10-K405: Annual report [Sections 13 and 15(d), S-K Item 405]
Published on March 27, 1998
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO
__________.
COMMISSION FILE NUMBER 0-19271
IDEXX LABORATORIES, INC.
(Exact name of registrant as specified in its charter)
(207) 856-0300
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $0.10 par value per share
Preferred Stock Purchase Rights
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
---
Based on the closing sale price on February 28, 1998, the aggregate market
value of the voting stock held by nonaffiliates of the registrant was
$588,090,769. For these purposes, the registrant considers all of its Directors
and executive officers and The Jackson Laboratory to be its only affiliates.
The number of shares outstanding of the registrant's Common Stock was
38,430,462 on March 25, 1998.
DOCUMENTS INCORPORATED BY REFERENCE
LOCATION IN FORM 10-K 10-K INCORPORATED DOCUMENT
Part III Specifically identified portions of the
Company's definitive proxy statement to be
filed in connection with the Company's Annual
Meeting to be held on May 15, 1998 are
incorporated herein by reference.
Parts I and II Specifically identified portions of the
Company's Annual Report to Stockholders for
the year ended December 31, 1997 are
incorporated herein by reference.
1
Forward-looking statements, within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended, are made throughout this Annual Report on Form
10-K. For this purpose, any statements contained herein that are not statements
of historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, the words "believes," "anticipates," "plans," "expects,"
"seeks," "estimates," and similar expressions are intended to identify
forward-looking statements. There are a number of important factors that could
cause the results of the Company to differ materially from those indicated by
such forward-looking statements, including those detailed under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Future Operating Results" in the Company's 1997 Annual Report to
Stockholders incorporated herein by reference.
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ITEM 1. BUSINESS
IDEXX Laboratories, Inc., incorporated in Delaware in 1983 (the "Company"
or "IDEXX", which includes wholly-owned subsidiaries unless the context
otherwise requires), develops, manufactures and distributes products and
provides services for animal health, food, hygiene and environmental markets.
Within these markets, the Company's products and services include biology-based
detection systems, chemistry-based detection systems, laboratory testing and
specialized consulting services, veterinary practice management software systems
and pharmacy services. The substantial majority of the Company's revenue is
currently derived from the sale of animal health diagnostic products and
services and veterinary practice management systems, where the Company believes
it holds leading market positions. The Company's veterinary products are used by
veterinarians to detect and monitor diseases, physiologic disorders, immune
status, hormone and enzyme levels, blood chemistry, electrolyte levels, blood
cell counts and other substances or conditions in animals. The Company's
software products are designed to provide practice management solutions for
veterinary clinics. The veterinary laboratory testing and consultation services
provided by the Company are used by veterinarians to assist them in the
detection and diagnosis of disease status and other conditions in animals. The
Company's food, hygiene and environmental testing products and services and
consultative services are used to detect various contaminants in food, food
processing environments and water and to assist in maintaining safe food and
food processing environments.
The Company currently offers more than 400 products to customers in more
than 50 countries. The Company has developed leading positions in many of its
markets by identifying user needs and offering high-quality, cost-effective
product and service solutions backed by extensive customer support. The
Company's veterinary and food and environmental test products incorporate a
range of delivery systems and detection technologies which are tailored to
particular applications and customer needs. These products range from
single-use, handheld immunoassays that yield a simple positive or negative
result and instrument-based systems that perform quantitative testing on a range
of sample volumes to approximately 300 dehydrated culture media products.
Through its 1997 acquisitions of Advanced Veterinary Systems and Professionals'
Software, Inc., the Company has become the leading U.S. supplier of veterinary
practice management software systems. In addition, the Company provides rapid,
affordable, high-quality laboratory services to veterinarians throughout the
U.S., England, Japan and Australia.
In developing its businesses, the Company has employed a number of
strategies, including the licensing of human diagnostic technology and the
adaptation of that technology for veterinary applications, internal research and
development, strategic acquisitions, and an emphasis on single use products and
instrument-based products that offer a significant opportunity for repeatable
sales of associated consumables. The Company's strategy is to maintain and build
upon its market-leading positions in veterinary professional office diagnostic,
veterinary practice management software and water testing products through
continued product support, development and enhancement, and to exploit
opportunities created by the continuing integration of the Company's diverse
veterinary products and services and by the development of an integrated and
comprehensive offering of products and consulting services to food processors.
The Company also will continue to evaluate acquisition, licensing and other
opportunities in complementary areas within the veterinary and food and
environmental markets, including veterinary pharmaceuticals.
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IDEXX(R), Better Choice(TM), Bind(R), Cardiopet(R), CITE(R), Colilert(R),
Colisure(TM), Cornerstone(TM), Defined Substrate Technology(R),
DiaSystems(TM), DST(R), Enterolert(TM), Environetics(R), FlockChek(R),
HerdChek(R), IDEXX Food Safety Net(TM), IDEXX VetLab(TM), LacTek(TM),
Lightning(R), PetChek(R), Probe(R), Quanti-Tray(R), Screen Machine(TM), SNAP(R),
SimPlate(TM), VetLyte(R) and VetTest(R) are trademarks of the Company.
Autoread(TM), QBC(R) and VetAutoread(TM) are trademarks of Becton Dickinson and
Company ("Becton"). Windows(R) is a trademark of Microsoft Corporation.
2
PRODUCTS AND SERVICES
The Company operates in two primary business areas: products and services
for the veterinary market and products and services for food, hygiene and
environmental markets. Within the veterinary market, the Company operates
primarily through five business units: (i) Professional Office Diagnostics,
which includes test kits and instrument-based detection systems for in-clinic
companion animal diagnostics, (ii) IDEXX Veterinary Services, which operates the
Company's U.S. network of veterinary laboratory testing and consulting services,
(iii) the IDEXX Informatics Division, formed as a result of the acquisition of
two veterinary practice management software businesses in 1997, (iv) IDEXX
Pharmacy Services, a mail order pharmacy serving veterinarians throughout the
U.S. and (v) Production Animal Services, which comprises test kits and
instrument-based systems for diagnostics in the production animal (poultry,
livestock and swine) market. The Company's food, hygiene and environmental
testing products and services are provided by the Company's Food and
Environmental Division.
- - PROFESSIONAL OFFICE DIAGNOSTICS
IMMUNOASSAYS
The Company, through its Professional Office Diagnostic ("POD") Division,
provides a broad range of point-of-care diagnostic products for use by
veterinarians in testing for a variety of animal diseases and health conditions.
The Company markets a line of single-use, hand-held test kits, under the SNAP,
CITE Probe and CITE trademarks, to veterinary clinics and animal hospitals for
the detection of diseases and other conditions in dogs, cats, horses and cattle.
