How did the adoption of SFAS No. 123(R) affect the company's financial statements?

The adoption of SFAS No. 123(R) on January 1, 2006, required the expensing of share-based compensation. This resulted in an increase of $2.8 million in share-based compensation expense recognized during the first quarter of 2006, which impacted operating expenses and reduced operating income by approximately 2% as a percentage of revenue compared to the prior year. Additionally, it led to a reclassification of certain tax benefits from operating to financing cash flows.

What is the company's outlook for its Water segment?

The Water segment experienced a 5.8% revenue decrease in the first quarter. Management attributes this partly to timing between quarters and expects the growth rate for the full year of 2006 to be in the mid-single digits.

What significant share repurchase activity occurred during the quarter?

IDEXX Laboratories repurchased 541,000 shares of common stock for $42.7 million during the first quarter of 2006, reflecting an ongoing commitment to share repurchases under its authorized program.

IDXX 10-Q Quarterly Report Q1 FY2006 — Revenue, Net Income, EPS

Q: What was the primary driver of revenue growth in the first quarter of 2006?

The primary driver of revenue growth was the Companion Animal Group (CAG), which experienced an 11.6% increase, particularly in laboratory and consulting services and practice information systems. The Food Diagnostics Group (FDG) also contributed with a 13.5% revenue increase.

Summary

IDEXX Laboratories, Inc. reported solid revenue growth of 10.3% to $168.2 million for the first quarter of 2006, compared to the same period in 2005. This growth was primarily driven by a strong performance in the Companion Animal Group (CAG), which saw a 11.6% revenue increase, particularly in laboratory and consulting services, and practice information systems. The Food Diagnostics Group (FDG) also showed robust growth of 13.5%. However, the Water segment experienced a slight revenue decline of 5.8%. The company's gross profit margin improved to 51.2% from 49.9%, reflecting better pricing and cost management. Operating income saw a modest increase of 3.2% to $27.0 million, though operating expenses rose, partly due to the adoption of new accounting standards for share-based compensation (SFAS No. 123(R)).

Key Highlights

1Total revenue increased by 10.3% to $168.2 million in Q1 2006, compared to Q1 2005.
2Companion Animal Group (CAG) revenue grew by 11.6%, driven by laboratory services and practice information systems.
3Food Diagnostics Group (FDG) revenue increased by 13.5%, primarily from production animal products.
4Gross profit margin improved to 51.2% from 49.9% in the prior year's quarter.
5Operating income increased by 3.2% to $27.0 million.
6The company adopted SFAS No. 123(R) on January 1, 2006, impacting reported expenses and cash flows related to share-based compensation.
7Shareholder equity decreased from $369.0 million to $363.1 million, largely due to significant treasury stock repurchases.

IDEXX LABORATORIES INC /DE Quarterly Report for Q1 Ended Mar 31, 2006

Summary

Key Highlights

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