Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

b
The following documents are filed as part of this Form 10-K:
(a) (1) and (a) (2)		The financial statements set forth in the Index to Consolidated Financial Statements and the Consolidated Financial Statement Schedule are filed as a part of this Annual Report on Form 10-K commencing on page F-1.
(a)(3) and (b)		The exhibits listed in the accompanying Exhibit Index are filed as part of this Annual Report on Form 10-K and either filed herewith or incorporated by reference herein, as applicable.

FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

AND

CONSOLIDATED FINANCIAL STATEMENT SCHEDULE

	Page No.
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2015 and 2014	F-3
Consolidated Statements of Income for the Years Ended December 31, 2015, 2014 and 2013	F-4
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2015, 2014 and 2013	F-5
Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2015, 2014 and 2013	F-6
Consolidated Statements of Cash Flows for the Years Ended December 31, 2015, 2014 and 2013	F-7
Notes to Consolidated Financial Statements	F-8
Schedule II
Valuation and Qualifying Accounts	F-46

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of IDEXX Laboratories, Inc.

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of IDEXX Laboratories, Inc. and its subsidiaries at December 31, 2015 and 2014, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the Report of Management on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts

February 16, 2016

F-2

IDEXX LABORATORIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

	December 31,			December 31,
	2015			2014
ASSETS
Current Assets:
Cash and cash equivalents	$	128,994		$	322,536
Marketable securities		213,591			-
Accounts receivable, net of reserves of $5,128 in 2015 and $4,306 in 2014		188,318			152,380
Inventories		188,833			160,342
Deferred income tax assets		39,829			37,689
Other current assets		62,069			86,451
Total current assets		821,634			759,398
Long-Term Assets:
Property and equipment, net		333,026			303,587
Goodwill		178,934			184,450
Intangible assets, net		55,909			65,122
Other long-term assets		85,490			71,654
Total long-term assets		653,359			624,813
TOTAL ASSETS	$	1,474,993		$	1,384,211
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts payable	$	52,648		$	44,743
Accrued liabilities		205,530			195,351
Line of credit		573,000			549,000
Current portion of deferred revenue		25,583			31,812
Total current liabilities		856,761			820,906
Long-Term Liabilities:
Deferred income tax liabilities		49,389			41,688
Long-term debt		597,085			350,000
Long-term deferred revenue, net of current portion		27,055			21,665
Other long-term liabilities		28,698			32,363
Total long-term liabilities		702,227			445,716
Total liabilities		1,558,988			1,266,622
Commitments and Contingencies (Note 14)
Stockholders’ Equity (Deficit):
Common stock, $0.10 par value: Authorized: 120,000 shares; Issued: 102,237 and 101,947 shares in 2015 and 2014, respectively		10,258			10,195
Additional paid-in capital		940,534			888,293
Deferred stock units: Outstanding: 240 and 235 units in 2015 and 2014, respectively		5,409			5,066
Retained earnings		318,356			1,675,299
Accumulated other comprehensive loss		(42,265)			(8,071)
Treasury stock, at cost: 12,242 and 54,574 shares in 2015 and 2014, respectively		(1,316,417)			(2,453,266)
Total IDEXX Laboratories, Inc. stockholders’ equity (deficit)		(84,125)			117,516
Noncontrolling interest		130			73
Total stockholders’ equity (deficit)		(83,995)			117,589
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	1,474,993		$	1,384,211
The accompanying notes are an integral part of these consolidated financial statements.

