IDEXX Laboratories Announces Third Quarter Results
WESTBROOK, Maine, Oct. 24 /PRNewswire-FirstCall/ -- IDEXX Laboratories, Inc. (Nasdaq: IDXX), today reported that revenue for the third quarter of 2008 increased 9% to $251.1 million from $229.4 million for the third quarter of 2007. Diluted earnings per share ("EPS") for the quarter ended September 30, 2008 were $0.42, compared to $0.40 for the same period in the prior year.
"I am pleased with the overall progress of the company and our financial performance during the third quarter. While we saw a modest slowing of organic revenue growth, we offset somewhat less than expected revenue growth with careful management of our operating expenses, such that our bottom line performance was within our expectations," said Jonathan W. Ayers, Chairman and CEO.
"We are facing challenging times given the economy and its impact on the pet owner. We are seeing some diminution in the rate of revenue growth in our markets, particularly for the Companion Animal Group and our Production Animal Segment. In addition, the very recent and significant strengthening of the dollar will negatively impact our international results. In particular, we will see lower revenues from international sales and lower margins from products that are manufactured in the U.S. where expenses are recorded in U.S. dollars and sold internationally in currencies such as the Euro, British Pound and Canadian Dollar. Our guidance for the remainder of 2008 and 2009 reflects the recently observed exchange rates."
"Despite the economy and the financial markets, the fundamentals of our business remain strong and our product market strategies remain on track. For example, we continue to see strong demand for our diagnostic instruments and digital radiography systems, and we remain on track with the controlled launch of our new generation chemistry system, Catalyst Dx(TM). We continue to forecast the sale and installation of 600 to 800 Catalyst systems in the second half of 2008 and our order backlog as of today covers 90% of our fourth quarter targeted placements."
"We continue to enjoy a uniquely competitive position in our markets, and our profitability, free cash flow and balance sheet all remain strong. While visibility to performance in the next several quarters is made difficult due to turbulence in the economy and financial markets, we continue to believe in the growth and profit potential of our strategy and the long-term attractiveness of our core business of providing diagnostics and information technology solutions for the animal health, water and dairy markets."
Revenue Performance
Companion Animal Group ("CAG") revenue for the third quarter of 2008 increased 9% to $205.1 million from $187.5 million for the third quarter of 2007. Organic growth for the quarter, which is reported growth adjusted to eliminate the effect of changes in foreign currency exchange rates and revenues from businesses acquired since July 1, 2007, was 8%. The increase in CAG revenue was due to increased sales volume across all lines of business, except in our pharmaceuticals business where comparatively lower revenue was due to the discontinuation of sales of PZI VET(R) as discussed below. Increased sales volume 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, and increased volume of testing in our laboratories.
In the second quarter of 2008, we announced that we had sold all of our remaining inventory of PZI VET(R) following our announcement that we would be discontinuing this product due to unavailability of raw materials. As a result we had approximately $10 million of incremental revenue from this product in the second quarter, approximately half of which would normally have occurred in each of the third and fourth quarters of 2008.
Water segment revenue for the third quarter of 2008 increased 17% to $20.3 million from $17.4 million for the third quarter of 2007. The increase in Water revenue was due primarily to higher sales volume attributable to the distribution of water testing kits manufactured by Invitrogen Corporation under an arrangement that commenced in September 2007, as well as higher sales volume of our Colilert(R) products, used to detect total coliforms and E. coli in water. Sales of Invitrogen Corporation products contributed 6% to Water revenue growth. Changes in foreign currency exchange rates contributed 1% to Water revenue growth.
Production Animal Segment ("PAS") revenue for the third quarter of 2008 increased 2% to $17.8 million from $17.4 million for the third quarter of 2007 as higher livestock diagnostics sales volume and the favorable impact of changes in foreign currency exchange rates, which contributed 6% to PAS revenue growth, were partly offset by lower average unit sales prices resulting from increased price competition and unfavorable product mix.
