IDEXX Laboratories (IDXX) 8-K IDEXX Laboratories Announces Fourth Quarter Results

Exhibit 99.1

Contact: Merilee Raines, Chief Financial Officer, (207) 856-8155

FOR IMMEDIATE RELEASE

IDEXX Laboratories Announces Fourth Quarter Results

WESTBROOK, Maine, January 28, 2005 — IDEXX Laboratories, Inc. (NASDAQ: IDXX), today reported that net income increased 37% to $16.9 million for the quarter ended December 31, 2004, from $12.4 million for the same period in the prior year.

          Earnings per diluted share for the quarter were $0.49, a 44% increase over earnings per diluted share of $0.34 for the quarter ended December 31, 2003.  Earnings per share in the fourth quarter of 2003 reflect a negative effect of $0.12 per diluted share resulting from the write-down of fixed assets associated with the discontinuation of development of a clinical chemistry instrument, and a positive effect of $0.03 per diluted share resulting from a reduction of an estimated liability for a third party claim and revision of an estimate of collectability of an account receivable.

          Excluding the effects of these discrete items for the fourth quarter of 2003, earnings per diluted share grew 14%.

          Revenue for the fourth quarter of 2004 increased 16% to $144.3 million from $124.8 million for the fourth quarter of 2003. Revenues from Vet Med Lab, a European veterinary reference laboratory, and Dr. Bommeli AG, a Swiss manufacturer of production animal diagnostics, which were acquired in the fourth quarter, contributed 4% to revenue growth and the favorable impact of currency contributed 3% to revenue growth.

          Companion Animal Group (CAG) revenue for the fourth quarter of 2004 increased 17% to $117.3 million from $100.4 million for the fourth quarter of 2003. This increase resulted primarily from increased sales of laboratory services, instruments and consumables, rapid assays and computer systems. The increase in laboratory services revenue was due in part to acquisitions in the first and fourth quarters of 2004. The favorable impact of foreign currency contributed 2% to CAG revenue growth.

          Water segment revenue for the fourth quarter increased 7% to $14.0 million from $13.0 million for the fourth quarter of 2003. The favorable impact of foreign currency contributed 3% to Water revenue growth.

IDEXX Announces Fourth Quarter Results
January 28, 2005
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          Food Diagnostics Group (FDG) revenue for the fourth quarter increased 13% to $13.0 million from $11.4 million for the fourth quarter of 2003 primarily due to increased livestock sales in Europe, including sales from Bommeli and, to a lesser extent, livestock sales in the U.S. The impact of foreign currency contributed 5% to FDG revenue growth.

          “We had strong revenue growth from most of our businesses during the quarter, and particularly good operating performance from our IDEXX VetLab (instruments and consumables) and computer systems lines in the Companion Animal Group,” said Jonathan Ayers, President and CEO. “Based on the fourth quarter performance and the impact of the acquisitions, we are increasing our revenue estimate for 2005. “

           “As we head into 2005 we continue to focus on product development and operating initiatives that we believe will create long-term value for our shareholders.  We are looking forward to the launches of our IDEXX HerdChek ^® BSE Antigen Test Kit in Europe, and our new VetStat ™ Electrolyte and Blood Gas Analyzer in the first few months of 2005.”

Full year results

          Net income increased 37% to $78.3 million for the year ended December 31, 2004, from $57.1 million for 2003. Earnings per diluted share for 2004 were $2.19, a 38% increase over earnings per diluted share of $1.59 for 2003. In 2004, earnings per diluted share included a net benefit of $0.09 resulting from (i) a reduction in the Company’s provision for income taxes primarily related to the completion of a tax audit through the year 2001 and the receipt of certain state tax benefits, (ii) reductions in the estimated liability for a third party claim and (iii) a payment received in settlement of certain litigation. Excluding the effects of these discrete items and the discrete items that occurred in 2003, described above, diluted earnings per share grew 24% in 2004.

          Revenue for the year ended December 31, 2004 increased 15% to $549.2 million from $476.0 million for 2003. The favorable impact of currency contributed 3% to revenue growth.

