IDEXX Laboratories Announces Fourth Quarter and Full Year Results
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
SOURCE IDEXX Laboratories, Inc.
Released January 30, 2009