These trademarks designate different testing delivery systems, each of which is
designed to address different customer needs and to allow quick (in most cases,
less than ten minutes), accurate and convenient testing without the need for
laboratory equipment. These products enable veterinarians to provide improved
service to animal owners by delivering test results almost immediately, allowing
the veterinarians to initiate therapy during the office visit, if required.
The Company's test kits incorporate immunoassay technology based on
antibody-antigen reactions. Antibodies are proteins produced as a result of an
immune response, a biological mechanism that enables certain animals to
recognize and respond to substances foreign to the body, called antigens.
Antibodies are provided by the immune system specifically to bind to these
antigens and also signal other immune system cells to assist in eliminating the
antigen. Antigens include viruses, bacteria, parasites, and hormones. In
immunoassay-based tests, a sample containing an unknown quantity of the analyte
is mixed with one or more reagents. Certain of these reagents contain either
antibodies or antigens that bind in a highly specific manner to the analyte.
Certain reagents are labeled with an indicator chemical, which identifies the
presence or absence of the analyte. In some cases results can be read visually;
in others, instruments are used to determine the results.
The Company's POD immunoassays use enzyme labels to indicate the presence
or absence of a specific analyte. In these enzyme immunoassays ("EIA"), the test
results are measured through a color change, which varies in proportion to the
amount of the analyte present in the sample. Use of EIA labels allows for visual
interpretation of test results.
The Company offers SNAP, CITE Probe and CITE immunoassays to detect feline
leukemia ("FeLV") and feline immunodeficiency virus ("FIV") (which resembles the
human AIDS virus) in cats and heartworm disease in dogs and cats. The Company
also has developed and markets a combination test, the SNAP Combo FeLV/FIV,
which enables veterinarians to test simultaneously for the FeLV and FIV viruses.
Other small animal assays include tests for Lyme disease in dogs, thyroid
hormone levels in dogs and cats, and parvovirus, which causes a gastrointestinal
disease in dogs. The Company's equine products test for immunity levels in
newborn foals, as well as for equine infectious anemia, a regulated disease in
the U.S. for which horses must be tested before they are allowed to cross state
lines.
The Company also markets a line of EIA microwell-based test kits, under the
PetChek name, for testing in larger clinics and independent laboratories serving
the veterinary market. PetChek tests offer accuracy, ease of use and cost
advantages to high-volume customers. The Company currently sells PetChek tests
for feline leukemia virus, feline immunodeficiency virus and heartworm disease.
The Company also markets several immunoassay test kits under the DiaSystems
trade name. These include microwell-based tests for feline infectious
peritonitis and equine infectious anemia, and an agar gel immunodiffusion test
for equine infectious anemia.
3
INSTRUMENTS
The Company markets four instrument systems for use in veterinary clinics.
These instruments are distributed under the trade names of VetTest, QBC(R)
VetAutoread(TM), VetLyte and VetTest SNAP Reader.
VETTEST. The VetTest blood chemistry analyzer is used to measure levels of
certain enzymes and other substances in blood in order to assist the
veterinarian in diagnosing physiologic conditions. Twenty-one separate blood
chemistry tests can be performed on the VetTest analyzer. The system is capable
of running up to 12 tests at a time on a single sample. The Company also offers
prepackaged general health profiles which include 12 frequently used chemistries
and pre-anesthetic panels for young animals consisting of six chemistries each.
Commonly run tests include glucose, alkaline phosphate, albumin, creatinine,
urea and total protein. VetTest analysers are manufactured for the Company by
Sanyo Electric Co., Ltd. under an agreement that expires December 31, 1998, but
renews automatically for one-year periods unless either party notifies the other
of its decision not to renew. The dry chemistry slides used in the VetTest
analyzer (the "VetTest Slides") are supplied by Johnson and Johnson Clinical
Diagnostics, Inc. ("J&J") under a Supply Agreement with J&J, as assignee of
Eastman Kodak Company (as amended, the "J&J Agreement"). The Company is required
to purchase all of its requirements for slides from J&J to the extent available.
In addition, the Company has committed to minimum annual purchase volumes of
certain chemistry VetTest Slides during the term of the J&J Agreement. The J&J
Agreement does not prohibit J&J from selling comparable slides or licensing its
slide technology for use in veterinary applications and J&J currently sells
comparable slides for use in its own analyzer, which is primarily designed for
human applications but is also used in the veterinary market. Although the
Company does not believe sales by J&J in the veterinary market currently have a
material adverse effect on the business of the Company, there can be no
assurance that such sales will not have such a material adverse effect in the
future. The J&J Agreement expires on December 31, 2006 and contains provisions
for the negotiation of a renewal term of five years.
QBC(R) VETAUTOREAD(TM). The QBC(R) VetAutoread(TM) is a hematology system
used to evaluate certain components of blood. This hematology instrument is
based on Quantitative Buffy Coat technology, which uses centrifugal force to
separate a blood sample into its key components. The blood sample is spun at
high speed in a proprietary test device, and the different components of the
blood separate by density. The QBC(R) VetAutoread(TM) instrument scans the blood
tube, quantifies the different components and calculates parameters. These
values are then compared to normal ranges contained in the software of the
instrument, which assists the veterinarian in determining if there are disease
states indicated that require further investigation. Key components evaluated
are red blood cells (anemia/internal bleeding), white blood cells (infection,
immunosuppression, allergy), and platelets (clotting capability). The QBC(R)
VetAutoread(TM) instrument is based on the Becton QBC(R) Autoread(TM) system
sold to physicians in private practices for human applications. The QBC(R)
VetAutoread(TM) system is manufactured for IDEXX by Becton, and is covered by a
development and distribution agreement which requires Becton to supply
instruments to IDEXX through 2001 and reagents through 2003. IDEXX has committed
to minimum annual purchases of instruments and reagents under the agreement.
VETTEST SNAP READER. The VetTest SNAP Reader allows the veterinarian to
obtain quantitative measurement of hormones including T4 and cortisol. These
measurements assist the veterinarian in diagnosing and monitoring the treatment
of certain endocrine diseases, such as hyper- and hypo-thyroidism, Cushing's
syndrome and Addison's disease. In addition, the analyzer allows the
veterinarian to monitor the effect of treatment on these diseases. The VetTest
SNAP Reader is a module which can be integrated into the VetTest chemistry
analyzer. Samples and reagents are introduced to the instrument using the
Company's SNAP device. The quantitative measurement is performed automatically
with results available for interpretation in less than 15 minutes after sample
introduction. The results are either displayed on the VetTest SNAP Reader or
downloaded to the VetTest analyzer.
VETLYTE. The VetLyte system is used for measuring three electrolytes --
sodium, potassium and chloride -- to aid in evaluating water and electrolyte
balances and assessing plasma condition. Samples are introduced to the
instrument through a probe. The assay operation, including the addition of
reagents from an enclosed solution pack, is performed automatically. Test
results are available in less than one minute after sample introduction and are
either displayed on the VetLyte instrument or downloaded to the VetTest
instrument.
