 148,316 | 32.7 | % | $ | 135,785 | 33.0 | % | $ | 12,531 | 9.2 | % |
For
the Six Months Ended June 30,
|
||||||||||||||||||||||||
Operating
Expenses
(dollars
in thousands)
|
2010
|
Percent
of
Revenue
|
2009
|
Percent
of
Revenue
|
Dollar
Change
|
Percentage
Change
|
||||||||||||||||||
Sales
and marketing
|
$ | 3,851 | 10.3 | % | $ | 3,615 | 10.3 | % | $ | 236 | 6.5 | % | ||||||||||||
General
and administrative
|
3,340 | 9.0 | % | 2,879 | 8.2 | % | 461 | 16.0 | % | |||||||||||||||
Research
and development
|
1,212 | 3.2 | % | 1,296 | 3.7 | % | (84 | ) | (6.5 | )% | ||||||||||||||
Total
operating expenses
|
$ | 8,403 | 22.5 | % | $ | 7,790 | 22.2 | % | $ | 613 | 7.9 | % |
For the Six Months Ended June 30,
|
||||||||||||||||||||||||
Operating Expenses
(dollars in thousands)
|
2010
|
Percent of
Revenue
|
2009
|
Percent of
Revenue
|
Dollar
Change
|
Percentage
Change
|
||||||||||||||||||
Sales
and marketing
|
$ | 6,833 | 17.5 | % | $ | 6,048 | 16.0 | % | $ | 785 | 13.0 | % | ||||||||||||
General
and administrative
|
6,470 | 16.5 | % | 6,113 | 16.1 | % | 357 | 5.8 | % | |||||||||||||||
Research
and development
|
4,354 | 11.1 | % | 4,188 | 11.0 | % | 166 | 4.0 | % | |||||||||||||||
Total
operating expenses
|
$ | 17,657 | 45.2 | % | $ | 16,349 | 43.1 | % | $ | 1,308 | 8.0 | % |
For the Three Months Ended
|
|||||||||||||
June 30,
2010
|
March 31,
2010
|
December 31,
2009
|
September 30,
2009
|
June 30,
2009
|
|||||||||
Days
sales outstanding
|
41.8
|
41.7
|
38.9
|
41.2
|
40.2
|
||||||||
Inventory
turns
|
1.9
|
2.0
|
1.9
|
1.8
|
1.8
|
For the Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2010
|
2009
|
Dollar Change
|
|||||||||
Net
cash provided by operating activities
|
$ | 75,085 | $ | 70,881 | $ | 4,204 | ||||||
Net
cash used by investing activities
|
(17,517 | ) | (18,907 | ) | 1,390 | |||||||
Net
cash used by financing activities
|
(43,207 | ) | (28,136 | ) | (15,071 | ) | ||||||
Net
effect of changes in exchange rates on cash
|
(3,114 | ) | 1,038 | (4,152 | ) | |||||||
Net
increase in cash and cash equivalents
|
$ | 11,247 | $ | 24,876 | $ | (13,629 | ) |
For the Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2010
|
2009
|
Dollar Change
|
|||||||||
Accounts
receivable
|
$ | (16,544 | ) | $ | (7,101 | ) | $ | (9,443 | ) | |||
Inventories
|
(12,977 | ) | (6,876 | ) | (6,101 | ) | ||||||
Other
assets
|
(1,634 | ) | (2,768 | ) | 1,134 | |||||||
Accounts
payable
|
4,308 | (1,684 | ) | 5,992 | ||||||||
Accrued
liabilities
|
7,432 | (3,423 | ) | 10,855 | ||||||||
Deferred
revenue
|
2,558 | (682 | ) | 3,240 | ||||||||
Tax
benefit from exercises of stock options and vesting of restricted stock
units
|
(9,372 | ) | (1,355 | ) | (8,017 | ) | ||||||
Total
change in cash due to changes in operating assets and liabilities and the
tax benefit from exercises of stock options and vesting of restricted
stock units
|
$ | (26,229 | ) | $ | (23,889 | ) | $ | (2,340 | ) |
|
·
|
Accounts
receivable are historically higher in the first quarter of the year due to
seasonality of certain products.
|
|
·
|
We
have management and non-management employee incentive programs that
provide for the payment of annual bonuses in the first quarter following
the year in which the bonuses were
earned.
|
|
·
|
We
have agreements with certain suppliers that require us to make minimum
annual inventory purchases, in some cases in order to retain exclusive
distribution rights, and we have other agreements with suppliers that
provide for lower pricing based on annual purchase volumes. We may place a
higher volume of purchase orders for inventory during the fourth quarter
in order to meet our minimum commitments or realize volume pricing
discounts and we receive that inventory in the fourth or first quarters
and pay in the first quarter. The specific facts and circumstances that we
consider in determining the timing and level of inventory purchases
throughout the year related to these agreements may yield inconsistent
cash flows from operations, most typically in the first and fourth
quarters.