F-3

IDEXX LABORATORIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

		For the Years Ended December 31,
			2015			2014			2013
Revenue:
Product revenue		$	974,933		$	899,412		$	854,531
Service revenue			626,959			586,395			522,527
Total revenue			1,601,892			1,485,807			1,377,058
Cost of Revenue:
Cost of product revenue			360,208			335,046			318,685
Cost of service revenue			351,414			334,645			302,255
Total cost of revenue			711,622			669,691			620,940
Gross profit			890,270			816,116			756,118
Expenses:
Sales and marketing			299,955			283,708			243,492
General and administrative			182,510			173,890			157,861
Research and development			99,681			98,263			88,003
Impairment charge			8,212			-			-
Income from operations			299,912			260,255			266,762
Interest expense			(29,239)			(15,429)			(5,386)
Interest income			2,468			1,729			1,885
Income before provision for income taxes			273,141			246,555			263,261
Provision for income taxes			81,006			64,604			75,467
Net income			192,135			181,951			187,794
Less: Net income (loss) attributable to noncontrolling interest			57			45			(6)
Net income attributable to IDEXX Laboratories, Inc. stockholders		$	192,078		$	181,906		$	187,800
Earnings per Share:
Basic		$	2.07		$	1.82		$	1.77
Diluted		$	2.05		$	1.79		$	1.74
Weighted Average Shares Outstanding:
Basic			92,601			100,094			106,318
Diluted			93,649			101,503			107,970
The accompanying notes are an integral part of these consolidated financial statements.

F-4

IDEXX LABORATORIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

		For the Years Ended December 31,
			2015				2014				2013
Net income		$	192,135			$	181,951			$	187,794
Other comprehensive income, net of tax:
Foreign currency translation adjustments			(30,718)				(29,126)				(4,502)
Unrealized gain on net investment hedge			1,894				-				-
Unrealized gain (loss) on investments, net of tax expense (benefit) of ($93), ($63) and $165 in 2015, 2014, and 2013, respectively			(226)				(107)				279
Unrealized gain (loss) on derivative instruments:
Unrealized gain, net of tax expense of $3,736, $4,073 and $1,555 in 2015, 2014 and 2013, respectively			8,839				9,542				3,781
Less: reclassification adjustment for gains included in net income, net of tax expense of $5,853, $756 and $679 in 2015, 2014 and 2013, respectively			(13,983)				(2,002)				(1,890)
Unrealized gain (loss) on derivative instruments			(5,143)				7,540				1,891
Other comprehensive loss, net of tax			(34,194)				(21,693)				(2,332)
Comprehensive income			157,941				160,258				185,462
Less: comprehensive income (loss) attributable to noncontrolling interest			57				45				(6)
Comprehensive income attributable to IDEXX Laboratories, Inc.		$	157,884			$	160,213			$	185,468
The accompanying notes are an integral part of these consolidated financial statements.

F-5

IDEXX LABORATORIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands, except per share amounts)

																		Accumulated
		Common Stock							Additional			Deferred						Other									Total
			Number of Shares			$0.10 Par Value			Paid-in Capital			Stock Units			Retained Earnings			Comprehensive Income (Loss)			Treasury Stock			Noncontrolling Interest			Stockholders’ Equity (Deficit)
Balance January 1, 2013			100,160		$	10,016		$	757,214		$	4,630		$	1,305,593		$	15,954		$	(1,457,184)		$	34		$	636,257
Net income (loss)			-			-			-			-			187,800			-			-			(6)			187,794
Other comprehensive loss, net			-			-			-			-			-			(2,332)			-			-			(2,332)
Repurchases of common stock			-			-			-			-			-			-			(372,194)			-			(372,194)
Common stock issued under stock plans, including excess tax benefit			1,028			103			51,861			(38)			-			-			-			-			51,926
Deferred stock units activity			-			-			(259)			448			-			-			-			-			189
Share-based compensation cost			-			-			16,504			70			-			-			-			-			16,574
Balance December 31, 2013			101,188		$	10,119		$	825,320		$	5,110		$	1,493,393		$	13,622		$	(1,829,378)		$	28		$	518,214
Net income			-			-			-			-			181,906			-			-			45			181,951
Other comprehensive loss, net			-			-			-			-			-			(21,693)			-			-			(21,693)
Repurchases of common stock			-			-			-			-			-			-			(623,888)			-			(623,888)
Common stock issued under stock plans, including excess tax benefit			759			76			45,162			-			-			-			-			-			45,238
Deferred stock units activity			-			-			(218)			(114)			-			-			-			-			(332)
Share-based compensation cost			-			-			18,029			70			-			-			-			-			18,099
Balance December 31, 2014			101,947		$	10,195		$	888,293		$	5,066		$	1,675,299		$	(8,071)		$	(2,453,266)		$	73		$	117,589
Net income			-			-			-			-			192,078			-			-			57			192,135
Other comprehensive loss, net			-			-			-			-			-			(34,194)			-			-			(34,194)
Repurchases of common stock			-			-			-			-			-			-			(412,172)			-			(412,172)
Stock split enacted through stock dividend			-			-			-			-			(1,518,264)			-			1,518,264			-			-
Shares retired			(346)			-			-			-			(30,757)			-			30,757			-			-
Common stock issued under stock plans, including excess tax benefit			636			63			32,700			-			-			-			-			-			32,763
Deferred stock units activity			-			-			(258)			258			-			-			-			-			-
Share-based compensation cost			-			-			19,799			85			-			-			-			-			19,884
Balance December 31, 2015			102,237		$	10,258		$	940,534		$	5,409		$	318,356		$	(42,265)		$	(1,316,417)		$	130		$	(83,995)
The accompanying notes are an integral part of these consolidated financial statements.