          Companion Animal Group (CAG) revenue for the year ended December 31, 2004 increased 17% to $448.7 million from $384.4 million for 2003, as a result of increased sales from all lines within the CAG segment. The favorable impact of currency contributed 3% to CAG revenue growth.

          Water segment revenue for the year ended December 31, 2004 increased 13% to $53.1 million from $46.9 million for 2003 primarily due to increased sales in Europe and North America. The favorable impact of foreign currency contributed 4% to Water revenue growth. 

IDEXX Announces Fourth Quarter Results
January 28, 2005
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          Food Diagnostics Group (FDG) revenue for the year ended December 31, 2004 increased 6% to $47.4 million from $44.6 million. The favorable impact of foreign currency contributed 5% to FDG revenue growth.

Outlook

The Company offers the following guidance for the full year of 2005:

• Revenue is expected to be approximately $630 to $640 million.

• Diluted earnings per share are expected to be approximately $2.20 to $2.25. (This guidance excludes the effect of new accounting rules requiring the expensing of share-based compensation.)

The Company offers the following guidance for the first quarter of 2005:

• Revenue is expected to be approximately $152 to $154 million.

• Diluted earnings per share are expected to be approximately $0.47 to $0.48, which includes approximately $0.03 of anticipated acquisition integration costs.

IDEXX Laboratories to Present at Merrill Lynch Global Pharmaceutical, Biotechnology and Medical Device Conference

          The Company also announced today that it will participate in the Merrill Lynch Global Pharmaceutical, Biotechnology and Medical Device Conference.  Jonathan Ayers, President and CEO, is scheduled to make a presentation on the Company on Tuesday, February 8, 2005, at 10:30 a.m. (ET) at the Grand Hyatt in New York City.  Individuals can access the live webcast audio presentation through a link on the home page of the IDEXX Laboratories Web site, idexx.com.  An archived edition of the presentation will be available for 14 days via the same link.

About IDEXX Laboratories

          IDEXX Laboratories, Inc. is a worldwide leader in the development and commercialization of innovative, technology-based products and services for veterinary, food and water applications. The Company’s largest business is focused on companion animal health, combining biotechnology, medical device technology and information technology to aid veterinarians in providing better medicine while building successful practices. IDEXX Laboratories’ food and water businesses are focused on employing innovative technologies to monitor production animal health and the safety and quality of drinking water and milk. Headquartered in Westbrook, Maine, IDEXX Laboratories employs more than 2,600 people and offers products to customers in over 100 countries.

IDEXX Announces Fourth Quarter Results
January 28, 2005
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Note Regarding Forward-Looking Statements

This press release contains statements about the Company’s business prospects and estimates of the Company’s financial results for future periods that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on management’s expectations of future events as of the date of this press release, and the Company assumes no obligation to update any forward-looking statements as a result of new information or future events or developments. Actual results could differ materially from management’s expectations. Factors that could cause or contribute to such differences include the following: the Company’s ability to develop, manufacture, introduce and market new products and enhancements to existing products; the effectiveness of the Company’s sales and marketing activities; the Company’s ability to develop, license or obtain rights to new technologies; the Company’s ability to identify acquisition opportunities, complete acquisitions and integrate acquired businesses; the impact of competition and technological change on the markets for the Company’s products; the effect of government regulation on the Company’s business, including government decisions about whether and when to approve the Company’s products and decisions regarding labeling, manufacturing and marketing products; the impact of distributor purchasing decisions on sales of our products that are sold through distribution; changes or trends in veterinary medicine that affect the rate of use of the Company’s products and services by veterinarians; the Company’s ability to obtain patent and other intellectual property protection for its products, successfully enforce its intellectual property rights and defend itself against third party claims against the Company; disruptions, shortages or pricing changes that affect the Company’s purchases of products and materials from third parties, including from sole source suppliers; the effects of government regulatory decisions, customer demand, pricing and other factors on the realizability of the Company’s inventories; the Company’s ability to manufacture complex biologic products; the effects of operations outside the U.S., including  from currency fluctuations, different regulatory, political and economic conditions, and different market conditions; and the loss of key employees. A further description of these and other factors can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003, and the Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, in the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

