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 27, 2006 — IDEXX Laboratories, Inc. (NASDAQ: IDXX), today reported that revenue for the fourth quarter of 2005 increased 16% to $167.0 million from $144.3 million for the fourth quarter of 2004. Earnings per diluted share for the quarter ended December 31, 2005 were $0.60, compared to $0.49 for the same period in the prior year. 

          During the quarter ended December 31, 2005, the Company incurred acquisition integration costs of $0.02 per diluted share and income tax expense on the repatriation of foreign earnings under the American Jobs Creation Act of $0.03 per diluted share. During the quarter ended December 31, 2004, the Company incurred acquisition-related costs of $0.02 per diluted share. Excluding the effects of these discrete items in the fourth quarters of 2005 and 2004, adjusted earnings per diluted share grew approximately 28%. The Company believes adjusted earnings per diluted share is a useful financial measure to indicate the results of ongoing operations, excluding significant infrequent items.

          Companion Animal Group (“CAG”) revenue for the fourth quarter of 2005 increased 16% to $135.9 million from $117.3 million for the fourth quarter of 2004. Incremental sales from businesses acquired during 2004 and 2005, consisting of veterinary reference laboratories and a digital radiography business, contributed approximately 5% to CAG revenue growth. Aside from acquisitions, the increased CAG revenue resulted primarily from higher sales of instruments and consumables, laboratory and consulting services, rapid assay products, and, to a lesser extent, computer and digital radiography systems and pharmaceutical products. The unfavorable impact of foreign currency decreased CAG revenue growth by 2%.

          Water segment revenue for the fourth quarter increased 4% to $14.6 million from $14.0 million for the fourth quarter of 2004 primarily due to higher worldwide sales volume. The unfavorable impact of foreign currency decreased Water revenue growth by 3%.

          Food Diagnostics Group (“FDG”) revenue for the fourth quarter increased 27% to $16.4 million from $13.0 million for the fourth quarter of 2004. Incremental sales from businesses acquired in the fourth quarter of 2004 contributed approximately 9% to FDG revenue growth. The remainder of the growth resulted primarily from higher sales volume of established product lines in the production animal diagnostic products business. The unfavorable impact of foreign currency decreased FDG revenue growth by 7%.

IDEXX Announces Fourth Quarter Results
January 27, 2006
Page 2 of 9

          “IDEXX Laboratories wrapped up a strong year in 2005 with organic revenue growth, adjusting for acquisitions and foreign exchange, of nearly 14%, bringing organic growth for the year to 10%,” said Jonathan W. Ayers, President and CEO. “The fourth quarter was a particularly strong quarter for the instrument and consumables business as well as production animal diagnostic products. Solid growth trends in the business, several recent product introductions and the benefits from our focus on world class quality over the last twelve months put us in good position to meet our revenue and profit plans for 2006.”

Additional operating results

          Gross profit for the fourth quarter of 2005 increased $16.0 million, or 23%, to $84.9 million from $68.9 million for the fourth quarter of 2004. As a percentage of revenue, gross profit increased to 51% from 48%. The increase in the gross profit percentage was attributable, in part, to relatively favorable pricing in certain businesses; the net favorable change in the impact of foreign currency rates; higher proportional sales of higher margin products and services; lower costs of slides sold for use in our VetTest^® instruments under the agreement with our supplier; and lower acquisition-related costs in the fourth quarter of 2005 compared to the same period of the prior year.

          Research and development (“R&D”) expense for the quarter was $10.6 million compared to $9.4 million for the fourth quarter of 2004. R&D expense was approximately constant as a percentage of total revenue at 6% for the fourth quarters of 2005 and 2004. 

           Selling, general and administrative (“SG&A”) expense was $44.1 million, or 26% of revenue, compared to $36.3 million, or 25% of revenue, in the fourth quarter of 2004. The increase in SG&A expense as a percentage of total revenue reflects the investment made to expand our sales and marketing organizations in both the U.S. and Europe, as well as higher integration costs and intangible amortization expenses associated with the businesses acquired in the fourth quarter of 2004 and in 2005. The increase in SG&A expense in total dollars was also attributable to costs incurred to support the operating activities of businesses acquired in the fourth quarter of 2004 and in 2005.

Full year results

          Revenue for the year ended December 31, 2005 increased 16% to $638.1 million from $549.2 million for the year ended December 31, 2004.

          Earnings per diluted share for 2005 were $2.30, a 5% increase over earnings per diluted share of $2.19 for 2004.  In 2005, earnings per diluted share included net expenses of $0.08 resulting from (i) integration costs associated with businesses acquired in the fourth quarter of 2004 and in 2005, including costs incurred in connection with the consolidation of our European production animal diagnostics operations in Bern, Switzerland, and (ii) income tax expense on the repatriation of foreign earnings under the American Jobs Creation Act. In 2004, earnings per diluted share included a net benefit of $0.08 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, offset partly by acquisition-related costs associated with businesses acquired in the fourth quarter of 2004. Excluding the effects of these discrete items in 2005 and 2004, adjusted earnings per diluted share grew approximately 13%.