F-6

IDEXX LABORATORIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

		For the Years Ended December 31,
			2015			2014			2013
Cash Flows from Operating Activities:
Net income		$	192,135		$	181,951		$	187,794
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			68,956			58,888			54,596
Amortization on marketable securities, net			1,432			-			-
Impairment charge			8,212			-			-
Provision for uncollectible accounts			2,200			2,035			1,601
Provision for deferred income taxes			5,143			830			2,073
Share-based compensation expense			19,884			18,099			16,539
Other			(472)			(160)			614
Tax benefit from share-based compensation arrangements			(11,315)			(16,078)			(14,158)
Changes in assets and liabilities:
Accounts receivable			(50,142)			(3,626)			(15,946)
Inventories			(34,969)			(38,310)			(1,347)
Accounts payable			(2,468)			6,703			(4,399)
Deferred revenue			(319)			14,195			6,442
Other assets and liabilities			18,087			11,319			12,187
Net cash provided by operating activities			216,364			235,846			245,996
Cash Flows from Investing Activities:
Purchases of property and equipment			(82,921)			(60,523)			(77,612)
Purchase of marketable securities			(271,958)			-			-
Proceeds from the sale and maturities of marketable securities			56,775			-			-
Proceeds from disposition of pharmaceutical product lines			-			-			3,500
Proceeds from sale of equity investment			-			5,400			-
Acquisitions of intangible assets			-			(175)			(1,024)
Acquisition of businesses, net of cash acquired			(10,302)			(25,115)			(10,923)
Net cash used by investing activities			(308,406)			(80,413)			(86,059)
Cash Flows from Financing Activities:
Borrowings on revolving credit facilities, net			24,000			272,000			65,000
Issuance of senior notes			250,097			200,000			150,000
Debt issue costs			(1,380)			(1,406)			(976)
Payment of notes payable			-			(1,394)			(1,107)
Repurchases of common stock			(401,981)			(618,158)			(367,761)
Proceeds from exercises of stock options and employee stock purchase plans			22,397			29,442			38,235
Tax benefit from share-based compensation arrangements			11,315			16,078			14,158
Net cash used by financing activities			(95,552)			(103,438)			(102,451)
Net effect of changes in exchange rates on cash			(5,948)			(8,517)			(2,414)
Net increase (decrease) in cash and cash equivalents			(193,542)			43,478			55,072
Cash and cash equivalents at beginning of period			322,536			279,058			223,986
Cash and cash equivalents at end of period		$	128,994		$	322,536		$	279,058
Supplemental Disclosures of Cash Flow Information:
Interest paid		$	27,187		$	12,284		$	5,024
Income taxes paid		$	54,877		$	60,239		$	67,721
The accompanying notes are an integral part of these consolidated financial statements.

F-7

IDEXX LABORATORIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. NATURE OF BUSINESS, BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements of IDEXX Laboratories, Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and with the requirements of Regulation S-X.

These statements include the accounts of IDEXX Laboratories, Inc. and our wholly-owned and majority-owned subsidiaries (“IDEXX,” the “Company,” “we” or “our”). We do not have any variable interest entities for which we are the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation.

