10-K405: Annual report [Sections 13 and 15(d), S-K Item 405]
Published on March 31, 1999
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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, 1998
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 March 26, 1999, the aggregate market
value of the voting stock held by non-affiliates of the registrant was
$891,213,126. 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
39,069,039 on March 26, 1999.
DOCUMENTS INCORPORATED BY REFERENCE
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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 1998 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 veterinary, food 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 information management software systems and
related services and pharmaceutical products. The substantial majority of the
Company's revenue is currently derived from the sale of veterinary diagnostic
products and services and veterinary practice information management systems and
services, where the Company believes it holds leading market positions. The
Company's veterinary diagnostic 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 comprehensive information 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 is also developing products for veterinary therapeutic applications. The
Company's food and environmental testing products and services and consultative
services are used to detect various contaminants in food, food processing
environments and water, to assist in maintaining safe food and food processing
environments and to assist in disease detection, management and eradication in
food production animals.
The Company currently offers 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 350
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 information management software
systems. Through locations in the U.S., England, Japan and Australia, the
Company provides rapid, affordable, high-quality laboratory services to
veterinarians. In October 1998, the Company acquired Blue Ridge Pharmaceuticals,
Inc., a company engaged in the development of novel therapeutics for the
veterinary market.
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 diagnostics, veterinary practice
information 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.
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IDEXX(R), Better Choice(TM), Bind(R), Cardiopet(R), CITE(R), Colilert(R),
Colisure(TM), Defined Substrate Technology(R), DiaSystems(TM), DST(R),
Enterolert(TM), FlockChek(R), HerdChek(R), IDEXX Food Safety Net(TM), IDEXX
VetLab(TM), LacTek(TM), Lightning(R), Parallux(TM), Patient Advisor(TM),
PetChek(R), Probe(R), Quanti-Tray(R), SNAP(R), SimPlate(TM), Veterinary Practice
Manager(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). Cornerstone(R) is used under license by the Company.
Windows(R) is a trademark of Microsoft Corporation.
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PRODUCTS AND SERVICES
The Company operates in two primary business areas: products and services
for the veterinary market and products and services for food and environmental
markets.
* VETERINARY PRODUCTS AND SERVICES
IMMUNOASSAYS
The Company provides a broad range of point-of-care diagnostic products for
use by veterinarians in testing for a variety of companion 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 and horses. 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 produced 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 veterinary immunoassays use enzyme labels to indicate the
presence or absence of a specific analyte. In these enzyme-linked immunosorbent
assays ("ELISA"), the test results are measured through a color change, which
varies in proportion to the amount of the analyte present in the sample.
The Company offers SNAP immunoassays to detect feline leukemia virus
("FeLV") 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 FeLV and feline immunodeficiency virus
("FIV") (which resembles the human AIDS virus). 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 product tests for immune status in newborn foals.
The Company also markets a line of ELISA 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 a microwell-based test kit for feline
coronavirus under the DiaSystems trade name.
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 ANALYZER. 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 analyzers are manufactured for the Company by
Tokyo Parts Industrial Co. under an agreement that renews annually 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
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
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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) HEMATOLOGY SYSTEM. The QBC(R) VetAutoread(TM)
hematology system is 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)
hematology system 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) hematology system is based on the Becton
QBC(R) Autoread(TM) hematology system sold to physicians in private practices
for human applications. The QBC(R) VetAutoread(TM) hematology 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 downloaded and displayed on the VetTest analyzer.
VETLYTE SYSTEM. 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 instruments) 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. The Company
expects to introduce in 1999 similar links to its other practice management
systems, Cornerstone and Veterinary Practice Manager.
VETERINARY LABORATORY AND CONSULTING SERVICES
The Company 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, and pathology.
Additionally, the Company provides specialized veterinary consultation and
advisory services, including cardiology, radiology, internal medicine,
dermatology and ultrasound consulting. These services permit veterinarians to
obtain readings and interpretations of test results transmitted by telephone
from the veterinarians' offices. The services can be provided during the course
of a visit, thereby giving veterinarians immediate access to specialists. The
Company employs or retains
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as consultants approximately 33 board-certified 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 70%, 71% and 80% of the Company's total revenues were derived
from sales of veterinary diagnostic products and services in 1998, 1997 and
1996, respectively.