The Company also provides computer software which facilitates the
integration of results obtained on these four systems. This linkage of the four
instrument systems as part of the IDEXX VetLab (the combination of the VetTest,
QBC(R) VetAutoread(TM), VetLyte and VetTest SNAP Reader) allows the veterinarian
to produce a report containing the same types of information in a more timely
manner than would typically be provided by commercial laboratories performing
the same tests. A veterinarian using the Company's Better Choice practice
management software system can also automatically transfer results obtained from
the IDEXX VetLab to the applicable patient records.
4
Approximately 57%, 73% and 75% of the Company's total revenues were derived
from sales of POD products in 1997, 1996 and 1995, respectively, with
approximately 39%, 46% and 46% of total revenues, respectively, attributable to
the sale of POD kits and consumables and approximately 18%, 27% and 29% of total
revenues, respectively, attributable to the sale of POD instruments.
- - IDEXX VETERINARY SERVICES
IDEXX Veterinary Services was formed in 1996 when IDEXX acquired VetLab,
Inc., located in Fort Worth, Texas, Veterinary Services, Inc., located in
Denver, Colorado and the Consolidated Veterinary Diagnostics, Inc. business,
located in Sacramento, California and combined them with the Company's
specialized consulting service provider known as Cardiopet, Incorporated. Since
that time, IDEXX Veterinary Services has opened a number of other facilities in
the U.S. to broaden its veterinary laboratory services coverage. IDEXX
Veterinary Services currently offers commercial veterinary laboratory and
consulting services to approximately 4,500 veterinary clinics in the U.S.
through facilities located in Arizona, California, Colorado, Illinois, New
Jersey, Oregon and Texas. Through subsidiaries located in the United Kingdom,
Japan and Australia, the Company offers commercial veterinary laboratory
services to approximately 4,000 veterinary clinics located in those countries.
Veterinarians use the Company's services by submitting samples by courier or
overnight delivery to the appropriate Company facility based on location, type
of sample and workload at the facility. The commercial reference laboratories
offer a large selection of tests and diagnostic panels to detect a number of
disease states and other conditions in production and companion animals.
Services include chemistry, hematology, pathology and serum allergy testing.
Additionally, IDEXX Veterinary Services provides specialized veterinary
consultation and advisory services through Cardiopet. Cardiopet was originally
established in 1979 by veterinarians to facilitate the provision of
electrocardiographic ("ECG") consulting services by board-certified
veterinarians. Since its founding, Cardiopet has expanded into areas such as
radiology, internal medicine, dermatology and ultrasound consulting. Cardiopet's
ECG and radiology services permit veterinarians to obtain readings and
interpretations of test results transmitted by telephone from the veterinarians'
offices. Such consulting services can be provided during the course of a visit,
thereby giving veterinarians immediate access to experts in cardiology and
radiology, as well as internal medicine and dermatology consulting, by
telephone. Cardiopet employs or retains as consultants approximately 33
board-certified or board-eligible specialists, who handle over 70,000 cases per
year for over 9,000 veterinary clinics and hospitals in the U.S., Canada and
approximately 12 other countries.
Approximately 15% of the Company's 1997 revenues were derived from
veterinary laboratory and consulting services.
- - IDEXX INFORMATICS DIVISION
The IDEXX Informatics Division was formed in 1997 with the acquisition of
Advanced Veterinary Systems, located in Eau Claire, Wisconsin, and
Professionals' Software, Inc., located in Effingham, Illinois. The Company
believes that it is the leading provider of veterinary practice management
software in the U.S. with an installed based of more than 8,000 clinics. Through
this division, the Company provides comprehensive veterinary practice management
software solutions for veterinary emergency, food animal, equine and small
animal practices. These products include the Company's Windows-based Cornerstone
and Better Choice practice management software products. The Company can provide
fully integrated solutions which include software, hardware, network design,
installation and education. The Company's software systems are designed to
manage all aspects of client contact, and business and accounting functions for
the veterinarian.
- - IDEXX PHARMACY SERVICES
The Company introduced its mail-order veterinary pharmacy services in 1997.
While the Company will fill any valid pharmaceutical prescription from a
licensed veterinarian, the pharmacy specializes in custom-compounding of
pharmaceutical products for which no approved animal formulation exists.
Generally, compounding is the preparation, mixing, assembling or packaging of a
drug when there is no approved human or animal drug available of the composition
required by a veterinarian to treat a particular patient. The Company believes
that many veterinarians provide compounding services for their clients in
clinic. The Company believes that its compounding services, performed by
licensed pharmacists, will be more desirable to many veterinarians than
in-clinic compounding.
The pharmacy industry is heavily regulated. The Center for Veterinary
Medicine ("CVM") of U.S. Food and Drug Administration ("US FDA") regulates the
compounding of drugs for use in the veterinary industry. The Company's pharmacy
is also regulated by other federal government agencies and in each state in
which it conducts its business. See "Government Regulation." The pharmacy is
conducting business in every state except California, North Carolina,
Missouri and the District of Columbia, where it currently has license
applications pending.
- - PRODUCTION ANIMAL SERVICES
The Company provides a range of diagnostic products, including single-test
kits and instrument-based systems, to production industry and government
customers for disease surveillance and eradication and health management
programs. Products sold for these applications utilize a range of technologies
including enzyme immunoassay, particle concentration fluorescence immunoassay
("PCFIA") and DNA probe technologies.
The Company's HerdChek product line consists of several immunoassay kits
and related instruments which detect diseases in swine and cattle, including an
often fatal, highly contagious disease in swine caused by pseudorabies virus
("PRV") and a disease in cattle caused by infectious bovine rhinotracheitis
("IBR"). The disease caused by PRV is a target of eradication by state and
federal governments and in many countries worldwide. The HerdChek products
include tests that can distinguish antibody levels caused by certain genetically
engineered vaccines from antibody levels produced by the field strains of PRV
and IBR. The product line also includes a test for porcine reproductive
respiratory syndrome, a swine disease that has been shown to have a severe
health impact on infected herds, and for a cattle disease known as bovine
leukemia virus.
5
The Company has three test kits based on DNA probe technology, marketed
under the name IDEXX DNA Probe, for the diagnosis of Johne's disease
(Mycobacterium paratuberculosis) in cattle, and Mycoplasma gallisepticum ("MG")
and Mycoplasma synoviae ("MS") infections in poultry. Johne's disease causes
significant economic loss for cattle producers and is thus a target for disease
control efforts by producers, veterinarians and certain government agencies.