Year-to-Date Results
Year-to-date revenue increased 15% to $780.7 million from $677.6 million for the nine months ended September 30, 2007. Revenue for the nine months ended September 30, 2008, adjusted for the impacts of changes in foreign currency exchange rates and revenues from businesses acquired since January 1, 2007, increased 10%.
Year-to-date diluted EPS increased 40% to $1.48 from $1.06 for the nine months ended September 30, 2007. Non-GAAP diluted EPS of $1.46 grew 24% compared to 2007 non-GAAP diluted EPS of $1.18. A reconciliation of non-GAAP diluted EPS to earnings per share is included in the supplementary table provided below.
Additional Operating Results for the Third Quarter
Gross profit for the third quarter of 2008 increased $9.7 million, or 8.2%, to $128.1 million from $118.5 million for the third quarter of 2007. As a percentage of total revenue, gross profit decreased to 51% from 52% due primarily to higher relative sales of lower gross margin products and services, partly offset by the favorable impact of changes in foreign currency rates on sales denominated in those currencies.
Research and development ("R&D") expense for the third quarter of 2008 was $17.9 million, or 7% of revenue, compared to $17.3 million, or 7.5% of revenue, for the third quarter of 2007. The increase in R&D expense was due primarily to increased spending on software and systems research and development related to the integrated veterinary practice, partly offset by a reduction in product development spending related to the completion of development of our Catalyst Dx(TM) and SNAPshot Dx(TM) analyzers, both of which we began shipping to customers in the first quarter.
Selling, general and administrative ("SG&A") expense for the third quarter of 2008 was $71.2 million compared to $65.1 million for the third quarter of 2007. As a percentage of revenue SG&A expense was 28% in the third quarters of both 2007 and 2008. Growth in SG&A expense reflected increased headcount and worldwide expansion of sales, marketing and customer support resources as well as the unfavorable impact of exchange rates on foreign currency denominated expenses.
Disposition of Pharmaceutical Assets
On October 17, 2008, we entered into an agreement to sell our ACAREXX and SURPASS pharmaceutical products and a product currently under development, which are a part of our CAG segment. We expect that this transaction will be completed in the fourth quarter of 2008, at which time we also intend to restructure the remaining pharmaceutical business. The impact of the sale and restructuring is not expected to have a material effect on the results of operations for the fourth quarter of 2008.
Supplementary Analysis of Results
The accompanying financial tables provide more information concerning our revenue and other operating results for the three and nine months ended September 30, 2008, as well as a reconciliation of non-GAAP diluted EPS to earnings per share.
Outlook for 2008
The Company offers the following revised guidance for the full year of 2008:
-- Revenue is expected to be $1.025 billion to $1.03 billion, updated from guidance of $1.06 billion to $1.07 billion provided in July of this year, which represents revenue growth of 11% to 12%. The change in the revenue outlook is largely due to the recent and significant strengthening of the U.S. dollar, which decreases the dollar value of international revenues. Changes in foreign currency exchange rates, which we previously estimated would add 4% to overall revenue growth for 2008, now are estimated to add only 1% due to the recent strengthening of the U.S. dollar, assuming currency rates remain at current levels.
-- Diluted EPS are expected to be $1.88 to $1.91, which represents EPS growth of 29% to 31%. This guidance reflects the impact of the reinstatement of the federal research and development tax credit, offset by the effects of the strengthening U.S. dollar and lower organic revenue growth in a few of our businesses due to economic and other factors. Diluted EPS excludes the anticipated fourth quarter 2008 disposition of pharmaceutical assets described above.
-- Non-GAAP diluted EPS are expected to be $1.86 to $1.89, reflecting growth of 18% to 20%. Non-GAAP diluted EPS excludes the impact of discrete income tax benefits in 2008, the anticipated fourth quarter 2008 dispositions, and acquisition-related purchase accounting and acquisition integration costs and the write-down of certain pharmaceutical assets in 2007.
Outlook for 2009
The Company offers the following preliminary 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 2008 and 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.
