Segment Reporting

3 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Segment Reporting

Note 13.     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 comprises products for the human point-of-care medical diagnostics market (“OPTI Medical”), 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 months ended March 31, 2014 and 2013(in thousands):

	For the Three Months Ended March 31,
	CAG		Water		LPD		Other		Unallocated Amounts		Consolidated Total
2014
Revenue	$	301,588	$	21,421	$	31,351	$	5,843	$	-	$	360,203
Income (loss) from operations	$	55,864	$	8,116	$	6,460	$	589	$	(983)	$	70,046
Interest expense, net												(2,303)
Income before provision for income taxes												67,743
Provision for income taxes												21,150
Net income												46,593
Less: Net income attributable to noncontrolling interest												8
Net income attributable to IDEXX Laboratories, Inc. stockholders											$	46,585
2013
Revenue	$	276,941	$	20,666	$	28,039	$	6,460	$	-	$	332,106
Income (loss) from operations	$	51,309	$	8,355	$	4,836	$	435	$	(3,747)	$	61,188
Interest expense, net												(391)
Income before provision for income taxes												60,797
Provision for income taxes												15,930
Net income												44,867
Less: Net income attributable to noncontrolling interest												7
Net income attributable to IDEXX Laboratories, Inc. stockholders											$	44,860

The following is a summary of revenue by product and service category for the three months ended March 31, 2014 and 2013  (in thousands):

	For the Three Months Ended March 31,
		2014		2013
CAG segment revenue:
CAG Diagnostics recurring revenue:	$	258,763	$	239,568
IDEXX VetLab® consumables		84,321		75,783
VetLab service and accessories		13,093		12,053
Rapid assay products		43,059		44,083
Reference laboratory diagnostic and consulting services		118,290		107,649
CAG Diagnostics capital - instruments		18,565		15,835
Customer information management and digital imaging systems		24,260		21,538
CAG segment revenue		301,588		276,941
Water segment revenue		21,421		20,666
LPD segment revenue		31,351		28,039
Other segment revenue		5,843		6,460
Total revenue	$	360,203	$	332,106