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

Exhibit 99.1

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

FOR IMMEDIATE RELEASE

IDEXX Laboratories Announces First Quarter Results

WESTBROOK, Maine, April 28, 2006 — IDEXX Laboratories, Inc. (NASDAQ: IDXX), today reported that revenue for the first quarter of 2006 increased 10% to $168.2 million from $152.4 million for the first quarter of 2005. Earnings per diluted share for the quarter ended March 31, 2006 were $0.55, compared to $0.51 for the same period in the prior year. 

          Net income for 2006 includes the after-tax impact of share-based compensation expense of $0.07 per diluted share, including the impact of SFAS No. 123(R). Net income for the quarter ended March 31, 2005 included acquisition integration costs of $0.02 per diluted share. Adjusting the results for both periods to exclude the effects of these specified items, adjusted non-GAAP earnings per diluted share grew approximately 15%. Management believes adjusted earnings per diluted share is a useful non-GAAP financial measure to evaluate the results of ongoing operations, excluding significant specified items, period over period, and therefore believes that investors may find this information useful in addition to the GAAP results.

          Companion Animal Group (“CAG”) revenue for the first quarter of 2006 increased 12% to $139.4 million from $124.9 million for the first quarter of 2005 primarily due to higher sales in all CAG product and service categories. Incremental sales from businesses acquired during 2005, consisting of veterinary reference laboratories and a digital radiography business, contributed approximately 2% to CAG revenue growth, while the impact of foreign exchange reduced growth by 2%.

          Food Diagnostics Group (“FDG”) revenue for the first quarter increased 14% to $16.7 million from $14.7 million for the first quarter of 2005 primarily due to higher livestock diagnostics sales volume. The unfavorable impact of foreign currency decreased FDG revenue growth by 7%.

          Water segment revenue for the first quarter decreased 6% to $12.1 million from $12.8 million for the first quarter of 2005 primarily due to lower worldwide sales volume. The unfavorable impact of foreign currency contributed 2% to the decline.

IDEXX Announces First Quarter Results
April 28, 2006
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          “We are pleased with the fundamentals of the business, with very good growth in most of the businesses contributing to 13% growth, adjusting for the impact of currency, and good profit realization as a result,” said Jonathan Ayers, Chairman and CEO.  “Our confidence leads us to increase our financial outlook for the year.”

Additional operating results

          Gross profit for the first quarter of 2006 increased $9.9 million, or 13%, to $86.0 million from $76.1 million for the first quarter of 2005. As a percentage of revenue, gross profit increased to 51% from 50% in the first quarter of 2005. The increase in the gross profit percentage was attributable, in part, to relatively favorable pricing in certain businesses; lower overall manufacturing and purchased materials costs including lower cost of instruments and consumables; and the absence in 2006 of the acquisition integration costs incurred in the first quarter of 2005.

          Research and development (“R&D”) expense for the quarter was $12.7 million compared to $9.8 million for the first quarter of 2005. R&D expense as a percentage of total revenue increased to 8% from 6% in the first quarter of 2005. The increase in R&D expense resulted from increased product development spending related primarily to IDEXX VetLab® instrumentation.

          Selling, general and administrative (“SG&A”) expense for the quarter was $46.4 million, or 28% of revenue, compared to $40.2 million, or 26% of revenue, in the first quarter of 2005. The increase in SG&A expense as a percentage of total revenue was primarily due to the change in accounting for share-based compensation beginning on January 1, 2006.

Outlook

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

• Revenue is expected to be approximately $704 to $712 million, updated from $700 to $710 million.

• Diluted earnings per share are expected to be approximately $2.44 to $2.52, updated from $2.40 to $2.50.

Annual Meeting

          IDEXX Laboratories, Inc. today announced that it will host a simultaneous Webcast of its Annual Meeting of Stockholders, to be held on Wednesday, May 10, 2006, at 10:00 a.m. (eastern) at the Portland Marriott at Sable Oaks in South Portland, Maine.

          Chairman and CEO Jonathan Ayers will chair the meeting. Investors may listen to the Annual Meeting and view a presentation live via a link on the Company’s Web site, idexx.com. An archived edition of the Meeting will be available after 1:00 p.m. (eastern) on that day via the same link.

IDEXX Announces First Quarter Results
April 28, 2006
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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 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, 2005, in the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

IDEXX Announces First Quarter Results
April 28, 2006
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IDEXX Laboratories, Inc. and Subsidiaries
Consolidated Statement of Operations
Amounts in thousands except per share data (Unaudited)

		Three Months Ended
		March 31, 2006			March 31, 2005
Revenue:	Revenue	$	168,164		$	152,426
Expenses and Income:	Cost of revenue		82,139			76,346
	Gross profit		86,025			76,080
	Sales and marketing		26,938			25,070
	General and administrative		19,434			15,098
	Research and development		12,678			9,774
	Income from operations		26,975			26,138
	Interest income, net		769			503
	Income before provision for income taxes and partner’s interest		27,744			26,641
	Provision for income taxes		9,584			9,052
	Partner’s share of consolidated loss		(113	)		(101	)
Net Income:	Net income	$	18,273		$	17,690
	Earnings per share: Basic	$	0.57		$	0.54
	Earnings per share: Diluted	$	0.55		$	0.51
	Shares outstanding: Basic		31,800			32,955
	Shares outstanding: Diluted		33,418			34,439