We develop, manufacture and distribute products and provide services for the veterinary, bioresearch, water, livestock, poultry and dairy markets. We also sell a line of portable electrolytes and blood gas analyzers for the human point-of-care medical diagnostics market. Our principal line of business, which we refer to as our Companion Animal Group (“CAG”) operating segment, provides diagnostic capabilities and information management solutions for the veterinary market as well as and biological materials testing and services for the bioresearch market. Our principal markets for these products and services are the United States (“U.S.”) and Europe, but we also sell to customers and distributors in many other countries around the world. Our Water operating segment provides innovative testing solutions for the quality and safety of water in our principal markets the U.S. and Europe, but we also sell to customers in many other countries around the world. Our Livestock, Poultry and Dairy (“LPD”) operating segment provides diagnostic tests and related instrumentation and performs services that are used to manage the health status of livestock and poultry, to improve bovine reproductive efficiency, and to ensure the quality and safety of milk and food. Our principal markets for these products and services is Europe, China and Australia but we also sell to customers in many other countries around the world. We also operate a smaller operating segment that comprises products for the human point-of-care medical diagnostics market (“OPTI Medical”). Financial information about the OPTI Medical operating segment is combined and presented with our pharmaceutical product line and out-licensing arrangements remaining from our pharmaceutical business in an “Other” category because they do not meet the quantitative or qualitative thresholds for reportable segments. See Note 15 for additional information regarding our reportable operating segments, products and services and geographical areas.

Stock Split

On May 6, 2015, we announced a two-for-one split of our outstanding shares of common stock which was effected through a stock dividend that was paid through the issuance of treasury shares. The stock split entitled each stockholder of record at the close of business on May 18, 2015 to receive one additional share of common stock for each outstanding share of common stock held. The additional shares of our common stock paid pursuant to the stock split were distributed by the Company’s transfer agent on June 15, 2015. All share and per share amounts in the consolidated balance sheets, consolidated statement of operations and notes to the consolidated financial statements retroactively reflect the effect of the stock split unless otherwise noted.

Reclassifications

Certain prior year amounts have been reclassified to conform with the current year presentation. Reclassifications had no material impact on previously reported results of operations, financial position or cash flows.

F-8

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Estimates

The preparation of these consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures. On an ongoing basis, we evaluate these estimates, including those related to reserves for accounts receivable; goodwill and other intangible assets; income taxes; inventory valuation; revenue recognition, product returns, customer programs and multiple element arrangements; share-based compensation; warranty reserves; self-insurance reserves; fair value measurements and loss contingencies. We accrue contingent liabilities when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

(b)Cash and Cash Equivalents

We consider all highly liquid investments with original maturities of ninety days or less to be cash equivalents. Cash and cash equivalents consist primarily demand deposits, money market funds and short duration agency bonds and commercial paper as described above. There is no restricted cash on our consolidated balance sheet for the years ended December 31, 2015 and 2014.

(c)Marketable Securities

During the year ended December 31, 2015, we purchased marketable debt securities, which are classified as available-for-sale and carried at fair value in the accompanying consolidated balance sheets on a trade date basis. We have classified our investments with maturities beyond one year as short-term, based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations. Unrealized holding gains and losses are deferred within accumulated other comprehensive income (“AOCI”), net of applicable taxes, except for when an impairment is determined to be other-than-temporary or the security is divested prior to maturity. Within the accompanying consolidated statements of operations, interest earned and amortization of premiums or discounts on marketable securities are included in interest income, realized gains and losses on the sale of our marketable securities are included in other income.

(d)Inventories

Inventories, which are stated at the lower of cost (first-in, first-out) or market, include material, conversion costs and inbound freight charges. We write down the carrying value of inventory for estimated obsolescence by an amount equal to the difference between the cost of inventory and the estimated market value when warranted based on assumptions of future demand, market conditions, remaining shelf life, or product functionality. If actual market conditions or results of estimated functionality are less favorable than those we estimated, additional inventory write-downs may be required, which would have a negative effect on results of operations.