-- Revenue is expected to be $1.05 to $1.07 billion, which represents revenue growth of 2% to 4% compared to projected revenue for 2008. Changes in foreign currency exchange rates and the absence of sales of certain pharmaceutical products to be disposed of in 2008 account for a substantial majority of the reduction in the 2009 growth rate as compared to the 2008 growth rate.
-- Diluted EPS are expected to be in the range of $1.82 to $1.92. Changes in foreign currency exchange rates since July are anticipated to reduce EPS by approximately $0.20.
Conference Call and Webcast Information
IDEXX Laboratories will be hosting a conference call today at 9:00 a.m. (eastern) to discuss its third quarter results. To participate in the conference call, dial 612-332-0923 or 888-423-3273 and reference confirmation code 966126. An audio replay will be available through October 31, 2008 by dialing 320-365-3844 and referencing replay code 966126.
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 companion animal health, serving practicing veterinarians around the world with innovative, technology-based offerings, including a broad range of diagnostic products and services, practice management systems and pharmaceuticals. IDEXX products enhance the ability of veterinarians to provide advanced medical care 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 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 effects of deep or sustained economic weakness on pet owner decisions regarding pet health care; 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 June 30, 2008, in the section captioned "Risk Factors."
Contact: Merilee Raines, Chief Financial Officer, 1-207-556-8155
IDEXX Laboratories, Inc. and Subsidiaries
Consolidated Statement of Operations
Amounts in thousands except per share data (Unaudited)
Three Months Ended Nine Months Ended
September September September September
30, 2008 30, 2007 30, 2008 30, 2007
Revenue: Revenue $251,093 $229,385 $780,737 $677,586
Expenses
and
Income: Cost of revenue 122,944 110,907 371,492 336,308
Gross profit 128,149 118,478 409,245 341,278
Sales and marketing 41,527 37,757 129,742 110,086
General and
administrative 29,705 27,343 89,407 81,182
Research and development 17,920 17,281 53,489 50,569
Income from operations 38,997 36,097 136,607 99,441
Interest expense, net (560) (515) (1,688) (1,321)
Income before
provision for income
taxes 38,437 35,582 134,919 98,120
Provision for income
taxes 12,738 9,787 42,305 29,634
Net
Income: Net income $25,699 $25,795 $92,614 $68,486
Earnings per share:
Basic $0.43 $0.42 $1.54 $1.11
Earnings per share:
Diluted $0.42 $0.40 $1.48 $1.06
Shares outstanding:
Basic 59,473 61,094 60,121 61,685
Shares outstanding:
Diluted 61,865 63,916 62,603 64,449
Historical share and per share data has been retroactively restated to reflect the additional shares of common stock that were distributed on November 26, 2007 as a result of the two-for-one split of our outstanding common stock.
IDEXX Laboratories, Inc. and Subsidiaries
Key Operating Information (Unaudited)
Three Months Ended Nine Months Ended
September September September September
30, 2008 30, 2007 30, 2008 30, 2007
Key Operating Gross profit 51.0% 51.7% 52.4% 50.4%
Ratios (as Sales, marketing,
a percentage general and
of revenue): administrative
expense 28.4% 28.4% 28.1% 28.2%
Research and
development expense 7.1% 7.5% 6.9% 7.5%
Income from
operations (1) 15.5% 15.7% 17.5% 14.7%
International International
Revenue: revenue
(in thousands) $99,646 $89,547 $316,902 $264,514
International
revenue as a
percentage of
total revenue 39.7% 39.0% 40.6% 39.0%
(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
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2008 2007 2008 2007
GAAP measurement $128,149 $118,478 $38,997 $36,097
% of revenue 51.0% 51.7% 15.5% 15.7%
Acquisition-related purchase
accounting and acquisition
integration costs (1) - 87 - 139
Non-GAAP comparative measurements(2) $128,149 $118,565 $38,997 $36,236
% of revenue 51.0% 51.7% 15.5% 15.8%
Earnings per Share
Net Income Diluted
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2008 2007 2008 2007
GAAP measurement $25,699 $25,795 $0.42 $0.40
% of revenue 10.2% 11.2%