IDEXX Announces Fourth Quarter Results
January 28, 2005
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IDEXX Laboratories, Inc. and Subsidiaries
Consolidated Statement of Operations
Amounts in thousands except per share data (Unaudited)

	Three Months Ended						Twelve Months Ended
	December 31, 2004			December 31, 2003			December 31, 2004			December 31, 2003
Revenue:
Revenue	$	144,274		$	124,838		$	549,181		$	475,992
Expenses and Income:
Cost of revenue		75,363			64,757			270,164			245,688
Gross profit		68,911			60,081			279,017			230,304
Sales and marketing		22,916			20,103			85,710			71,846
General and administrative		13,347			16,356			49,870			45,752
Research and development		9,373			8,302			35,402			32,319
Income from operations		23,275			15,320			108,035			80,387
Interest income, net		753			679			3,068			2,867
Income before provision for income taxes
and partner’s interest		24,028			15,999			111,103			83,254
Partner’s share of consolidated loss		(79	)		(114	)		(394	)		(114	)
Provision for income taxes		7,172			3,748			33,165			26,278
Net Income:
Net income	$	16,935		$	12,365		$	78,332		$	57,090
Earnings per share: Basic	$	0.51		$	0.36		$	2.29		$	1.67
Earnings per share: Diluted	$	0.49		$	0.34		$	2.19		$	1.59
Shares outstanding: Basic		33,462			34,753			34,214			34,271
Shares outstanding: Diluted		34,845			36,416			35,800			35,931

IDEXX Laboratories, Inc. and Subsidiaries
Key Operating Ratios (Unaudited)

	Three Months Ended					Twelve Months Ended
		December 31, 2004		December 31, 2003			December 31, 2004		December 31, 2003
Key Operating Ratios (as a percentage of revenue):
Gross profit		47.8	%	48.1	%		50.8	%	48.4	%
Sales, marketing, general and
administrative expense		25.2	%	29.1	%		24.6	%	24.7	%
Research and development expense		6.5	%	6.7	%		6.5	%	6.8	%
Income from operations		16.1	%	12.3	%		19.7	%	16.9	%
International Revenue:
International revenue		35.8	%	32.0	%		32.0	%	30.3	%

IDEXX Announces Fourth Quarter Results
January 28, 2005
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IDEXX Laboratories, Inc. and Subsidiaries
Segment Information
Amounts in thousands (Unaudited)

	Three Months Ended						Twelve Months Ended
		December 31, 2004			December 31, 2003			December 31, 2004			December 31, 2003
Revenue:
Companion Animal Group	$	117,310		$	100,378		$	448,687		$	384,419
Water		14,003			13,035			53,098			46,936
Food Diagnostics Group		12,961			11,425			47,396			44,637
Total	$	144,274		$	124,838		$	549,181		$	475,992
Gross Profit:
Companion Animal Group	$	52,985		$	45,058		$	214,927		$	175,612
Water		9,333			8,686			35,885			31,483
Food Diagnostics Group		6,593			6,337			28,205			23,209
Total	$	68,911		$	60,081		$	279,017		$	230,304
Income from Operations:
Companion Animal Group	$	16,101		$	7,216		$	77,123		$	55,216
Water		6,255			5,957			24,259			20,934
Food Diagnostics Group		1,577			2,827			9,831			7,606
Other		(658	)		(680	)		(3,178	)		(3,369	)
Total	$	23,275		$	15,320		$	108,035		$	80,387
Gross Profit (as a percentage of revenue):
Companion Animal Group		45.2	%		44.9	%		47.9	%		45.7	%
Water		66.7	%		66.6	%		67.6	%		67.1	%
Food Diagnostics Group		50.9	%		55.5	%		59.5	%		52.0	%
Operating Profit (as a percentage of revenue):
Companion Animal Group		13.7	%		7.2	%		17.2	%		14.4	%
Water		44.7	%		45.7	%		45.7	%		44.6	%
Food Diagnostics Group		12.2	%		24.7	%		20.7	%		17.0	%