INFORMATICS PRODUCTS AND SERVICES
The Company's informatics business was formed in 1997 with the acquisition
of Advanced Veterinary Systems, located in Eau Claire, Wisconsin, and
Professionals' Software, Inc., located in Effingham, Illinois. In 1998 most
operations were consolidated in Eau Claire, Wisconsin. The Company provides
comprehensive veterinary practice information management solutions designed to
assist veterinarians in delivering high quality medical care and increasing the
profitability of their businesses. The Company believes that it is the leading
provider of veterinary practice information management systems ("PIMS") in the
U.S. with an installed based of more than 8,000 of the approximately 21,000
veterinary hospitals in North America. The Company supplies software, hardware,
network design, installation, education and support for companion animal, food
animal, equine, and emergency veterinary practices.
The Company's two principal software products are its Cornerstone and Better
Choice systems.
CORNERSTONE. The Company's lead PIMS product is Cornerstone, a proprietary
Windows-based software product that assists veterinarians in all aspects of
veterinary hospital management, including maintaining client and patient
records, appointment scheduling, invoicing, billing, dispensing and inventory
management. The software facilitates sending reminders of needed health care to
selected customers and assists in the management of critical business functions
such as pricing, client analysis, and staff productivity. The software is sold
as a core package with additional, optional modules. Optional modules include an
advanced client communication module, Patient Advisor, and an image management
program that allows the clinic to transmit radiographs and other images over the
internet to consultants for expert second opinions. The Company believes that
Cornerstone is the most widely-used Windows-based PIMS in veterinary medicine
with over 1,000 installations.
BETTER CHOICE. The Company also offers an AccuCobol-based PIMS, Better
Choice, that is especially well suited for practices with multiple locations
because of its ability to share records across sites. Better Choice also has
features particularly useful for livestock, equine and emergency practices. The
program is compatible with both Unix and Windows operating systems. Optional
modules allow direct transmission of results from the IDEXX VetTest blood
chemistry analyzer to the hospitals' patient records and transmission of
digitized radiographs and other images to the Company's veterinary medical
specialists via the internet.
The Company provides software and hardware support for its Cornerstone,
Better Choice, and Veterinary Practice Manager products and derives a
significant proportion of its revenues from ongoing service contracts.
VETERINARY PHARMACEUTICALS
In October 1998 the Company acquired Blue Ridge Pharmaceuticals, Inc.
("Blue Ridge"), a privately-held company engaged in the development of novel
therapeutics for the veterinary market. Blue Ridge was formed in 1996 to develop
products for therapeutic applications in companion animals and livestock that
might not fit the strategic goals of larger pharmaceutical companies marketing
both human and veterinary products. The Company believes that most research and
development at larger multi-national pharmaceutical companies is dedicated to
products expected to result in gross sales in excess of $50 million, and that
substantial opportunities exist for the development and sale of niche products
solely for the veterinary market. Blue Ridge currently has a number of products
in the registration process with the Center for Veterinary Medicine ("CVM") of
the U. S. Food and Drug Administration ("FDA"). These products include
antibiotics using long-acting delivery technologies and fertility enhancement
products.
* FOOD AND ENVIRONMENTAL PRODUCTS AND SERVICES
The Company sells a variety of detection products that help assure the
safety and wholesomeness of water and food, such as drinking water, dairy
products, poultry and meat, and food processing environments. Detection targets
include microbial contaminants such as total coliforms, E. coli and enterococci,
pathogenic bacteria such as Salmonella, and other contaminants such as food and
antibiotic residues. The Company also provides a broad range of diagnostic
products to food animal producers and government customers for disease
surveillance and eradication and health management programs.
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WATER TESTING PRODUCTS
The Company's Colilert and Colisure tests, based on Defined Substrate
Technology ("DST"), 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 and Colisure 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 and Colisure
tests are used by government laboratories, water utilities and private certified
laboratories to test drinking water in compliance with U.S. Environmental
Protection Agency ("EPA") standards. The tests are also used in evaluating water
used in production processes (for example, in food, beverage and pharmaceutical
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 EPA. In addition, the
Colilert test has also been approved in Japan, Brazil, Argentina, Colombia,
Chile, New Zealand and parts of Australia, and is under evaluation by regulatory
agencies in Europe and certain other countries in South America.
FOOD SAFETY AND HYGIENE PRODUCTS AND SERVICES
The Company currently offers several test kits which are used by worldwide
dairy producers, food companies and government laboratories to test for
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. In 1999 the Company expects to introduce the
Parallux system, a fully automated instrument for detecting antibiotic residues
in milk.
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 and retail outlets. 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
generate a visible signal 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. BIND gives results in approximately 22
hours, more rapidly and without the time-consuming steps associated with
traditional methods.
The Company also produces a line of more than 350 dehydrated culture media
products. These products are used primarily for bacterial detection in the food
industry.