Acquisition-related purchase
accounting and acquisition
integration costs (1) - 90 - -
Non-GAAP comparative measurements(2) $25,699 $25,885 $0.42 $0.40
% of revenue 10.2% 11.2%
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) 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)
Nine Months Ended
Income from
Gross Profit Operations
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2008 2007 2008 2007
GAAP measurement $409,245 $341,278 $136,607 $99,441
% of revenue 52.4% 50.4% 17.5% 14.7%
Write-downs of certain
pharmaceutical assets (1) - 10,138 - 10,138
Acquisition-related purchase
accounting and acquisition
integration costs (2) - 1,979 - 2,381
Discrete income tax benefits(3) - - - -
Non-GAAP comparative
measurements(4) $409,245 $353,395 $136,607 $111,960
% of revenue 52.4% 52.2% 17.5% 16.5%
Nine Months Ended
Earnings per Share
Net Income Diluted
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2008 2007 2008 2007
GAAP measurement $92,614 $68,486 $1.48 $1.06
% of revenue 11.9% 10.1%
Write-downs of certain
pharmaceutical assets (1) - 6,392 - 0.10
Acquisition-related purchase
accounting and acquisition
integration costs (2) - 1,522 - 0.02
Discrete income tax benefits(3) (1,472) - (0.02) -
Non-GAAP comparative measurements(4) $91,142 $76,400 $1.46 $1.18
% of revenue 11.7% 11.3%
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 have written down these assets because the third-party contract manufacturer of finished goods recently gave notification that it will 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 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.
(4) 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 Nine Months Ended
September September September September
30, 2008 30, 2007 30, 2008 30, 2007
Revenue: CAG $205,050 $187,481 $639,411 $554,939
Water 20,321 17,431 57,287 48,941
PAS 17,801 17,377 60,452 52,871
Other 7,921 7,096 23,587 20,835
Total $251,093 $229,385 $780,737 $677,586
Gross Profit: CAG $99,945 $93,949 $322,730 $269,328
Water 12,825 10,919 35,573 30,960
PAS 12,035 10,412 40,698 32,677
Other 3,324 3,081 9,952 7,926
Unallocated 20 117 292 387
Total $128,149 $118,478 $409,245 $341,278
Income (Loss)
from
Operations: CAG $28,938 $28,529 $106,300 $75,293
Water 8,865 7,212 23,437 20,010
PAS 3,482 2,561 14,824 10,286
Other (11) 27 (254) (487)
Unallocated (2,277) (2,232) (7,700) (5,661)
Total $38,997 $36,097 $136,607 $99,441
Gross Profit
(as a
percentage
of revenue): CAG 48.7% 50.1% 50.5% 48.5%
Water 63.1% 62.6% 62.1% 63.3%
PAS 67.6% 59.9% 67.3% 61.8%
Other 42.0% 43.4% 42.2% 38.0%
Income (Loss)
from Operations
(as a
percentage
of revenue): CAG 14.1% 15.2% 16.6% 13.6%
Water 43.6% 41.4% 40.9% 40.9%
PAS 19.6% 14.7% 24.5% 19.5%
Other (0.1%) 0.4% (1.1%) (2.3%)
IDEXX Laboratories, Inc. and Subsidiaries
Revenues by Product and Service Categories
Amounts in thousands (Unaudited)
Three Months Ended
Perce-
Perce- Perce- ntage
ntage ntage Change
Change Change Net of
Perce- from from Acquisit-
Net Revenue September September Dollar ntage Curr- Acquis- ions and
30, 2008 30, 2007 Change Change ency itions Currency
(1) (2) Effect(3)
CAG $205,050 $187,481 $17,569 9.4% 1.3% 0.3% 7.8%
Water 20,321 17,431 2,890 16.6% 1.2% - 15.4%
PAS 17,801 17,377 424 2.4% 5.6% - (3.2%)
Other 7,921 7,096 825 11.6% 3.0% - 8.6%
Total $251,093 $229,385 $21,708 9.5% 1.8% 0.2% 7.5%
Three Months Ended
Perce-
Perce- Perce- ntage
ntage ntage Change
Change Change Net of
Perce- from from Acquisit-
Net CAG September September Dollar ntage Curr- Acquis- ions and
Revenue 30, 2008 30, 2007 Change Change ency itions Currency
(1) (2) Effect(3)
Instruments
and
consumables $80,587 $71,443 $9,144 12.8% 1.2% - 11.6%
Rapid assay
products 36,212 33,639 2,573 7.6% 0.7% - 6.9%
Laboratory
and consulting
services 73,536 64,914 8,622 13.3% 2.0% 0.8% 10.5%
Practice
information
management
systems
and digital
radiography 13,333 12,197 1,136 9.3% 0.3% - 9.0%
Pharmaceutical
products 1,382 5,288 (3,906) (73.9%) - - (73.9%)
Net CAG
revenue $205,050 $187,481 $17,569 9.4% 1.3% 0.3% 7.8%
(1) Represents the percentage change in revenue attributed to the effect of changes in currency rates from the three months ended September 30, 2008 to the three months ended September 30, 2007.