IDEXX Announces Fourth Quarter Results
January 27, 2006
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          Companion Animal Group revenue for the year ended December 31, 2005 increased 16% to $520.8 million from $448.7 million for 2004. Incremental sales from businesses acquired during 2004 and 2005, consisting of veterinary reference laboratories and a digital radiography business, contributed approximately 7% to CAG revenue growth. Aside from acquisitions, the increased CAG revenue resulted primarily from increased sales of instruments and consumables, laboratory and consulting services, rapid assay products, and, to a lesser extent, pharmaceutical products and computer and digital radiography systems. 

          Water segment revenue for the year ended December 31, 2005 increased 7% to $56.8 million from $53.1 million in 2004 primarily due to higher worldwide sales volume. 

          Food Diagnostics Group revenue for the year ended December 31, 2005 increased 28% to $60.5 million from $47.4 million in 2004. Incremental sales from businesses acquired in the fourth quarter of 2004 contributed approximately 11% to FDG revenue growth. The remainder of the growth resulted primarily from higher sales volume of established product lines in the production animal products business.

Outlook

          The Company offers the following revised guidance for the full year of 2006:

• Revenue is expected to be approximately $700 to $710 million.

• Diluted earnings per share are expected to be approximately $2.40 to $2.50, which includes the expensing of equity-based compensation as required by Statement of Financial Accounting Standards No. 123 (revised 2004).

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 W. Ayers, President and CEO, is scheduled to make a presentation on the Company on Tuesday, February 7, 2006 at 10:20 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.

IDEXX Announces Fourth Quarter Results
January 27, 2006
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About IDEXX Laboratories

           IDEXX Laboratories, Inc. is a leader in companion animal health, serving practicing veterinarians around the world with innovative, technology-based offerings, including a broad range of diagnostic products and services, practice-management systems and therapeutics. Our products enhance the ability of veterinarians to provide advanced medical care and to build more economically successful practices. IDEXX is also a worldwide leader in providing diagnostic tests and information for the production animal industry and tests for the quality and safety of water and milk. Headquartered in Westbrook, Maine, IDEXX Laboratories employs more than 3,000 people and offers products to customers in over 100 countries.

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, 2004 and the Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, in the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

IDEXX Announces Fourth Quarter Results
January 27, 2006
Page 5 of 9

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, 2005			December 31, 2004			December 31, 2005			December 31, 2004
Revenue:	Revenue	$	166,970		$	144,274		$	638,095		$	549,181
Expenses and Income:	Cost of revenue		82,054			75,363			315,195			270,164
	Gross profit		84,916			68,911			322,900			279,017
	Sales and marketing		26,769			22,916			101,990			85,710
	General and administrative		17,327			13,347			64,631			49,870
	Research and development		10,636			9,373			40,948			35,402
	Income from operations		30,184			23,275			115,331			108,035
	Interest income, net		849			753			3,141			3,068
	Income before provision for income taxes and partner’s interest		31,033			24,028			118,472			111,103
	Provision for income taxes		11,137			7,172			40,670			33,165
	Partner’s share of consolidated loss		(131	)		(79	)		(452	)		(394	)
Net Income:	Net income	$	20,027		$	16,935		$	78,254		$	78,332
	Earnings per share: Basic	$	0.63		$	0.51		$	2.41		$	2.29
	Earnings per share: Diluted	$	0.60		$	0.49		$	2.30		$	2.19
	Shares outstanding: Basic		32,032			33,462			32,521			34,214
	Shares outstanding: Diluted		33,627			34,845			34,055			35,800

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

		Three Months Ended						Twelve Months Ended
		December 31, 2005			December 31, 2004			December 31, 2005			December 31, 2004
Key Operating	Gross profit		50.9	%		47.8	%		50.6	%		50.8	%
Ratios (as a	Sales, marketing, general and administrative expense		26.4	%		25.2	%		26.1	%		24.6	%
percentage of	Research and development expense		6.4	%		6.5	%		6.4	%		6.5	%
revenue):
	Income from operations		18.1	%		16.1	%		18.1	%		19.7	%
International	International revenue	$	59,153		$	51,578		$	225,789		$	175,566
Revenue:
	International revenue as percentage of total revenue		35.4	%		35.8	%		35.4	%		32.0	%

IDEXX Announces Fourth Quarter Results
January 27, 2006
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IDEXX Laboratories, Inc. and Subsidiaries
Segment Information
Amounts in thousands (Unaudited)