Respiratory infections caused by MG or MS cause significant economic loss for
poultry breeders. DNA probes offer a direct means of detecting the presence of
certain organisms through the recognition of specific DNA sequences. The
technology is particularly effective in differentiating closely related
organisms that cannot adequately be distinguished by current immunoassay
technology. The Company's DNA probe products utilize the patented polymerase
chain reaction ("PCR") technology licensed from Roche Molecular Systems, Inc.,
which amplifies target DNA sequences several million-fold and facilitates
detection of minute amounts of DNA in a sample. The Company believes that its
DNA Probe tests provide more rapid and accurate results than culture
methodologies.
The Company's FlockChek product line comprises a range of enzyme
immunoassay test kits and related instrumentation and software used in poultry
health management programs. Extensive testing in breeder flocks, which produce
progeny flocks for egg and meat production, permits better management of vaccine
and therapeutic programs designed to enhance production efficiency. Kits in the
FlockChek product line are used to test for immunity to leading avian pathogens,
including Newcastle disease virus, infectious bursal disease virus, infectious
bronchitis virus, reovirus, mycoplasma and Salmonella enteriditis.
The Company also sells instrument-based detection systems used by
government and industry laboratories to test large numbers of samples
simultaneously. Applications include disease surveillance and health monitoring
in poultry and livestock, which can facilitate government and industry disease
eradication programs and enhance poultry and livestock production efficiency.
- - FOOD AND ENVIRONMENTAL PRODUCTS AND SERVICES
Detection products help assure the safety and wholesomeness of water and
food such as drinking water, dairy products, poultry and meat. Detection targets
include microbial contaminants such as total coliforms, E. coli and enterococci,
pathogenic bacteria such as Salmonella, and other contaminants such as food
residues and antibiotic residues.
The Company currently offers several enzyme immunoassay test kits which are
used by food companies, government laboratories and dairy producers to test for
contaminants such as antibiotic residues in milk. Dairy farmers and food
producers use these tests for incoming quality assurance of raw milk, and
government and food quality managers use them for ongoing surveillance of food
safety. IDEXX dairy and food quality tests are designed for convenience in field
and laboratory testing applications and are calibrated to detect analytes at
specified levels. While many of these tests are read visually, the Company's
reader instrument also enables users to obtain confirmation and a printed record
of test results for antibiotic residues in milk.
The Company's Colilert tests are Defined Substrate Technology ("DST") media
which simultaneously detect total coliforms and E. coli in water. These
organisms are broadly used as indicators of microbial contamination. The
Company's DST products utilize indicator-nutrients which produce a change in
color or fluorescence when metabolized by target microbes in the sample.
Colilert tests serve as a rapid method for determining the presence or absence
of both total coliforms and E. coli, with results available in 24 hours, or 18
hours in the case of the Colilert-18 media. Colilert tests are used by
government laboratories, water utilities and private certified
6
laboratories to test drinking water in compliance with U.S. Environmental
Protection Agency ("US EPA") standards. The test is also used in evaluating
water used in production processes (for example, in food or cosmetic
applications) and in evaluating bottled water, recreational water and water from
private wells.
The Company's Enterolert product is also based on DST and detects
enterococci in recreational waters with results available in 24 hours. The
Quanti-Tray device, when used in conjunction with the Company's Colilert,
Colilert-18 or Enterolert products, enables users to test for microbiological
contamination, and to obtain quantitative results without the time-consuming
steps associated with traditional methods.
The Company's Colilert, Colilert-18, and Quanti-Tray products have been
approved by the US EPA. In addition, the Colilert test has also been approved in
Japan and Brazil and is under evaluation by regulatory agencies in Europe and
certain other countries in South America.
In connection with the settlement of patent infringement litigation (see
the section in this Report labeled "Legal Proceedings"), the Company recently
acquired from Millipore Corporation all rights to manufacture and distribute the
Colisure test for detection of total coliforms and E. coli in water. Colisure is
also a DST medium, and the Company believes that this product may complement the
Company's Colilert and Colilert-18 products and intends to continue distributing
the Colisure product.
The Company's hygiene products, marketed under the Lightning trade name,
are designed for rapid and convenient testing of cleaning effectiveness in food
processing plants, retail outlets and restaurants. The Lightning system consists
of a unit-dose testing device, which is used to swab processing and other
surfaces to measure levels of adenosine triphosphate ("ATP"), which is a
commonly used indicator of the presence of food residue, and a portable
luminometer used to read test results. Detection of ATP is accomplished by
bioluminescence, the production of light by the reaction between the swab
reagents and ATP. Results may be obtained within one minute after a surface is
swabbed. The luminometer also may be easily linked to a printer or computer to
enable users to maintain records of test results.
The Company's SimPlate product line consists of proprietary media and a
patented incubation vessel which detect and quantify various microorganisms in
food, including total bacterial count, total coliforms, E. coli, and yeast and
mold. The SimPlate device is used with the Company's Defined Substrate
Technology or Multiple Enzyme Technology media, with results available in 24 -
48 hours. Multiple Enzyme Technology media correlates enzyme activity to the
presence of microorganisms in food using multiple enzyme substrates which
fluoresce when hydrolyzed by bacterial enzymes. Reading and quantification of
total viable bacteria is achieved by incubating the media with the food sample
in the SimPlate device for 24 hours and then counting the fluorescent wells. The
total count of fluorescent wells is then compared against a most probable number
table to determine the number of bacteria present in the sample. The SimPlate
product line is used by food quality managers for ongoing surveillance of food
safety.
The Company's BIND test uses genetically engineered bacteriophage to screen
for the presence of a broad range of Salmonella organisms in finished food
products, ingredients and animal feeds. The bacteriophage causes Salmonella to
produce a unique protein which is easily detectable. BIND gives results in
approximately 22 hours, more rapidly and without the time-consuming steps
associated with traditional methods.
The Company, through its Acumedia subsidiary, also produces a line of more
than 300 dehydrated culture media products. These products are used primarily
for bacterial detection in the food industry.
In 1997, the Company introduced the IDEXX Food Safety Net, which is
intended to offer a comprehensive and integrated network of products and
consulting services to food producers to help improve the effectiveness of
their food safety and quality programs. The network is intended to combine
offerings of the Company's food testing products with reference laboratory
testing services and consulting services, including food safety education and
training, food safety auditing, crisis management and response, and regulatory
awareness.
Approximately 17%, 13% and 14% of the Company's revenues were derived from
sales of food and environmental test products in 1997, 1996 and 1995,
respectively.
7
MARKETING AND DISTRIBUTION
IDEXX markets, sells and services its products in more than 50 countries
through its marketing, sales and technical service groups as well as through
independent distributors and other resellers. The Company maintains sales
offices outside the U.S. in Australia, France, Germany, Italy, Japan, New
Zealand, the Netherlands, Spain, Taiwan and the United Kingdom.