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In 1998, the Company introduced the IDEXX Food Safety Net, which is intended
to offer a comprehensive and integrated network of products and laboratory
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.
PRODUCTION ANIMAL SERVICES
The Company's HerdChek product line consists of 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
product line also includes a test for porcine reproductive respiratory syndrome
("PRRS"), a swine disease that has been shown to have a severe health impact on
infected herds, and for a cattle disease known as mycopbacterium
paratuberculosis ("Johne's disease"), which can cause significant economic loss
for cattle producers.
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 in cattle,
and Mycoplasma gallisepticum ("MG") and Mycoplasma synoviae ("MS") infections in
poultry. 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 Company's FlockChek product line comprises a range of enzyme immunoassay
test kits and related instrumentation and software used in poultry health
management programs. 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.
Approximately 22%, 24% and 19% of the Company's revenues were derived from
sales of food and environmental products and services in 1998, 1997 and 1996,
respectively.
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 veterinary 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
veterinary 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 water and food safety 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. The Company markets its livestock and poultry
diagnostic products directly to laboratories and other customers through IDEXX
salespeople located in the U.S., Europe, Japan, Canada, Australia, Brazil and
Taiwan. Those products are also sold through distributors in Japan, Southeast
Asia, the Middle East and parts of Eastern Europe.
In 1998, 1997 and 1996, 28%, 32% and 34%, respectively, 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;
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enhancement of its practice information management software systems; and the
development of novel veterinary therapeutics. 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 $21.5 million, $17.1 million and $12.2 million in 1998, 1997 and
1996, respectively.
PATENTS AND LICENSES
The Company holds 26 U.S. patents and has filed patent applications for 29
other processes or products. The Company also holds five foreign patents and has
filed 17 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."
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, Tokyo Parts Industrial Co.
and Becton covering its anticipated 1999 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 quality.
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
8
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
diagnostic 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 manufacture and sale of veterinary drugs are regulated by the CVM of the
FDA. A new animal drug may not be commercially marketed in the United States
unless it has been approved as safe and effective by CVM. Approval may be
requested by filing a New Animal Drug Application ("NADA") with CVM containing
substantial evidence as to the safety and effectiveness of the drug. For food
animals, the data must also include extensive data to support a withdrawal
period or other use restriction to ensure that the proposed drug use will
produce animals and animal products that are safe for human consumption. Data
regarding manufacturing methods and controls is also required to be submitted
with the NADA. Manufacturers of animal drugs must also comply with the FDA's
Good Manufacturing Practices. Sale of animal drugs in countries outside the
United States requires compliance with the laws of those countries, which may be
extensive.
The Colilert product has been approved in the U.S., Canada, Japan, Brazil,
Argentina, Colombia, Chile, New Zealand and parts of Australia for drinking
water testing. The Colilert product has also received approval from AOAC
(Association of Official Analytical Chemists) and is included in "Standard
Methods for the Examination of Water and Wastewater". The Company's Colilert-18,
Colisure, Quanti-Tray and Quanti-Tray 2000 products have been approved by EPA
and are also included in Standard Methods. Use of DST (Defined Substrate
Technology) for other applications may require regulatory approval from EPA and
other government agencies. In addition, the SimPlate product used in conjunction
with Mutliple Enzyme Technology for detection of total bacteria, and the
Company's BIND products, have been approved by AOAC-RI (AOAC-Research Institute)
for use in food testing.
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 FDA, the 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, 1998, 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, approximately 75,000 square feet of industrial space in
Memphis, Tennessee for use as a distribution facility, under a lease expiring in
2007, and approximately 60,000 square feet of office and manufacturing space in
Illinois and Wisconsin for its veterinary practice information management
software business. 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 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,
9
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. In March 1998, the Court granted the
Company's motion for summary judgment in the case, however CDC is appealing that
ruling. 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 12, 1998, 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 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.
On December 18, 1997, SA Scientific, Inc. ("SAS") filed suit against the
Company in the State of Texas District Court seeking unspecified damages
resulting from the Company's alleged breach of a development and supply
agreement between SAS and the Company. The Company has filed an answer to the
complaint denying SAS's allegations and asserting counterclaims against SAS for
breach of contract and conversion of the Company's property. SAS has filed an
amended complaint seeking $1,500,000 in actual damages related to the Company's
alleged breach of contract, $5,000,000 in punitive damages and further
unspecified damages from the Company's alleged negligent misrepresentation,
fraud and conversion of SAS's intellectual property, and attorneys' fees. The
Company believes that it has meritorious defenses to SAS's claims and is
contesting the matter vigorously. However, the Company is unable to assess the
likelihood of an adverse result or estimate the amount of damages the Company
might be required to pay. Any adverse outcome resulting in 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.