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

		Three Months Ended
		March 31, 2006			March 31, 2005
Key Operating	Gross profit		51.2	%		49.9	%
Ratios (as a percentage of revenue):	Sales, marketing, general and administrative expense		27.7	%		26.4	%
	Research and development expense		7.5	%		6.4	%
	Income from operations		16.0	%		17.1	%
International Revenue:	International revenue (in thousands)	$	58,400		$	53,549
	International revenue as a percentage of total revenue		34.7	%		35.1	%

IDEXX Announces First Quarter Results
April 28, 2006
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IDEXX Laboratories, Inc. and Subsidiaries
Non-GAAP Financial Measures
Amounts in thousands except per share data (Unaudited)

	Three Months Ended
	Gross Profit				Income from Operations				Net Income				Earnings per Share Diluted
		March 31, 2006		March 31, 2005		March 31, 2006		March 31, 2005		March 31, 2006		March 31, 2005		March 31, 2006		March 31, 2005
GAAP measures	$	86,025	$	76,080	$	26,975	$	26,138	$	18,273	$	17,690	$	0.55	$	0.51
Specified items:
Share-based compensation expense		378		—		2,795		—		2,309		—		0.07		—
Acquisition integration expense		—		752		—		1,068		—		706		—		0.02
Non-GAAP comparative measures	$	86,403	$	76,832	$	29,770	$	27,206	$	20,582	$	18,396	$	0.62	$	0.53

We use these supplemental non-GAAP financial measures to evaluate the Company’s comparative financial performance. The specified items that are excluded from these non-GAAP measures are actual charges that impact net income and cash flows, however, we believe that it is useful to evaluate our core business performance period over period excluding these specified items, in addition to relying upon GAAP financial measures.  We adjust 2006 GAAP financial results to exclude the after-tax impact of share-based compensation expense in order to evaluate the Company’s performance relative to 2005 financial results. We do not consider the pro forma 2005 financial results that are included in our Annual Report on Form 10-K and quarterly reports on Form 10-Q to be reasonably comparable to 2006 financial results with respect to the impact of share-based compensation expense due to several factors, including changes in 2006 in the types, terms and total fair value of share-based compensation awards; changes in the timing of expense recognition for 2006 awards; and differences between periods in income tax benefits.

IDEXX Announces First Quarter Results
April 28, 2006
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IDEXX Laboratories, Inc. and Subsidiaries
Segment Information
Amounts in thousands (Unaudited)

		Three Months Ended
		March 31, 2006			March 31, 2005
Revenue:	Companion Animal Group	$	139,363		$	124,880
	Water		12,066			12,806
	Food Diagnostics Group		16,735			14,740
	Total	$	168,164		$	152,426
Gross Profit:	Companion Animal Group	$	68,605		$	59,263
	Water		7,961			8,477
	Food Diagnostics Group		9,837			8,340
	Other		(378	)		—
	Total	$	86,025		$	76,080
Income from Operations:
	Companion Animal Group	$	22,604		$	18,888
	Water		4,822			5,504
	Food Diagnostics Group		3,671			2,578
	Other		(4,122	)		(832	)
	Total	$	26,975		$	26,138
Gross Profit (as a percentage of revenue):
	Companion Animal Group		49.2	%		47.5	%
	Water		66.0	%		66.2	%
	Food Diagnostics Group		58.8	%		56.6	%
Income  from Operations (as a percentage of revenue):
	Companion Animal Group		16.2	%		15.1	%
	Water		40.0	%		43.0	%
	Food Diagnostics Group		21.9	%		17.5	%

IDEXX Announces First Quarter Results
April 28, 2006
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IDEXX Laboratories, Inc. and Subsidiaries
Revenues by Product and Service Categories
Amounts in thousands (Unaudited)

		Three Months Ended
		March 31, 2006		March 31, 2005		Dollar Change			Percentage Change			Percentage Change from Currency(1)			Percentage Change Net of Currency Effect
Net CAG Revenue:
	Instruments and consumables	$	55,820	$	52,873	$	2,947			5.6	%		-2.9	%		8.5	%
	Rapid assay products		26,004		24,752		1,252			5.1	%		-0.9	%		6.0	%
	Laboratory and consulting services		43,583		36,544		7,039			19.3	%		-2.9	%		22.2	%
	Practice information systems and digital radiography		9,695		7,461		2,234			29.9	%		0.1	%		29.8	%
	Pharmaceutical products		4,261		3,250		1,011			31.1	%		—			31.1	%
	Net CAG revenue		139,363		124,880		14,483			11.6	%		-2.3	%		13.9	%
Net Water
Revenue:	Water		12,066		12,806		(740	)		-5.8	%		-2.5	%		-3.3	%
Net FDG Revenue:
	Production animal products		12,953		10,862		2,091			19.2	%		-7.6	%		26.8	%
	Dairy testing products		3,782		3,878		(96	)		-2.5	%		-4.5	%		2.0	%
	Net FDG revenue		16,735		14,740		1,995			13.5	%		-6.8	%		20.3	%
Net Revenue:		$	168,164	$	152,426	$	15,738			10.3	%		-2.7	%		13.0	%

⁽¹⁾ Represents the percentage change in revenue attributed to the effect of changes in currency rates from the three months ended March 31, 2005 to the three months ended March 31, 2006.