The Company selects the appropriate distribution channel for its products
based on the type of product, technical service requirements, number and
concentration of customers, regulatory requirements and other factors. The
Company markets its professional office diagnostic products to veterinarians
both directly and through independent veterinary distributors in the U.S., with
most instruments sold directly by IDEXX sales personnel and test kits supplied
both via the distribution channel and directly. Outside the U.S., IDEXX sells
its professional office diagnostic products through independent distributors and
other resellers and, in certain European countries, Australia, Japan, Taiwan and
Canada, through its direct sales force. The Company markets its software
products and veterinary laboratory services through its direct sales force. The
Company markets its livestock and poultry monitoring products directly to
laboratories and other customers through IDEXX salespeople located in the U.S.,
Europe, Japan, Canada, Australia and Malaysia. Those products are also sold
through distributors in Japan and several other countries. The Company markets
its water testing, food quality control and research products primarily through
its direct sales force in the U.S. and Canada. Outside the U.S. and Canada,
IDEXX markets these products through its direct sales force and through selected
independent distributors in certain markets.
In 1997, 32%, and in 1996 and 1995, 34%, of the Company's revenue was
attributable to sales of products and services to customers outside the U.S.
Risks associated with foreign operations include the need for additional
regulatory approvals, possible disruptions in transportation of the Company's
products, the differing product needs of foreign customers, difficulties in
building and managing foreign operations, fluctuations in the value of foreign
currencies, import/export duties and quotas, and unexpected regulatory, economic
or political changes in foreign markets. The Company engages in limited hedging
activities to reduce the effect of foreign currency fluctuations on its
earnings.
RESEARCH AND DEVELOPMENT
The Company's research and development activities are focused on the
enhancement of its existing detection systems; the development of new test kits
for additional diagnostic applications, new types of detection systems
incorporating advances in immunology, cell and molecular biology, microbiology,
DNA probes and other technologies and therapeutics; and the enhancement of its
practice management software systems. The Company seeks to enhance its
competitive position in each of its markets by developing new products to meet
evolving customer needs. These new products include both enhancements of
existing products and the introduction of products based on new technologies or
delivery systems. The Company's research and development expenses were
approximately $17 million, $12.2 million and $10.2 million in 1997, 1996 and
1995, respectively.
PATENTS AND LICENSES
The Company holds 22 U.S. patents and has filed patent applications for 17
other processes or products. The Company also holds four foreign patents and has
filed 18 foreign patent applications which correspond to U.S. patents and patent
applications of the Company.
The Company also has pursued a strategy of licensing patents and
technologies from third parties to provide it with competitive advantages in
selected markets and to accelerate new product introductions. These licenses
include an exclusive royalty-bearing license for diagnostic products for the
feline immunodeficiency virus from The Regents of the University of California,
and an exclusive royalty-bearing license for the Defined Substrate Technology
utilized in the Colilert test. In addition, the Company holds a royalty-bearing
license for canine heartworm tests from Barnes-Jewish Hospital.
The Company currently licenses certain technologies used in its products
from third parties, and expects to continue to do so in the future. Moreover, to
the extent the Company's products embody technologies protected by patents,
copyrights or trade secrets of others, the Company may be required to obtain
licenses to such technologies in order to continue to sell such products. There
can be no assurance that any technology licenses which the Company desires or is
required to obtain will be available on commercially reasonable terms. The
failure to obtain any such licenses may delay or prevent the sale by the Company
of certain new or existing products. See "Legal Proceedings" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
8
PRODUCTION
Certain components of the Company's products are available from only one
source. The Company purchases all of its CITE devices from Hybritech. The
Company purchases all of its VetTest slides from J&J and all of its hematology
components from Becton. Certain key components of the Colilert product are
available only from a single source. The Company purchases the components of its
Lightning devices and luminometers from single sources. The Company also
purchases certain of the components for its LacTek dairy reader instrument from
single sources. While the Company does not anticipate difficulties in obtaining
the components used in its products, the loss of any of these sources of supply
would have a material adverse effect on the Company. The Company has contractual
commitments or outstanding purchase orders with J&J, Sanyo and Becton covering
its anticipated 1998 requirements for slides, VetTest analyzers, hematology
reagents and instruments.
Substantially all of the Company's revenue in each quarter results from
orders booked in that quarter. Accordingly, the Company maintains no significant
backlog and believes that its backlog at any particular date is not indicative
of future sales.
COMPETITION
Competition in the Company's markets is intense. IDEXX competes with a
large number of companies ranging from very small businesses to large health
care and other companies, many of which have substantially greater financial,
manufacturing, marketing and product and service research resources than the
Company. In general, the particular companies with which IDEXX competes vary
with the Company's different markets. In most of its markets, the Company
competes with a number of companies. However, in the U.S. market for veterinary
laboratory services the Company competes primarily with Antech Diagnostics, a
unit of Veterinary Centers of America, Inc. In the markets for veterinary and
food and environmental test products, the Company competes primarily on the
basis of the ease of use, speed, accuracy and other performance characteristics
of its products and services, the breadth of its product line and services, the
effectiveness of its sales and distribution channels, customer service and
pricing. In the market for veterinary practice management software systems, the
Company competes primarily on the basis of ease of use, speed and other
performance characteristics, the effectiveness of its customer service, advances
in technologies and pricing. In the market for veterinary laboratory services,
the Company competes on the basis of service, price and performance.
Academic institutions, governmental agencies and other public and private
research organizations are also conducting research activities and may
commercialize products on their own or through joint ventures. The existence of
competing products, services or procedures that may be developed in the future
may adversely affect the marketability of products and services developed by the
Company. The Company's competitive position will also depend on its ability to
attract and retain qualified scientific and other personnel, develop effective
proprietary products, implement production and marketing plans, obtain patent
protection and obtain adequate capital resources.
GOVERNMENT REGULATION
Most diagnostic tests for animal health applications are regulated in the
U.S. by the Center for Veterinary Biologics within the U.S. Department of
Agriculture's ("USDA") Animal and Plant Health Inspection Service ("APHIS"). The
APHIS regulatory process involves the submission of product performance data and
manufacturing documentation. Subsequent to regulatory approval to market a
product, APHIS requires that each lot of product be submitted for review prior
to release to customers. In addition, APHIS requires special approval for
marketing products where test results are used in part for government-mandated
disease management programs. A number of foreign governments accept APHIS
approval as part of their separate regulatory approvals. However, compliance
with an extensive regulatory process is required in connection with marketing
products in Japan, Germany, The Netherlands and many other countries. The
Company also is required to have a facility license from APHIS to manufacture
USDA-licensed products at its facility. The Company has obtained such a license
for its current manufacturing facility.
The Company also submits certain of its products for government or industry
certification which is not legally required in order to market the product but
which may be required by customers purchasing the product.
