Segment Reporting

6 Months Ended

Jun. 30, 2015

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 combines and presents products for the human point-of-care medical diagnostics market with our pharmaceutical product line and our out-licensing arrangements because they do not meet the quantitative or qualitative thresholds for reportable segments.

Prior to January 1, 2015, our CAG segment included certain livestock testing services processed within and managed by our CAG Reference Laboratories.  We have transitioned the responsibility for these diagnostic services to our LPD segment to more effectively align our business with the nature and customers of these livestock services.  Segment revenue and income from operations for the three and six months ended June 30, 2014 has been retrospectively revised in this Quarterly Report on Form 10-Q to reflect this change in the composition of our reportable segments.  Revenue related to these livestock testing services was $4.6 million and $7.4 million for the three and six months ended June 30, 2014, respectively.

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, 2015 and 2014 (in thousands):

	For the Three Months Ended June 30,
		CAG	Water		LPD		Other		Unallocated Amounts		Consolidated Total
2015
Revenue	$	351,620	$	25,051	$	32,059	$	4,613	$	-	$	413,343
Income (loss) from operations	$	67,875	$	11,954	$	5,895	$	(237)	$	2,816	$	88,303
Interest expense, net												(6,700)
Income before provision for income taxes												81,603
Provision for income taxes												24,665
Net income												56,938
Less: Net income attributable to noncontrolling interest												26
Net income attributable to IDEXX  Laboratories, Inc. stockholders											$	56,912
2014
Revenue	$	322,129	$	24,487	$	37,307	$	6,199	$	-	$	390,122
Income (loss) from operations	$	66,924	$	10,064	$	10,747	$	(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

	For the Six Months Ended June 30,
		CAG	Water		LPD		Other		Unallocated Amounts		Consolidated Total
2015
Revenue	$	676,151	$	46,749	$	63,329	$	9,591	$	-	$	795,820
Income (loss) from operations	$	120,304	$	21,413	$	11,846	$	(431)	$	7,974	$	161,106
Interest expense, net												(12,579)
Income before provision for income taxes												148,527
Provision for income taxes												45,011
Net income												103,516
Less: Net income attributable to noncontrolling interest												10
Net income attributable to IDEXX  Laboratories, Inc. stockholders											$	103,506
2014
Revenue	$	620,857	$	45,908	$	71,518	$	12,042	$	-	$	750,325
Income (loss) from operations	$	120,928	$	18,180	$	19,067	$	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

The following is a summary of revenue by product and service category for the three and six months ended June 30, 2015 and 2014 (in thousands): 

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
		2015		2014		2015		2014
CAG segment revenue:
CAG Diagnostics recurring revenue:	$	300,146	$	276,949	$	578,911	$	532,830
IDEXX VetLab® consumables		100,743		89,113		199,135		173,434
VetLab service and accessories		14,018		13,433		27,548		26,504
Rapid assay products		52,182		49,493		95,819		92,552
Reference laboratory diagnostic and consulting services		133,203		124,910		256,409		240,340
CAG Diagnostics capital - instruments		24,064		18,993		44,178		37,580
Customer information management and digital imaging systems		27,410		26,187		53,062		50,447
CAG segment revenue		351,620		322,129		676,151		620,857
Water segment revenue		25,051		24,487		46,749		45,908
LPD segment revenue		32,059		37,307		63,329		71,518
Other segment revenue		4,613		6,199		9,591		12,042
Total revenue	$	413,343	$	390,122	$	795,820	$	750,325