		Three Months Ended						Twelve Months Ended
		December 31, 2005			December 31, 2004			December 31, 2005			December 31, 2004
Revenue:	Companion Animal Group	$	135,942		$	117,310		$	520,830		$	448,687
	Water		14,606			14,003			56,760			53,098
	Food Diagnostics Group		16,422			12,961			60,505			47,396
	Total	$	166,970		$	144,274		$	638,095		$	549,181
Gross Profit:	Companion Animal Group	$	65,396		$	52,985		$	250,409		$	214,927
	Water		9,951			9,333			38,277			35,885
	Food Diagnostics Group		9,569			6,593			34,214			28,205
	Total	$	84,916		$	68,911		$	322,900		$	279,017
Income from Operations:	Companion Animal Group	$	21,369		$	16,101		$	82,970		$	77,123
	Water		6,653			6,255			25,974			24,259
	Food Diagnostics Group		3,038			1,577			9,894			9,831
	Other		(876	)		(658	)		(3,507	)		(3,178	)
	Total	$	30,184		$	23,275		$	115,331		$	108,035
Gross Profit	Companion Animal Group		48.1	%		45.2	%		48.1	%		47.9	%
(as a percentage of	Water		68.1	%		66.7	%		67.4	%		67.6	%
revenue):	Food Diagnostics Group		58.3	%		50.9	%		56.5	%		59.5	%
Income from	Companion Animal Group		15.7	%		13.7	%		15.9	%		17.2	%
Operations (as a	Water		45.5	%		44.7	%		45.8	%		45.7	%
percentage of revenue):	Food Diagnostics Group		18.5	%		12.2	%		16.4	%		20.7	%

IDEXX Announces Fourth Quarter Results
January 27, 2006
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IDEXX Laboratories, Inc. and Subsidiaries
Revenues by Product and Service Categories
Amounts in thousands (Unaudited)

		Three Months Ended
			December 31, 2005		December 31, 2004		Dollar Change		Percentage Change		Percentage Change from Currency (1)		Percentage Change Net of Currency Effect
Net CAG Revenue:	Instruments and consumables	$	59,181	$	52,840	$	6,341		12.0	%	-3.4	%	15.4	%
	Rapid assay products		22,815		20,645		2,170		10.5	%	-0.8	%	11.3	%
	Laboratory and consulting services		39,527		33,575		5,952		17.7	%	-2.9	%	20.6	%
	Computer systems and digital radiography		10,763		7,764		2,999		38.6	%	-0.1	%	38.7	%
	Pharmaceutical products		3,656		2,486		1,170		47.1	%	—		47.1	%
	Net CAG revenue		135,942		117,310		18,632		15.9	%	-2.5	%	18.4	%
Net Water Revenue:	Water		14,606		14,003		603		4.3	%	-2.5	%	6.8	%
Net FDG Revenue:	Production animal products		12,569		8,894		3,675		41.3	%	-7.9	%	49.2	%
	Dairy-testing products		3,853		4,067		(214	)	-5.3	%	-3.5	%	-1.8	%
	Net FDG revenue		16,422		12,961		3,461		26.7	%	-6.5	%	33.2	%
Net Revenue:		$	166,970	$	144,274	$	22,696		15.7	%	-2.9	%	18.6	%

⁽¹⁾ Represents the percentage change in revenue attributed to the effect of changes in currency rates from the three months ended December 31, 2004 to the three months ended December 31, 2005.

		Twelve Months Ended
		December 31, 2005		December 31, 2004		Dollar Change			Percentage Change			Percentage Change from Currency (1)			Percentage Change Net of Currency Effect
Net CAG Revenue:	Instruments and consumables	$	217,537	$	197,939	$	19,598			9.9	%		—			9.9	%
	Rapid assay products		100,255		93,506		6,749			7.2	%		0.2	%		7.0	%
	Laboratory and consulting services		156,425		118,596		37,829			31.9	%		-0.3	%		32.2	%
	Computer systems and digital radiography		32,589		28,163		4,426			15.7	%		0.2	%		15.5	%
	Pharmaceutical products		14,024		10,483		3,541			33.8	%		—			33.8	%
	Net CAG revenue		520,830		448,687		72,143			16.1	%		—			16.1	%
Net Water Revenue:	Water		56,760		53,098		3,662			6.9	%		0.3	%		6.6	%
Net FDG Revenue:	Production animal products		44,945		31,690		13,255			41.8	%		-0.3	%		42.1	%
	Dairy-testing products		15,560		15,706		(146	)		-0.9	%		0.3	%		-1.2	%
	Net FDG revenue		60,505		47,396		13,109			27.7	%		-0.1	%		27.8	%
Net Revenue:		$	638,095	$	549,181	$	88,914			16.2	%		—			16.2	%

⁽¹⁾ Represents the percentage change in revenue attributed to the effect of changes in currency rates from the twelve months ended December 31, 2004 to the twelve months ended December 31, 2005.