F-9

(e)Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation and amortization. The costs of additions and improvements are capitalized, while maintenance and repairs are charged to expense as incurred. When an item is sold or retired, the cost and related accumulated depreciation is relieved, and the resulting gain or loss, if any, is recognized in the consolidated statements of income. We provide for depreciation and amortization primarily using the straight-line method by charges to income in amounts that allocate the cost of property and equipment over their estimated useful lives as follows:

Asset Classification		Estimated Useful Life
Land improvements		15 to 20 years
Buildings and improvements		15 to 40 years
Leasehold improvements		Shorter of remaining lease term or useful life of improvements
Machinery and equipment		3 to 8 years
Office furniture and equipment		3 to 7 years
Computer hardware and software		3 to 7 years

We capitalize interest on the acquisition and construction of significant assets that require a substantial period of time to be made ready for use. The capitalized interest is included in the cost of the completed asset and depreciated over the asset’s estimated useful life. The amount of interest capitalized during the years ended December 31, 2015 and 2014 was not material.

We capitalize certain costs incurred in connection with developing or obtaining software designated for internal use based on three distinct stages of development. Qualifying costs incurred during the application development stage, which consist primarily of internal payroll and direct fringe benefits and external direct project costs, including labor and travel, are capitalized and amortized on a straight-line basis over the estimated useful life of the asset. Costs incurred during the preliminary project and post-implementation and operation phases are expensed as incurred. These costs are general and administrative in nature and relate primarily to the determination of performance requirements, data conversion and training. Software developed to deliver hosted services to our customers has been designated as internal use. See Note 7 for further information regarding costs capitalized in connection with software developed for internal use.

(f)Goodwill and Other Intangible Assets

A significant portion of the purchase price for acquired businesses is generally assigned to intangible assets. Intangible assets other than goodwill are initially valued at fair value. If a quoted price in an active market for the identical asset is not readily available at the measurement date, the fair value of the intangible asset is estimated based on discounted cash flows using market participant assumptions, which are assumptions that are not specific to IDEXX. The selection of appropriate valuation methodologies and the estimation of discounted cash flows require significant assumptions about the timing and amounts of future cash flows, risks, appropriate discount rates, and the useful lives of intangible assets. When material, we utilize independent valuation experts to advise and assist us in determining the fair values of the identified intangible assets acquired in connection with a business acquisition and in determining appropriate amortization methods and periods for those intangible assets. Goodwill is initially valued based on the excess of the purchase price of a business combination over the fair value of acquired net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized.

F-10

Our business combinations regularly include contingent consideration arrangements that require additional consideration to be paid based on the achievement of established objectives, most commonly surrounding the retention of customers during the post-combination period. We assess contingent consideration to determine if it is part of the business combination or if it should be accounted for separately from the business combination in the post-combination period. Contingent consideration is recognized at its fair value on the acquisition date. A liability resulting from contingent consideration is remeasured to fair value at each reporting date until the contingency is resolved, with changes in fair value recognized in earnings. Changes in fair value of contingent consideration and differences arising upon settlement were not material during the years ended December 31, 2015, 2014 and 2013. See Note 3 for additional information regarding contingent consideration arising from recent business acquisitions.

We provide for amortization primarily using the straight-line method by charges to income in amounts that allocate the intangible assets over their estimated useful lives as follows:

Asset Classification		Estimated Useful Life
Patents		13 years
Product rights(1)		5 to 15 years
Customer-related intangible assets(2)		5 to 17 years
Noncompete agreements		3 to 5 years

	(1)		Product rights comprise certain technologies, intellectual property, licenses and trade names acquired from third parties.

	(2)		Customer-related intangible assets comprise customer lists and customer relationships acquired from third parties.

We assess goodwill for impairment annually, at the reporting unit level, in the fourth quarter and whenever events or circumstances indicate impairment may exist. In evaluating goodwill for impairment, we have the option to first assess the qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. If, after assessing the totality of events or circumstances, we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we would then perform step one of the two-step impairment test; otherwise, no further impairment test would be required. In contrast, we can opt to bypass the qualitative assessment for any reporting unit in any period and proceed directly to step one of the two-step impairment test. Doing so does not preclude us from performing the qualitative assessment in any subsequent period.