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EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are as follows:
Mr. Shaw has been Executive Chairman of the Board of Directors of the
Company since February 1999. Mr. Shaw served as Chairman of the Board of
Directors and Chief Executive Officer of the Company from its foundation in 1983
until February 1999, and as 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 has been a Director and President of the Company since November
1997 and Chief Executive Officer of the Company since February 1999. 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 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. Johnson became a Vice President of the Company in October 1998. He has
been President and Chief Executive Officer of Blue Ridge since August 1996. For
15 years prior to forming Blue Ridge, Mr. Johnson was employed by the Ciba
Animal Health, most recently as Vice President Sales and Service.
Mr. Louis W. Pollock became a Vice President of the Company in December
1994. 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 practice information management software business, and presently
serves as President of that business 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
Company's in-clinic diagnostic testing business and now serves as President of
that business 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.
11
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
1998 Annual Report to Stockholders and is incorporated herein by reference.
As partial consideration for all of the outstanding capital stock of Blue
Ridge Pharmaceuticals, Inc., acquired on October 1, 1998, the Company issued
warrants to purchase 806,000 shares of the Company's Common Stock to the former
stockholders of Blue Ridge. The warrants are exercisable at a price of $31.59
per share until December 31, 2003. The warrants were issued pursuant to the
exemption from the registration requirements of, the Securities Act of 1933
provided by Section 4(2) of that Act. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and "Notes to Consolidated
Financial Statements" in the Company's 1998 Annual Report to Stockholders
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 1998 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 Discussion and Analysis of Financial Condition and Results of
Operations" in the Company's 1998 Annual Report to Stockholders and is
incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's Consolidated Financial Statements as of December 31, 1998 and
Supplementary Data are included in the Company's 1998 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 1999 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."
12
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) During the quarter ended December 31, 1998, the Company filed a
Current Report on Form 8-K dated October 1, 1998 (the "Form 8-K")
reporting the acquisition by the Company of Blue Ridge
Pharmaceuticals, Inc. ("Blue Ridge").
The Form 8-K, as amended by Amendment No. 1 on Form 8-K/A filed
November 12, 1998, contains (i) audited financial statements for
Blue Ridge for the year ended December 31, 1997, (ii) unaudited
financial statements for Blue Ridge for the six months ended
June 30, 1998 and (iii) unaudited pro forma condensed combined
financial information for the year ended December 31, 1997 and
the six months ended June 30, 1998.
(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/ JEFFREY J. LANGAN
-------------------------------------
Jeffrey J. Langan
President and Chief Executive Officer
March 30, 1999
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:
14
EXHIBIT INDEX
2.1(13) Stock Purchase Agreement dated as of September 23, 1998 by and among
the Company, Blue Ridge Pharmaceuticals, Inc. ("Blue Ridge") and the
stockholders of Blue Ridge. Certain schedules and exhibits to the
agreement (each of which are identified in the agreement) have been
omitted in reliance upon Rule 601 (b)(2) of Regulation S-K. The
Company hereby undertakes to furnish such schedules and exhibits to
the Commission supplementally upon request.
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(13) Form of Warrant dated October 1, 1998 to purchase Common Stock of the
Company issued to shareholders of Blue Ridge other than employee
shareholders.
4.3(13) Form of Warrant dated October 1, 1998 to purchase Common Stock of the
Company issued to employee shareholders of Blue Ridge.
4.4 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 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(12) Letter Agreement dated as of November 24, 1997 between the Company and
Jeffrey J. Langan.
10.8(12) Employment Agreement dated April 25, 1997 between the Company and
David E. Shaw.
10.9(12) Employment Agreement dated April 25, 1997 between the Company and
Erwin F. Workman, Jr., Ph.D.
**10.10 1998 Stock Incentive Plan of the Company, as amended
**10.11 Employment Agreement dated February 17, 1999 between the Company and
David E. Shaw.
**13 Annual Report to Stockholders for year ended December 31, 1998. (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 1998.
- ------------
(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.
15
(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.
(12) Incorporated by reference to the Exhibits to the Company's Annual
Report on Form 10-K dated March 27, 1998.
(13) Incorporated by reference to the Exhibits to the Company's Current
Report on Form 8-K dated October 1, 1998.
* Confidential treatment previously granted as to certain portions.
** Filed herewith
16