IDEXX Announces Fourth Quarter Results
January 27, 2006
Page 8 of 9

IDEXX Laboratories, Inc. and Subsidiaries
Consolidated Balance Sheet
Amounts in thousands (Unaudited)

			December 31, 2005			December 31, 2004
Assets:	Current Assets:
	Cash and cash equivalents	$	67,151		$	47,156
	Short-term investments		65,580			90,116
	Accounts receivable, net		71,688			65,639
	Inventories		69,369			76,424
	Other current assets		25,457			22,257
	Total current assets		299,245			301,592
	Long-term Investments		—			19,687
	Property and equipment - cost		142,777			137,851
	Less: accumulated depreciation		77,080			75,221
	Property and equipment, net		65,697			62,630
	Other long-term assets, net		125,734			130,328
	Total assets	$	490,676		$	514,237
Liabilities and	Current Liabilities:
Stockholders’	Accounts payable	$	19,842		$	14,723
Equity:	Accrued expenses		78,208			73,785
	Notes payable		551			1,291
	Deferred revenue		7,965			8,998
	Total current liabilities		106,566			98,797
	Total long-term liabilities		14,800			17,388
	Partner’s interest in subsidiary		300			392
	Stockholders’ Equity:
	Common stock		4,594			4,522
	Additional paid-in capital		437,394			410,817
	Deferred equity-based compensation		1,316			665
	Retained earnings		396,936			318,682
	Treasury stock, at cost		(472,096	)		(348,327	)
	Accumulated other comprehensive income		866			11,301
	Total stockholders’ equity		369,010			397,660
	Total liabilities and stockholders’ equity	$	490,676		$	514,237

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

			December 31, 2005		December 31, 2004
Key	Total cash, cash equivalents and investments	$	132,731	$	156,959
Balance Sheet	Days sales outstanding		38		39
Information:	Inventory turns(1)		2.4		1.9

⁽¹⁾ Reported inventory turns as of December 31, 2005 are favorably impacted by the timing of contractual inventory receipts subsequent to December 31, 2005. We expect future inventory turns to be consistent with our historical range of 1.5 to 2.0 turns per year

IDEXX Announces Fourth Quarter Results
January 27, 2006
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IDEXX Laboratories, Inc. and Subsidiaries
Consolidated Statement of Cash Flows
Amounts in thousands (Unaudited)

		Twelve Months Ended
		December 31, 2005			December 31, 2004
Operating:	Cash Flows from Operating Activities:
	Net income	$	78,254		$	78,332
	Non-cash charges		28,103			30,684
	Changes in current assets and liabilities, net of acquisitions and disposals		10,195			(13,637	)
	Net cash provided by operating activities	$	116,552		$	95,379
Investing:	Cash Flows from Investing Activities:
	Decrease in investments, net		44,261			48,896
	Purchase of property and equipment		(24,199	)		(29,065	)
	Net proceeds from sales of land and buildings		2,751			—
	Acquisition of businesses and intangible assets		(7,604	)		(53,942	)
	Acquisition of equipment leased to customers		(2,615	)		(2,640	)
	Net cash provided (used) by investing activities	$	12,594		$	(36,751	)
Financing:	Cash Flows from Financing Activities:
	Repayments of notes payable		(2,057	)		(356	)
	Purchase of treasury stock		(123,769	)		(129,191	)
	Proceeds from the exercise of stock options		18,841			19,376
	Net cash used by financing activities	$	(106,985	)	$	(110,171	)
	Net effect of exchange rate changes		(2,166	)		1,757
	Net increase (decrease) in cash and cash equivalents		19,995			(49,786	)
	Cash and cash equivalents, beginning of period		47,156			96,942
	Cash and cash equivalents, end of period	$	67,151		$	47,156

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

		Twelve Months Ended
		December 31, 2005			December 31, 2004
Free Cash Flow:	Net cash provided by operating activities	$	116,552		$	95,379
	Purchase of property and equipment		(24,199	)		(29,065	)
	Acquisition of equipment leased to customers		(2,615	)		(2,640	)
	Free cash flow	$	89,738		$	63,674

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.

IDEXX Laboratories, Inc. and Subsidiaries
Common Stock Repurchases

	Three Months Ended				Twelve Months Ended
	December 31, 2005		December 31, 2004		December 31, 2005		December 31, 2004
Total number of shares purchased		499,700		685,100		1,992,900		2,413,400
Average price paid per share	$	69.98	$	51.36	$	62.11	$	53.37