9
Certain non-diagnostic products of the Company are used in animal health
applications but do not currently require licensing by APHIS or most foreign
governments. From time to time other federal agencies and Congressional
committees have indicated an interest in implementing further regulation of the
biotechnology industry. The Company is unable to predict whether any such
regulations will be adopted or whether, if adopted, such regulations will
adversely affect the Company's business.
The Colilert product has been approved by the US EPA and the Japanese
Ministry of Health and Welfare for drinking water testing. The Company has also
received Association of Official Analytical Chemists ("AOAC") approval for the
use of Colilert for testing water used as an ingredient in food or in the
production of food. The Company's Colilert-18 product and the Colisure test have
been approved by the US EPA and submitted to United Kingdom regulatory
authorities for approval. Use of this technology for other applications may
require regulatory approval from those agencies, as well as the USDA and the US
FDA. In addition, the Company's SimPlate product used in conjunction with the
Defined Substrate Technology and the Multiple Enzyme Technology, and the
Company's BIND products, have been approved by the AOAC for use in food testing.
The US FDA has recommended certification requirements for certain test kits
used in dairy applications. The Company is in compliance with the recommended
requirements and has received AOAC-RI approval for its SNAP and LacTek
Beta-Lactam test kits. It is expected that the US FDA will impose further
requirements in this area. The Company's Pharmacy is subject to regulation by
CVM of the US FDA, the U.S. Drug Enforcement Agency and in each state in which
it is licensed or may conduct its business. The Company's Acumedia dehydrated
culture media products are subject to regulation by the US FDA.
Any acquisitions of new products and technologies may subject the Company
to additional areas of government regulation. These may involve food, drug and
water quality regulations of the US FDA, the US EPA and the USDA, as well as
state, local and foreign governments. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
EMPLOYEES
As of December 31, 1997, IDEXX had approximately 2,100 full-time and
part-time employees. The Company is not a party to any collective bargaining
agreement and believes that relations with its employees are good.
ITEM 2. PROPERTIES
IDEXX owns approximately 12 acres of land in Westbrook, Maine. IDEXX leases
approximately 290,000 square feet of industrial space in Westbrook, under a
lease expiring in 2008, and approximately 75,000 square feet of industrial space
in Memphis, Tennessee for use as a distribution facility, under a lease expiring
in 2007. The Company's Informatics Division leases approximately 75,000 square
feet of office and manufacturing space in Illinois and Wisconsin. IDEXX also
leases a total of approximately 100,000 square feet of smaller office,
manufacturing and warehouse space in the U.S. and elsewhere in the world. In
addition, the Company owns or leases approximately 114,000 square feet of space
in the U.S., Australia and the United Kingdom for use as veterinary reference
laboratories and office space for its veterinary consulting services. Of this
space, 46,000 square feet is owned by the Company and the remaining amount is
leased, under leases having expiration dates up to the year 2002.
ITEM 3. LEGAL PROCEEDINGS
On February 4, 1993, the Company acquired Environetics, Inc.
("Environetics"), which brought a patent infringement suit with Stephen C.
Edberg, Ph.D. against Millipore Corporation ("Millipore") in the U.S. District
Court for the District of Connecticut on September 30, 1992 (the "Millipore I
suit"). The complaint in the Millipore I suit was subsequently amended to add as
additional plaintiffs Access Medical Systems, Inc., a subsidiary of the Company
("Access"), and Stephen C. Wardlaw, M.D. The primary relief sought by the
plaintiffs was an injunction against Millipore which would prevent Millipore
from selling the Colisure product for the detection of E. coli and total
coliforms in water. The plaintiffs believe the Colisure product infringes U.S.
Patent No. 4,925,789 (the "`789 Patent") covering the Company's Colilert
product, under which Access and Environetics have an exclusive license from Drs.
Edberg and Wardlaw. In addition, on July 26, 1995, the Company, Environetics,
Access and Drs. Edberg and Wardlaw brought a second patent infringement suit
against Millipore in the U.S. District Court for the District of Connecticut
(the "Millipore II suit"). The principal relief sought by the plaintiffs in the
Millipore II suit was an injunction against Millipore which would prevent
Millipore from selling the Colisure product which the plaintiffs believe also
infringes U.S. Patent No. 5,429,933 (the "'933 Patent"), which covers the
Colilert product. The `933 Patent, which is related to the `789 Patent, was
issued in July 1995 to Dr. Edberg, and is exclusively licensed to Access and
Environetics. In November 1997, the Company and Millipore entered into an
agreement in principle to settle the Millipore I and II suits. Under the terms
of the agreement, which was finalized in March 1998, Millipore acknowledged the
validity of the `789 and `933 Patents and agreed to an injunction against
infringement of the patents. Millipore
10
also transferred the Colisure product to the Company in March 1998.
On February 24, 1995, CDC Technologies, Inc. ("CDC Technologies") filed
suit against the Company in the U.S. District Court for the District of
Connecticut. In its complaint, CDC Technologies alleges that the Company's
conduct in, and its relationships with its distributors in connection with, the
distribution of the Company's hematology products (i) violate federal and state
antitrust statutes, (ii) violate Connecticut statutes regarding unfair trade
practices, and (iii) constitute a civil conspiracy and interfere with CDC
Technologies' business relations. The relief sought by CDC Technologies includes
treble damages for antitrust violations, as well as compensatory and punitive
damages, and an injunction to prevent the Company from interfering with CDC
Technologies' relations with distributors. The Company has filed an answer
denying the allegations in CDC Technologies' complaint. The Company is unable to
assess the likelihood of an adverse result or estimate the amount of any damages
the Company may be required to pay. Any adverse outcome resulting in the payment
of damages would adversely affect the Company's results of operations.
On November 18, 1997, Synbiotics Corporation ("Synbiotics") filed suit
against the Company in the U.S. District Court for the Southern District of
California for infringement of U.S. Patent No. 4,789,631 issued December 6, 1988
(the " `631 Patent"). The `631 Patent, which is owned by Synbiotics, claims
assays, certain methods and compositions for the diagnosis of canine heartworm
infection. The primary relief sought by Synbiotics is an injunction against the
Company which would prevent the Company from selling canine heartworm diagnostic
products which infringe the `631 Patent, as well as treble damages for past
infringement. This suit was not served on the Company within the time period
specified under applicable court rules and therefore is expected to be
dismissed by the court, however Synbiotics would not be precluded from filing a
new suit in the future. While the Company believes that it has meritorious
defenses against claims of infringement of the `631 Patent, the Company is
unable to assess the likelihood of an adverse result or estimate the amount of
any damages the Company may be required to pay. If the Company is precluded from
selling canine heartworm diagnostic products or required to pay damages or make
additional royalty or other payments with respect to such sales, the Company's
business and results of operations could be materially and adversely affected.
