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Segment Reporting
 6 Months Ended
Jun. 30, 2014
Segment Reporting [Abstract]  
Segment Reporting

Note 15.     Segment Reporting 

  

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision-maker is our Chief Executive Officer. Our reportable segments include diagnostic and information technology-based products and services for the veterinary market, which we refer to as the Companion Animal Group (“CAG”), water quality products (“Water”) and diagnostic tests for livestock and poultry health and to ensure the quality and safety of milk and food, which we refer to as Livestock, Poultry and Dairy (“LPD”). Our Other operating segment includes products for the human point-of-care medical diagnostics market, which is combined and presented with our pharmaceutical product line and our out-licensing arrangements because they do not meet the quantitative or qualitative thresholds for reportable segments.

 

Items that are not allocated to our operating segments are as follows: a portion of corporate support function and personnel-related expenses; certain manufacturing costs; corporate research and development expenses that do not align with one of our existing business or service categories; the difference between estimated and actual share-based compensation expense; and certain foreign currency exchange gains and losses. These amounts are shown under the caption “Unallocated Amounts.”

 

We estimate our share-based compensation expense, corporate support function expenses and certain personnel-related costs and allocate the estimated expenses to the operating segments. This allocation differs from actual expense and consequently yields a difference that is reported under the caption “Unallocated Amounts.” 

 

With respect to manufacturing costs, the costs reported in our operating segments include our standard cost for products sold and any variances from standard cost for products purchased or manufactured within the period. We capitalize these variances for inventory on hand at the end of the period to record inventory in accordance with U.S. GAAP. We then record these variances as cost of product revenue as that inventory is sold. The impact to cost of product revenue resulting from this variance capitalization and subsequent recognition is reported within the caption “Unallocated Amounts.”

 

Additionally, in certain geographies where we maintain inventories in currencies other than the U.S. dollar, the product costs reported in our operating segments include our standard cost for products sold, which is stated at the budgeted currency exchange rate from the beginning of the fiscal year. In these geographies, the variances from standard cost for products sold related to changes in currency exchange rates are reported within the caption “Unallocated Amounts.”

 

 

The following is a summary of segment performance for the three and six months ended June 30, 2014 and 2013 (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended June 30,

 

 

 

 

CAG

 

Water

 

LPD

 

Other

 

Unallocated Amounts

 

Consolidated Total

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$
326,697 

 

$
24,487 

 

$
32,739 

 

$
6,199 

 

$

 -

 

$
390,122 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$
70,348 

 

$
10,064 

 

$
7,323 

 

$
(249)

 

$
(4,267)

 

$
83,219 

 

Interest expense, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(2,477)

 

Income before provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
80,742 

 

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
23,498 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
57,244 

 

Less: Net income attributable to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
26 

 

Net income attributable to IDEXX  Laboratories, Inc. stockholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$
57,218 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$
295,834 

 

$
22,384 

 

$
28,278 

 

$
6,087 

 

$

 -

 

$
352,583 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

$
63,358 

 

$
9,913 

 

$
3,215 

 

$
841 

 

$
1,436 

 

$
78,763 

 

Interest expense, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(735)

 

Income before provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
78,028 

 

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
24,029 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
53,999 

 

Less: Net income attributable to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
4 

 

Net income attributable to IDEXX  Laboratories, Inc. stockholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$
53,995 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended June 30,

 

 

 

 

CAG

 

Water

 

LPD

 

Other

 

Unallocated Amounts

 

Consolidated Total

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$
628,285 

 

$
45,908 

 

$
64,090 

 

$
12,042 

 

$

-

 

$
750,325 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$
126,212 

 

$
18,180 

 

$
13,783 

 

$
340 

 

$
(5,250)

 

$
153,265 

 

Interest expense, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(4,780)

 

Income before provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
148,485 

 

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
44,648 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
103,837 

 

Less: Net income attributable to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
34 

 

Net income attributable to IDEXX  Laboratories, Inc. stockholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$
103,803 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$
572,774 

 

$
43,050 

 

$
56,317 

 

$
12,547 

 

$

-

 

$
684,688 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$
114,666 

 

$
18,268 

 

$
8,051 

 

$
1,276 

 

$
(2,312)

 

$
139,949 

 

Interest expense, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
(1,125)

 

Income before provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
138,824 

 

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
39,959 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
98,865 

 

Less: Net income attributable to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
11 

 

Net income attributable to IDEXX  Laboratories, Inc. stockholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$
98,854 

 

 

 

 

 

 

 

 

 

 

 

 

The following is a summary of revenue by product and service category for the three and six months ended June 30, 2014 and 2013  (in thousands): 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

June 30,

 

June 30,

 

 

 
2014 

 

 
2013 

 

 
2014 

 

 
2013 

CAG segment revenue:

 

 

 

 

 

 

 

 

 

 

 

 

CAG Diagnostics recurring revenue:

 

$
281,596 

 

$
253,256 

 

$
540,370 

 

$
492,826 

IDEXX VetLab® consumables

 

 
89,113 

 

 
78,776 

 

 
173,434 

 

 
154,561 

VetLab service and accessories

 

 
13,512 

 

 
12,506 

 

 
26,616 

 

 
24,559 

Rapid assay products

 

 
49,493 

 

 
46,057 

 

 
92,552 

 

 
90,140 

Reference laboratory diagnostic and consulting services

 

 
129,478 

 

 
115,917 

 

 
247,768 

 

 
223,566 

CAG Diagnostics capital - instruments

 

 
18,914 

 

 
20,755 

 

 
37,468 

 

 
36,587 

Customer information management and digital imaging systems

 

 
26,187 

 

 
21,823 

 

 
50,447 

 

 
43,361 

CAG segment revenue

 

 
326,697 

 

 
295,834 

 

 
628,285 

 

 
572,774 

 

 

 

 

 

 

 

 

 

 

 

 

 

Water segment revenue

 

 
24,487 

 

 
22,384 

 

 
45,908 

 

 
43,050 

LPD segment revenue

 

 
32,739 

 

 
28,278 

 

 
64,090 

 

 
56,317 

Other segment revenue

 

 
6,199 

 

 
6,087 

 

 
12,042 

 

 
12,547 

Total revenue

 

$
390,122 

 

$
352,583 

 

$
750,325 

 

$
684,688