|
|
·
|
Developing,
manufacturing and marketing innovative new in-clinic laboratory analyzers
that drive sales of IDEXX VetLab®
instruments, grow our installed base of instruments, and create a
recurring revenue stream from consumable
products;
|
|
·
|
Developing
and introducing new proprietary diagnostic tests and services that provide
valuable medical information to our customers and effectively
differentiate our products and services from those of our
competitors;
|
|
·
|
Increasing
the value to our customers of our companion animal products and services
by enhancing the integration of these products and managing the diagnostic
information derived from our
products;
|
|
·
|
Achieving
the benefits of economies of scale in our worldwide network of
laboratories;
|
|
·
|
Achieving
cost reductions in the manufacture and service of our in-clinic laboratory
analyzers;
|
|
·
|
Expanding
our served market and growing our market share by strengthening our sales
and marketing activities both within the U.S. and in geographies outside
of the U.S.;
|
|
·
|
Developing
and implementing new technology and licensing strategies;
and
|
|
·
|
Identifying,
completing and integrating acquisitions that enhance our existing
businesses or create new business or geographic areas for
us.
|
Period
|
Total Number of
Shares Purchased
(a)
|
Average Price
Paid per Share
(b)
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
(c)
|
Maximum Number of
Shares that May Yet Be
Purchased Under the
Plans or Programs
(d)
|
||||||
April
1 to April 30, 2010
|
157,000
|
$
|
58.68
|
157,000
|
5,044,799
|
|||||
May
1 to May 31, 2010
|
99,616
|
63.48
|
99,616
|
4,945,183
|
||||||
June
1 to June 30, 2010
|
165,387
|
63.38
|
165,000
|
4,780,183
|
||||||
Total
|
422,003
|
$
|
61.66
|
421,616
|
4,780,183
|
Exhibit No.
|
Description
|
|
10.1*
|
Supply
Agreement, effective as of May 7, 2007 between the Company and Moss, Inc.
(filed herewith).
|
|
10.2**
|
Restated
Director Deferred Compensation Plan, as amended (filed
herewith).
|
|
10.3**
|
Restated
Executive Deferred Compensation Plan, as amended (filed
herewith).
|
|
31.1
|
Certification
by Chief Executive Officer.
|
|
31.2
|
Certification
by Corporate Vice President, Chief Financial Officer and
Treasurer.
|
|
32.1
|
Certification
by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
32.2
|
Certification
by Corporate Vice President, Chief Financial Officer and Treasurer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
|
|
101.INS†
|
XBRL
Instance Document.
|
|
101.SCH†
|
XBRL
Taxonomy Extension Schema Document.
|
|
101.CAL†
|
XBRL
Taxonomy Extension Calculation Linkbase Document.
|
|
101.DEF†
|
XBRL
Taxonomy Extension Definition Linkbase Document.
|
|
101.LAB†
|
XBRL
Taxonomy Extension Label Linkbase Document.
|
|
101.PRE†
|
XBRL
Taxonomy Extension Presentation Linkbase Document.
|
|
*
|
Confidential
treatment requested as to certain portions, which portions have been filed
separately with the Securities and Exchange
Commission.
|
|
**
|
Management
contract or compensatory arrangement required to be filed as an exhibit
pursuant to Item 6 of Form 10-Q.
|
|
†
|
|
In
accordance with Rule 406T of Regulation S-T, these interactive data files
are deemed “not filed” for purposes of section 18 of the Exchange Act, and
otherwise are not subject to liability under that
section.
|
IDEXX
LABORATORIES, INC.
|
|
/s/ Merilee Raines
|
|
Date:
July 23, 2010
|
Merilee
Raines
|
Corporate
Vice President, Chief Financial Officer and
Treasurer
(Principal Financial
Officer)
|
Exhibit No.
|
Description
|
|
10.1*
|
Supply
Agreement, effective as of May 7, 2007 between the Company and Moss, Inc.
(filed herewith).
|
|
10.2**
|
Restated
Director Deferred Compensation Plan, as amended (filed
herewith).
|
|
10.3**
|
Restated
Executive Deferred Compensation Plan, as amended (filed
herewith).
|
|
31.1
|
Certification
by Chief Executive Officer.
|
|
31.2
|
Certification
by Corporate Vice President, Chief Financial Officer and
Treasurer.
|
|
32.1
|
Certification
by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
32.2
|
Certification
by Corporate Vice President, Chief Financial Officer and Treasurer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
|
|
101.INS†
|
XBRL
Instance Document.
|
|
101.SCH†
|
XBRL
Taxonomy Extension Schema Document.
|
|
101.CAL†
|
XBRL
Taxonomy Extension Calculation Linkbase Document.
|
|
101.DEF†
|
XBRL
Taxonomy Extension Definition Linkbase Document.
|
|
101.LAB†
|
XBRL
Taxonomy Extension Label Linkbase Document.
|
|
101.PRE†
|
XBRL
Taxonomy Extension Presentation Linkbase Document.
|
|
|
*
|
Confidential
treatment requested as to certain portions, which portions have been filed
separately with the Securities and Exchange
Commission.
|
|
**
|
Management
contract or compensatory arrangement required to be filed as an exhibit
pursuant to Item 6 of Form 10-Q.
|
|
†
|
In accordance with Rule 406T of Regulation
S-T, these interactive data files are deemed “not filed” for purposes of
section 18 of the Exchange Act, and otherwise are not subject to liability
under that
section.
|