In the fourth quarters of 2015 and 2014, we elected to bypass the qualitative approach and instead proceeded directly to step one of the two-step impairment test to assess the fair value of all of our reporting units. As part of step one of the two-step impairment test, we estimate the fair values of applicable reporting units using an income approach based on discounted forecasted cash flows. We make significant assumptions about the extent and timing of future cash flows, growth rates and discount rates. Model assumptions are based on our projections and best estimates, using appropriate and customary market participant assumptions. In addition, we make certain assumptions in allocating shared assets and liabilities to individual reporting units in determining the carrying value of each reporting unit. Changes in forecasted cash flows or the discount rate would affect the estimated fair values of our reporting units and could result in a goodwill impairment charge in a future period.

No goodwill impairments were identified during the years ended December 31, 2015, 2014 or 2013.

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We assess the realizability of intangible assets other than goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If an impairment review is triggered, we evaluate the carrying value of intangible assets based on estimated undiscounted future cash flows over the remaining useful life of the primary asset of the asset group and compare that value to the carrying value of the asset group. The cash flows that are used contain our best estimates, using appropriate and customary assumptions and projections at the time. If the net carrying value of an intangible asset exceeds the related estimated undiscounted future cash flows, an impairment to write the intangible asset to its fair value would be reported as a non-cash charge to earnings. If necessary, we would calculate the fair value of an intangible asset using the present value of the estimated future cash flows to be generated by the intangible asset, and applying a risk-adjusted discount rate. Impairments of our intangible assets during the years ended December 31, 2015, 2014 and 2013 were not material. See Note 9 for further information regarding our goodwill and intangible assets.

(g)Warranty Reserves

We provide a standard twelve month warranty on all instruments sold. We recognize the cost of instrument warranties in cost of product revenue at the time revenue is recognized based on the estimated cost to repair the instrument over its warranty period. Cost of product revenue reflects not only estimated warranty expense for instruments sold in the current period, but also any changes in estimated warranty expense for the portion of the aggregate installed base that is under warranty. Estimated warranty expense is based on a variety of inputs, including historical instrument performance in the customers’ environment, historical costs incurred in servicing instruments and projected instrument reliability. Should actual service rates or costs differ from our estimates, revisions to the estimated warranty liability would be required. The liability for warranties is included in accrued liabilities in the accompanying consolidated balance sheets.

(h)Income Taxes

The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the estimated future tax effects of temporary differences between book and tax treatment of assets and liabilities and carryforwards to the extent they are realizable. We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. While we consider future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance, in the event we were to determine that we would be able to realize our deferred tax assets in the future in excess of the net recorded amount, a reduction of the valuation allowance would increase income in the period such determination was made. Likewise, should we determine that we would not be able to realize all or part of our net deferred tax asset in the future, a reduction to the deferred tax asset would be charged to income in the period such determination was made.

We record a liability for uncertain tax positions that do not meet the more likely than not standard as prescribed by the authoritative guidance for income tax accounting. We record tax benefits for only those positions that we believe will more likely than not be sustained. Unrecognized tax benefits are the differences between tax positions taken, or expected to be taken, in tax returns, and the benefits recognized for accounting purposes.

Significant judgment is required in determining our worldwide provision for income taxes and our income tax filings are regularly under audit by tax authorities. Any audit result differing from amounts recorded would increase or decrease income in the period that we determine such adjustment is likely. Interest expense and penalties associated with the underpayment of income taxes are included in income tax expense. See Note 12 for additional information regarding income taxes.

(i)Taxes Remitted to Governmental Authorities by IDEXX on Behalf of Customer

We calculate, collect from our customers, and remit to governmental authorities sales, value-added and excise taxes assessed by governmental authorities in connection with revenue-producing transactions with our customers. We report these taxes on a net basis and do not include these tax amounts in revenue or cost of product or service revenue.

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(j)Revenue Recognition

We recognize revenue when four criteria are met: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the sales price is fixed or determinable; and (iv) collectability is reasonably assured. Revenue-generating transactions generally fall into one of the following categories of revenue recognition:

	·		We recognize revenue from the sales of consumables, rapid assay test kits and other diagnostic products when the product is delivered to the customer, except as noted below.

	·		We recognize revenue from the sales of instruments, non-cancelable software licenses and hardware systems upon installation and the customer’s acceptance of the instrument or system as we have no significant further obligations after this point in time.