On January 9, 1998, a complaint was filed in the U.S. District Court for the
District of Maine captioned ROBERT A. ROSE V. DAVID E. SHAW, ERWIN F. WORKMAN,
JR., E. ROBERT KINNEY AND IDEXX LABORATORIES, INC. The plaintiff purports to
represent a class of purchasers of the common stock of the Company from July 19,
1996 through March 24, 1997. The complaint claims that the defendants violated
Section 10(b) of the Securities Exchange Act of 1934 and Securities and Exchange
Commission Rule 10b-5 promulgated pursuant thereto, by virtue of false or
misleading statements made during the class action period. The complaint also
claims that the individual defendants are liable as "control persons" under
Section 20(a) of that Act. In addition, the complaint claims that the individual
defendants sold some of their own common stock of the Company, during the class
period, at times when the market price for the stock allegedly was inflated.
While the Company and the other defendants deny the allegations and will defend
this suit vigorously, the Company is unable to assess the likelihood of an
adverse result or estimate the amount of damages which the Company may be
required to pay. Any adverse outcome resulting in the payment of damages would
adversely affect the Company's results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are as follows:
NAME AGE TITLE
---- --- -----
David E. Shaw.................... 46 Chairman of the Board of Directors and
Chief Executive Officer
Jeffrey J. Langan................ 53 President and Chief Operating Officer
Erwin F. Workman, Jr., Ph.D...... 51 Executive Vice President and Chief
Scientific Officer
Ralph K. Carlton................. 42 Senior Vice President, Finance and
Administration and Chief Financial
Officer
Louis W. Pollock................. 44 Vice President
Roy V. H. Pollock, D.V.M., Ph.D.. 48 Vice President
Christopher J. Quinn............. 39 Vice President
Mr. Shaw founded the Company in 1983, has served as its Chief Executive
Officer since 1983, and served as its President from 1983 until October 1993.
Prior to founding the Company, he was a Vice President of Agribusiness
Associates, Inc., an international management consulting firm.
Mr. Langan joined the Company in November 1997 as President, Chief Operating
Officer and a member of the Board of Directors. Mr. Langan came to the Company
from Thermedics Detection Inc., where he served as President and Chief Executive
Officer from April 1996. Prior to his position with Thermedics Detection Inc.,
Mr. Langan was employed by Hewlett-Packard Company from 1973 to 1996, where he
held several General Manager positions
11
including General Manager of the Healthcare Information Management Division and
General Manager of the Clinical Systems Business unit.
Dr. Workman joined the Company in July 1984, and he has served as Chief
Scientific Officer and Executive Vice President since November 1997 and as a
Director since 1993. He also served as President and Chief Operating Officer
from 1993 to November 1997. Before joining the Company, he was Manager of
Research and Development for the Hepatitis and AIDS Business Unit within the
diagnostic division of Abbott Laboratories.
Mr. Carlton joined the Company in February 1997 as Senior Vice President,
Finance and Administration and Chief Financial Officer. Mr. Carlton was a Senior
Vice President with the investment banking firm of Donaldson, Lufkin & Jenrette,
from March 1995 until he joined the Company. From 1986 to March 1995, he was
with the investment banking firm of Goldman, Sachs & Co., where he served in
various capacities, the most recent being as a Vice President.
Mr. Louis W. Pollock became a Vice President of the Company in December
1994 and is President and General Manager of the Company's Food and
Environmental Division. Mr. Pollock joined the Company in 1986 and served in
positions of increasing responsibility in veterinary products sales management
prior to serving as President of the Company's International Division from
December 1994 to March 1996. Prior to joining the Company, Mr. Pollock was
employed in various sales and marketing positions with Abbott Laboratories.
Dr. Roy V. H. Pollock became a Vice President of the Company in February
1998. Dr. Pollock joined the Company in November 1997 as Vice President of the
Company's Informatics Division, and presently serves as President of that
Division and Vice President of the Company. From 1995 until he joined the
Company, Dr. Pollock served as Vice President of the Companion Animal Division
of Pfizer Animal Health. Dr. Pollock was Vice President and Director, Strategic
Product Development, at SmithKline Beecham Animal Health from 1993 to 1995. Dr.
Pollock has also held faculty positions at Cornell University and Purdue
University.
Mr. Quinn became a Vice President of the Company in February 1998. Mr.
Quinn joined the Company in October 1997 as Vice President and General Manager
of the Professional Office Diagnostics Division and now serves as President of
that Division and Vice President of the Company. Mr. Quinn was employed by Bayer
in its Diagnostics Division as Senior Vice President from January 1996 until
joining the Company and as Vice President from 1993 through December 1995. Prior
to his employment at Bayer, Mr. Quinn was employed in various sales and
marketing positions at Baxter International.
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Information concerning the market price for the Company's Common Stock and
dividend policy is included under the section labeled "Market for the
Registrant's Common Stock and Related Stockholder Information" in the Company's
1997 Annual Report to Stockholders and is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information required under this item is included under the sections
labeled "Selected Financial Information" in the Company's 1997 Annual Report to
Stockholders and is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required under this item is included under the heading
"Management's Discussions and Analysis of Financial Condition and Results of
Operations" in the Company's 1997 Annual Report to Stockholders and is
incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Not applicable.
12
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's Consolidated Financial Statements as of December 31, 1997 and
Supplementary Data are included in the Company's 1997 Annual Report to
Stockholders and are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEMS 10-13.
Except as indicated below, the information required by Part III is omitted
from this Annual Report on Form 10-K, and, pursuant to Regulation 14A of the
Securities Exchange Act of 1934, as amended, is incorporated herein by reference
to the definitive proxy statement with respect to the Company's 1998 Annual
Meeting of Stockholders to be filed by the Company with the Securities and
Exchange Commission not later than 120 days after the end of the fiscal year
covered by this report. The information required by Part III will appear under
the headings "Beneficial Ownership of Common Stock," and "ELECTION OF
DIRECTORS--Nominees," "-- Board and Committee Meetings," "-- Directors'
Compensation" and "-- Executive Compensation." Information regarding executive
officers of the Company is furnished in Part I of this Annual Report on Form
10-K under the heading "Executive Officers of the Company."
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Financial Statements and Schedules
(1) The consolidated financial statements set forth in the
list below are filed as part of this Annual Report on Form
10-K.
(2) The consolidated financial statement schedule set forth in
the list below is filed as a part of this Annual Report on
Form 10-K.
(3) Exhibits filed herewith or incorporated herein by
reference are set forth in Item 14(c) below.
List of Financial Statements and Schedules referenced in this
Item 14. Information incorporated by reference from Exhibit 13
filed herewith:
Report of Independent Public Accountants
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Stockholders Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Financial Statement Schedules filed herewith:
Schedule II - Valuation and Qualifying Accounts
All other Schedules are omitted because they are not
applicable or not required, or because the required
information is already provided herein.