IDEXX Announces Fourth Quarter Results
January 28, 2005
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IDEXX Laboratories, Inc. and Subsidiaries
Consolidated Balance Sheet
Amounts in thousands (Unaudited)

		December 31, 2004			December 31, 2003
Assets:
Current Assets:
Cash and cash equivalents	$	87,556		$	186,717
Short-term investments		49,716			33,988
Accounts receivable, net		65,639			53,976
Inventories		76,424			75,333
Other current assets		21,947			20,575
Total current assets		301,282			370,589
Long-term investments		19,687			35,082
Property and equipment - cost		137,851			112,023
Less - Accumulated depreciation		75,221			66,799
Property and equipment, net		62,630			45,224
Other long-term assets, net		131,777			70,980
Total assets	$	515,376		$	521,875
Liabilities and  Stockholders’ Equity:
Current Liabilities:
Accounts payable	$	14,723		$	19,160
Accrued expenses		74,499			72,416
Notes payable		1,291			494
Deferred revenue		10,153			8,275
Total current liabilities		100,666			100,345
Total long-term liabilities		16,658			7,452
Partner’s interest in subsidiary		392			786
Stockholders’ Equity:
Common stock		4,521			4,439
Additional paid-in capital		410,818			383,249
Deferred equity-based compensation		665			138
Retained earnings		318,682			240,350
Treasury stock, at cost		(348,327	)		(219,449	)
Accumulated other comprehensive income		11,301			4,565
Total stockholders’ equity		397,660			413,292
Total liabilities and stockholders’ equity	$	515,376		$	521,875

IDEXX Laboratories, Inc. and Subsidiaries
Key Balance Sheet Statistics (Unaudited)

	December 31, 2004	December 31, 2003
Key Balance Sheet Statistics:
Days sales outstanding	39	38
Inventory turns	1.9	1.9

IDEXX Announces Fourth Quarter Results
January 28, 2005
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IDEXX Laboratories, Inc. and Subsidiaries
Consolidated Statement of Cash Flows
Amounts in thousands (Unaudited)

	Twelve Months Ended
		December 31, 2004			December 31, 2003
Operating:
Cash Flows from Operating Activities:
Net income	$	78,332		$	57,090
Non-cash charges		31,094			38,247
Changes in current assets and liabilities, net of acquisitions and disposals		(13,934	)		21,818
Net cash provided by operating activities	$	95,492		$	117,155
Investing:
Cash Flows from Investing Activities:
(Increase) decrease in investments, net		(479	)		(20,312	)
Purchase of property and equipment		(29,178	)		(16,896	)
Acquisition of businesses and intangible assets		(53,942	)		(2,300	)
Acquisition of equipment leased to customers		(2,640	)		(2,724	)
Net cash used by investing activities	$	(86,239	)	$	(42,232	)
Financing:
Cash Flows from Financing Activities:
Repayments of notes payable		(356	)		(510	)
Purchase of treasury stock		(129,191	)		(35,817	)
Proceeds from the exercise of stock options		19,376			31,165
Net cash provided (used) by financing activities	$	(110,171	)	$	(5,162	)
Net effect of exchange rate changes		1,757			3,168
Net increase (decrease) in cash and cash equivalents		(99,161	)		72,929
Cash and cash equivalents, beginning of period		186,717			113,788
Cash and cash equivalents, end of period	$	87,556		$	186,717

IDEXX Laboratories, Inc. and Subsidiaries
Free Cash Flow (Unaudited)

	Twelve Months Ended
		December 31, 2004			December 31, 2003
Free Cash Flow:
Net cash provided by operating activities	$	95,492		$	117,155
Purchase of property and equipment		(29,178	)		(16,896	)
Acquisition of equipment leased to customers		(2,640	)		(2,724	)
Free cash flow	$	63,674		$	97,535

Free cash flow indicates the cash generated from operations reduced by investments in capital and other long-term assets.  Free cash flow excludes financing activities, investments in monetary securities, and business acquisitions and divestitures.  We feel free cash flow is a useful measure because it indicates the cash the operations of the business are generating after appropriate reinvestment for recurring investments in fixed assets that are required to operate the business.  We believe this is a common financial measure useful to further evaluate the results of operations.