	·		We recognize service revenue at the time the service is performed.

	·		We recognize revenue associated with extended maintenance agreements (“EMAs”) and our software-as-a-service subscriptions over the life of the contracts using the straight-line method, which approximates the expected timing in which applicable services are performed. Amounts collected in advance of revenue recognition are recorded as current or long-term deferred revenue based on the time from the balance sheet date to the future date of revenue recognition.

	·		We recognize revenue on certain instrument systems under rental programs over the life of the rental agreement using the straight-line method. Amounts collected in advance of revenue recognition are recorded as current or long-term deferred revenue based on the time from the balance sheet date to the future date of revenue recognition.

	·		We recognize revenue on practice management systems sales, where the system includes software that is considered more than incidental, either by allocating the revenue to each element of the sale based on relative fair values of the elements, including post-contract support when fair value for all elements is available, or by use of the residual method when only the fair value of the post-contract support is available. We recognize revenue for the system upon installation and customer acceptance and recognize revenue equal to the fair value of the post-contract support over the support period.

	·		Shipping costs reimbursed by the customer are included in revenue. These same costs are also included in cost of product revenue.

Multiple Element Arrangements (“MEAs”). Arrangements to sell products to customers frequently include multiple deliverables. Our most significant MEAs include the sale of one or more of the instruments from the IDEXX VetLab suite of analyzers, diagnostic imaging systems or practice management software, combined with one or more of the following products: EMAs, consumables and reference laboratory diagnostic and consulting services. Practice management software is frequently sold with post-contract customer support and implementation services. Delivery of the various products or performance of services within the arrangement may or may not coincide. Delivery of our IDEXX VetLab instruments, diagnostic imaging systems, and practice management software generally occurs at the onset of the arrangement. EMAs, consumables, and reference laboratory diagnostic and consulting services typically are delivered over future periods, generally one to six years. In certain arrangements, revenue recognized is limited to the amount invoiced or received that is not contingent on the delivery of products and services in the future.

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We allocate revenue to each element based on the relative selling price and recognize revenue when the elements have standalone value and the four criteria for revenue recognition, as discussed above, have been met for each element. If available, we establish the selling price of each element based on vendor-specific objective evidence (“VSOE”), which represents the price charged for a deliverable when it is sold separately. We use third-party evidence (“TPE”) if VSOE is not available or best estimate of selling price if neither VSOE nor TPE is available. When these arrangements include a separately-priced EMA, we recognize revenue related to the EMA at the stated contractual price on a straight-line basis over the life of the agreement to the extent the separately stated price is substantive. If there is no stated contractual price for an EMA, or the separately stated price is not substantive, we allocate revenue to each element based on the relative selling price and recognize revenue when the elements have standalone value and the four criteria for revenue recognition, as discussed above, have been met for each element.

When arrangements within the scope of software revenue recognition guidance include multiple elements, we allocate revenue to each element based on relative fair value, when VSOE exists for all elements, or by using the residual method when there is VSOE for the undelivered elements but no such evidence for the delivered elements. Under the residual method, the fair value of the undelivered elements is deferred and the residual revenue is allocated to the delivered elements. Revenue is recognized on any delivered elements when the four criteria for revenue recognition have been met for each element. If VSOE does not exist for the undelivered element, all revenue from the arrangement is deferred until the earlier of the point at which such sufficient VSOE does exist or all elements of the arrangement have been delivered. We determine fair value based on amounts charged separately for the delivered and undelivered elements to similar customers in standalone sales of the specific elements.

Certain arrangements with customers include discounts on future sales of products and services. We apply judgment in determining whether future discounts are significant and incremental. When the future discount offered is not considered significant and incremental, we do not account for the discount as an element of the original arrangement. If the future discount is significant and incremental, we recognize that discount as an element of the original arrangement and allocate the discount to the other elements of the arrangement based on relative selling price. To determine whether a discount is significant and incremental, we look to the discount provided in comparison to standalone sales of the same product or service to similar customers, the level of discount provided on other elements in the arrangement, and the significance of the discount to the overall arrangement. If the discount in the MEA approximates the discount typically provided in standalone sales, that discount is not considered incremental.