IDEXX Announces First Quarter Results
April 28, 2006
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IDEXX Laboratories, Inc. and Subsidiaries
Consolidated Balance Sheet
Amounts in thousands (Unaudited)

		March 31, 2006			December 31, 2005
Assets:	Current Assets:
	Cash and cash equivalents	$	35,339		$	67,151
	Short-term investments		57,658			65,580
	Accounts receivable, net		81,916			71,688
	Inventories		81,229			69,369
	Other current assets		24,817			25,457
	Total current assets		280,959			299,245
	Property and equipment, at cost		147,785			142,777
	Less: accumulated depreciation		80,512			77,080
	Property and equipment, net		67,273			65,697
	Other long-term assets, net		127,010			125,734
	Total assets	$	475,242		$	490,676
Liabilities and Stockholders’ Equity:	Current Liabilities:
	Accounts payable	$	25,034		$	19,842
	Accrued expenses		65,033			78,208
	Notes payable		—			551
	Deferred revenue		8,301			7,965
	Total current liabilities		98,368			106,566
	Total long-term liabilities		13,627			14,800
	Partner’s interest in subsidiary		188			300
	Stockholders’ Equity:
	Common stock		4,628			4,594
	Additional paid-in capital		455,663			437,394
	Deferred stock units		1,836			1,316
	Retained earnings		415,209			396,936
	Treasury stock, at cost		(514,791	)		(472,096	)
	Accumulated other comprehensive income		514			866
	Total stockholders’ equity		363,059			369,010
	Total liabilities and stockholders’ equity	$	475,242		$	490,676

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

		March 31, 2006		December 31, 2005
Key
Balance Sheet	Total cash, cash equivalents and investments (in thousands)	$	92,997	$	132,731
Information:	Days sales outstanding		42		38
	Inventory turns(1)		1.9		2.4

⁽¹⁾ Reported inventory turns as of December 31, 2005 were favorably impacted by the timing of contractual inventory receipts subsequent to December 31, 2005. 

IDEXX Announces First Quarter Results
April 28, 2006
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IDEXX Laboratories, Inc. and Subsidiaries
Consolidated Statement of Cash Flows
Amounts in thousands (Unaudited)

		Three Months Ended
		March 31, 2006			March 31, 2005
Operating:	Cash Flows from Operating Activities:
	Net income	$	18,273		$	17,690
	Non-cash charges		8,728			6,390
	Changes in current assets and liabilities, net of acquisitions and disposals		(30,024	)		(23,798	)
	Net cash provided (used) by operating activities	$	(3,023	)	$	282
Investing:	Cash Flows from Investing Activities:
	Decrease in investments, net		7,954			32,112
	Purchase of property and equipment		(6,357	)		(4,536	)
	Purchase of land and buildings		(600	)		—
	Acquisition of businesses and intangible assets		(636	)		(659	)
	Acquisition of equipment leased to customers		(382	)		(696	)
	Net cash provided (used) by investing activities	$	(21	)	$	26,221
Financing:	Cash Flows from Financing Activities:
	Repayments of notes payable		(551	)		(1,271	)
	Purchase of treasury stock		(42,695	)		(29,540	)
	Proceeds from the exercise of stock options		9,995			2,603
	Tax benefit from exercise of stock options		4,681			—
	Net cash used by financing activities	$	(28,570	)	$	(28,208	)
	Net effect of exchange rate changes		(198	)		(872	)
	Net decrease in cash and cash equivalents		(31,812	)		(2,577	)
	Cash and cash equivalents, beginning of period		67,151			47,156
	Cash and cash equivalents, end of period	$	35,339		$	44,579

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

		Three Months Ended
		March 31, 2006			March 31, 2005
Free Cash
Flow:	Net cash provided (used) by operating activities	$	(3,023	)	$	282
	Financing cash flows attributable to tax benefits from exercise of stock options		4,681			—
	Purchase of fixed assets other than real property		(6,357	)		(4,536	)
	Acquisition of equipment leased to customers		(382	)		(696	)
	Free cash flow	$	(5,081	)	$	(4,950	)

Free cash flow indicates the cash generated from operations and tax benefits attributable to stock option exercises, reduced by investments in fixed assets other than real property.  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 (Unaudited)

	Three Months Ended
	March 31, 2006		March 31, 2005
Total number of shares purchased		541,400		530,800
Average price paid per share	$	78.86	$	55.65