(b) None
(c) See Exhibit Index on the page immediately preceding exhibits.
13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized:
IDEXX LABORATORIES, INC.
By: /s/ David E. Shaw
-------------------------
David E. Shaw
Chief Executive Officer
March 27, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID E. SHAW Chairman of the Board of March 27,1998
------------------------- Directors and Chief Executive
David E. Shaw Officer (Principal Executive
Officer) and Director
/s/ RALPH K. CARLTON Senior Vice President, March 27, 1998
------------------------- Finance and Administration and
Ralph K. Carlton Chief Financial Officer
(Principal Financial Officer)
/s/ MERILEE RAINES Vice President, Finance and March 27, 1998
------------------------- Treasurer (Principal Accounting
Merilee Raines Officer)
/s/ JEFFREY J. LANGAN President, Chief Operating March 27, 1998
------------------------- Officer and Director
Jeffrey J. Langan
/s/ ERWIN F. WORKMAN, JR. Executive Vice President, March 27, 1998
------------------------- Chief Scientific Officer
Erwin F. Workman, Jr. and Director
/s/ MARY L. GOOD Director March 27, 1998
-------------------------
Mary L. Good
/s/ JOHN R. HESSE Director March 27, 1998
-------------------------
John R. Hesse
/s/ E. ROBERT KINNEY Director March 27, 1998
-------------------------
E. Robert Kinney
/s/ JAMES L. MOODY, JR. Director March 27, 1998
-------------------------
James L. Moody, Jr.
/s/ KENNETH PAIGEN Director March 27, 1998
-------------------------
Kenneth Paigen
/s/ WILLIAM F. POUNDS Director March 27, 1998
-------------------------
William F. Pounds
14
EXHIBIT INDEX
3.1(11) Restated Certificate of Incorporation of the Company, as amended.
3.2(1) Amended and Restated By-Laws of the Company.
4.1(2) Rights Agreement, dated as of December 17, 1996, between the
Company and The First National Bank of Boston, as Rights Agent,
which includes as Exhibit A the Form of Certificate of
Designations, as Exhibit B the Form of Rights Certificate, and as
Exhibit C the Summary of Rights to Purchase Preferred Stock
4.2 Instruments with respect to other long-term debt of the Company
and its consolidated subsidiaries are omitted pursuant to Item
601(b)(4)(iii) of Regulation S-K since the total amount
authorized under each such omitted instrument does not exceed 10
percent of the total assets of the Company and its subsidiaries
on a consolidated basis. The Company hereby agrees to furnish a
copy of any such instrument to the Securities and Exchange
Commission upon request.
10.1(3) 1984 Stock Option Plan of the Company, as amended, with the forms
of option agreements granted thereunder attached thereto.
10.2(3) 1991 Stock Option Plan of the Company, as amended, with the forms
of option agreements granted thereunder attached thereto.
10.3(9) 1991 Director Option Plan of the Company, as amended, with the
forms of option agreements granted thereunder attached thereto.
10.4(10) 1997 Director Option Plan of the Company, as amended, with the
form of option agreement granted thereunder attached thereto.
* 10.5(4) Supply Agreement, dated January 15, 1992, between the Company and
Johnson & Johnson Clinical Diagnostics, Inc., as assignee of
Eastman Kodak Company.
* 10.5a(3) Amendment to Supply Agreement, dated November 16, 1993, and
Second Amendment to Supply Agreement, dated November 19, 1993,
between the Company and Johnson & Johnson Clinical Diagnostics,
Inc., as assignee of Eastman Kodak Company.
* 10.5b(5) Third Amendment to Supply Agreement, dated March 15, 1994,
between the Company and Johnson & Johnson Clinical Diagnostics,
Inc., as assignee of Eastman Kodak Company.
* 10.5c(8) Fourth Amendment to Supply Agreement, effective as of January 1,
1996, between the Company and Johnson & Johnson Clinical
Diagnostics, Inc.
* 10.6(3) Business Development and Sales Agreement, dated October 12, 1993,
between the Company and Becton Dickinson and Company.
* 10.6a(6) Schedules to Business Development and Sales Agreement, dated
October 12, 1993, and Amendment to Business Development and Sales
Agreement, dated as of July 25, 1994, between the Company and
Becton Dickinson and Company.
* 10.6b(7) Second Amendment to Business Development and Sales Agreement,
dated as of January 6, 1995, between the Company and Becton
Dickinson and Company.
* 10.6c(9) Third Amendment to Business Development and Sales Agreement,
dated as of January 22, 1996, between the Company and Becton
Dickinson and Company.
10.7 Letter Agreement dated as of November 24, 1997 between the
Company and Jeffrey J. Langan.
10.8 Employment Agreement dated April 25, 1997 between the Company and
David E. Shaw.
10.9 Employment Agreement dated April 25, 1997 between the Company and
Erwin F. Workman, Jr., Ph.D.
11 Statement regarding computation of per share earnings.
13 Annual Report to Stockholders for year ended December 31, 1997
(only those portions incorporated herein by reference).
21 Subsidiaries of the Company.
23.1 Consent of Arthur Andersen LLP.
27 Financial Data Schedule for Annual Report on Form 10-K for 1997.
15
- ------------
(1) Incorporated by reference to the Exhibits to the Company's
Registration Statement on Form S-1 (File No. 33-40447).
(2) Incorporated by reference to the Exhibits to the Company's
Registration Statement on Form 8-A dated December 24, 1996 (File No.
0-19271).
(3) Incorporated by reference to the Exhibits to the Company's Annual
Report on Form 10-K dated March 30, 1994.
(4) Incorporated by reference to the Exhibits to the Company's Amendment
No. 1 on Form 8 dated February 14, 1992 to the Company's Current
Report on Form 8-K dated January 20, 1992.
(5) Incorporated by reference to the Exhibits to the Company's Quarterly
Report on Form 10-Q dated May 11, 1994.
(6) Incorporated by reference to the Exhibits to the Company's Quarterly
Report on Form 10-Q dated August 15, 1994.
(7) Incorporated by reference to the Exhibits to the Company's Annual
Report on Form 10-K dated March 29, 1995.
(8) Incorporated by reference to the Exhibits to the Company's Quarterly
Report on Form 10-Q dated July 26, 1996.
(9) Incorporated by reference to the Exhibits to the Company's Annual
Report on Form 10-K dated March 25, 1996.
(10) Incorporated by reference to the Exhibits to the Company's Quarterly
Report on Form 10-Q dated August 14, 1997.
(11) Incorporated by reference to the Exhibits to the Company's Annual
Report on Form 10-K dated March 28, 1997.
* Confidential treatment previously granted as to certain portions.
16