(2) Represents the percentage change in revenue attributed to incremental revenues during the three months ended September 30, 2008 compared to the three months ended September 30, 2007 from businesses acquired since July 1, 2007.
(3) Organic growth
IDEXX Laboratories, Inc. and Subsidiaries
Revenues by Product and Service Categories
Amounts in thousands (Unaudited)
Nine Months Ended
Perce-
Perce- Perce- ntage
ntage ntage Change
Change Change Net of
Perce- from from Acquisit-
Net Revenue September September Dollar ntage Curr- Acquis- ions and
30, 2008 30, 2007 Change Change ency itions Currency
(1) (2) Effect(3)
CAG $639,411 $554,939 $84,472 15.2% 3.1% 1.1% 11.0%
Water 57,287 48,941 8,346 17.1% 3.3% - 13.8%
PAS 60,452 52,871 7,581 14.3% 9.6% 3.9% 0.8%
Other 23,587 20,835 2,752 13.2% 4.3% 4.3% 4.6%
Total $780,737 $677,586 $103,151 15.2% 3.7% 1.3% 10.2%
Nine Months Ended
Perce-
Perce- Perce- ntage
ntage ntage Change
Change Change Net of
Perce- from from Acquisit-
Net CAG September September Dollar ntage Curr- Acquis- ions and
Revenue 30, 2008 30, 2007 Change Change ency itions Currency
(1) (2) Effect(3)
Instruments
and
consumables $236,974 $209,889 $27,085 12.9% 3.6% - 9.3%
Rapid assay
products 115,699 101,464 14,235 14.0% 1.6% - 12.4%
Laboratory and
consulting
services 222,984 191,350 31,634 16.5% 4.1% 3.1% 9.3%
Practice
information
management
systems
and digital
radiography 42,373 36,419 5,954 16.3% 1.3% - 15.0%
Pharmaceutical
products 21,381 15,817 5,564 35.2% - - 35.2%
Net CAG
revenue $639,411 $554,939 $84,472 15.2% 3.1% 1.1% 11.0%
(1) Represents the percentage change in revenue attributed to the effect of changes in currency rates from the nine months ended September 30, 2008 to the nine months ended September 30, 2007.
(2) Represents the percentage change in revenue attributed to incremental revenues during the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007 from businesses acquired since January 1, 2007.
(3) Organic growth
IDEXX Laboratories, Inc. and Subsidiaries
Consolidated Balance Sheet
Amounts in thousands (Unaudited)
September 30, December 31,
2008 2007
Assets: Current Assets:
Cash and cash
equivalents $84,586 $60,360
Accounts receivable, net 112,053 108,384
Inventories 112,907 98,804
Other current assets 43,831 38,115
Total current assets 353,377 305,663
Property and equipment,
at cost 311,804 255,176
Less: accumulated
depreciation 133,149 113,324
Property and equipment,
net 178,655 141,852
Other long-term assets, net 246,661 254,664
Total assets $778,693 $702,179
Liabilities
and
Stockholders'
Equity: Current Liabilities:
Accounts payable $28,937 $32,510
Accrued expenses 103,659 107,248
Debt 164,696 72,956
Deferred revenue 10,458 10,678
Total current liabilities 307,750 223,392
Long-term debt, net of
current portion 5,157 5,727
Other long-term liabilities 28,459 34,737
Total long-term liabilities 33,616 40,464
Stockholders' Equity:
Common stock 9,531 9,450
Additional paid-in capital 544,077 514,773
Deferred stock units 2,614 2,201
Retained earnings 678,476 585,862
Treasury stock, at cost (820,468) (696,668)
Accumulated other
comprehensive income 23,097 22,705
Total stockholders' equity 437,327 438,323
Total liabilities and
stockholders' equity $778,693 $702,179
IDEXX Laboratories, Inc. and Subsidiaries
Key Balance Sheet Information (Unaudited)
September 30, December 31, September 30,
2008 2007 2007
Key Balance
Sheet Information: Days sales
outstanding 42.3 39.4 41.8
Inventory turns 1.9 2.3 2.1
IDEXX Laboratories, Inc. and Subsidiaries
Consolidated Statement of Cash Flows
Amounts in thousands (Unaudited)
Nine Months Ended
September 30, September 30,
2008 2007
Operating: Cash Flows from Operating
Activities:
Net income $92,614 $68,486
Non-cash charges 38,843 30,907
Changes in current assets and
liabilities, net of
acquisitions and
disposals (21,643) (4,643)
Net cash provided by
operating activities $109,814 $94,750
Investing: Cash Flows from Investing
Activities:
Decrease in investments, net - 35,000
Purchase of property and
equipment (64,982) (41,723)
Acquisition of businesses and
intangible assets (8,649) (87,738)
Acquisition of equipment
leased to customers (560) (740)
Net cash used by investing
activities $(74,191) $(95,201)
Financing: Cash Flows from Financing
Activities:
Borrowings on revolving
credit facilities, net 92,099 71,031
Payment of other notes
payable (542) (2,212)
Purchase of treasury stock (122,429) (99,241)
Proceeds from the exercise of
stock options 14,856 17,655
Tax benefit from exercise
of stock options 5,906 7,544
Net cash used by financing
activities $(10,110) $(5,223)
Net effect of exchange rate
changes (1,287) 2,515
Net increase (decrease) in
cash and cash equivalents 24,226 (3,159)
Cash and cash equivalents,
beginning of period 60,360 61,666
Cash and cash equivalents,
end of period $84,586 $58,507
IDEXX Laboratories, Inc. and Subsidiaries
Free Cash Flow
Amounts in thousands (Unaudited)
Nine Months Ended
September 30, September 30,
2008 2007
Free Cash
Flow: Net cash provided by operating activities $109,814 $94,750
Financing cash flows attributable to tax
benefits from exercise of stock options 5,906 7,544
Purchase of fixed assets (64,982) (41,723)
Acquisition of equipment leased to customers (560) (740)
Free cash flow $50,178 $59,831
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
Common Stock Repurchases
Amounts in thousands except per share data (Unaudited)
Three Months Ended Nine Months Ended
September September September September
30, 2008 30, 2007 30, 2008 30, 2007
Share repurchases during the
period 391 140 2,343 2,259
Average price paid per share $51.43 $50.91 $52.26 $43.93
Shares remaining under
repurchase authorization as
of September 30, 2008 4,509
IDEXX Laboratories, Inc. and Subsidiaries
Earnings per Share Adjusted for Stock Split (Unaudited)
Three Months Ended Nine Months Ended
September September September September
30, 2008 30, 2007 30, 2008 30, 2007
Basic
As reported $0.43 $0.84 $1.54 $2.22
Adjusted for stock split $0.43 $0.42 $1.54 $1.11
Diluted
As reported $0.42 $0.81 $1.48 $2.12
Adjusted for stock split $0.42 $0.40 $1.48 $1.06
SOURCE IDEXX Laboratories, Inc.
Released October 24, 2008