Customer Programs. We record reductions to revenue related to customer marketing and incentive programs, which include end-user rebates and other volume-based incentives. Incentives may be provided in the form of IDEXX Points, credits or cash and are earned by end users upon achieving defined volume purchases or utilization levels or upon entering an agreement to purchase products or services in future periods. Our most significant customer programs are categorized as follows:

Customer Loyalty Programs. Our customer loyalty programs offer customers the opportunity to earn incentives on a variety of IDEXX products and services as those products and services are purchased and utilized. Revenue reductions related to customer loyalty programs are recorded based on the actual issuance of incentives, incentives earned but not yet issued and estimates of incentives to be earned in the future.

Up-Front Customer Loyalty Programs. Our up-front loyalty programs provide incentives to customers in the form of cash payments or IDEXX Points upon entering multi-year agreements to purchase annual minimum amounts of future products or services. If a customer breaches its agreement, it is required to refund all or a portion of the up-front cash or IDEXX Points, or make other repayments, remedial actions or both. These incentives are considered to be customer acquisition costs and are capitalized within other current assets and other long-term assets and are subsequently recognized as a reduction to revenue over the term of the customer agreement. If these up-front incentives are subsequently utilized to purchase IDEXX VetLab instruments, diagnostic imaging systems or Cornerstone practice management systems, product revenue and cost is deferred and recognized over the term of the customer agreement as products and services are provided to the customer. We monitor customer purchases over the term of their agreement to assess the realizability of our capitalized customer acquisition costs. For the years ended December 31, 2015, 2014 and 2013, impairments of customer acquisition costs were immaterial.

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IDEXX Instrument Marketing Programs. Our instrument marketing programs require the customer to enroll at the time of instrument purchase and offer customers the opportunity to earn incentives in future periods based on the volume of the products they purchase and utilize over the term of the program. These arrangements are considered MEAs in accordance with our revenue recognition policy stated above. Revenue reductions related to instrument marketing programs are recorded based on an estimate of customer purchase and utilization levels and the incentive the customer will earn over the term of the program. Our estimates are based on historical experience and the specific terms and conditions of the marketing program and require us to apply judgment to estimate future product purchases and utilization. Differences between our estimates and actual incentives earned are accounted for as a change in estimate. These differences were not material for the years ended December 31, 2015, 2014 and 2013.

Reagent Rental Programs. Our reagent rental programs provide our customers the right to use our instruments in consideration for multi-year agreements to purchase annual minimum amounts of consumables. No instrument revenue is recognized at the time of instrument installation. We recognize a portion of the revenue allocated to the instrument concurrent with the future sale of consumables. We determine the amount of revenue allocated from the consumable to the instrument based on relative selling prices and determine the rate of instrument revenue recognition in proportion to the customer’s minimum volume commitment. The cost of the instrument is capitalized within property and equipment, and is charged to cost of product revenue on a straight-line basis over the term of the minimum purchase agreement.

IDEXX Points may be applied against the purchase price of IDEXX products and services or applied to trade receivables due to us. IDEXX Points that have not yet been used by customers are classified as a liability until use or expiration occurs. We estimate the amount of IDEXX Points expected to expire, or breakage, based on historical expirations and we recognize the estimated benefit of breakage in proportion to actual redemptions of IDEXX Points by customers. On November 30 of each year, unused IDEXX Points earned before January 1 of the prior year generally expire and any variance from the breakage estimate is accounted for as a change in estimate. This variance was not material for the years ended December 31, 2015, 2014 and 2013.

Future market conditions and changes in product offerings may cause us to change marketing strategies to increase or decrease customer incentive offerings, possibly resulting in incremental reductions of revenue in future periods as compared to reductions in the current or prior periods. Additionally, certain customer programs require us to estimate, based on historical experience, and apply judgment to predict the number of customers who will actually redeem the incentive. In determining estimated revenue reductions we utilize data collected directly from end users, which includes the volume of qualifying products purchased and the number of qualifying tests run as reported to us by end users via IDEXX SmartService, a secure internet link that enables us to extract data and provide diagnostic service and support for certain IDEXX VetLab instruments through remote access. Differences between estimated and actual customer participation in programs may impact the amount and timing of revenue recognition.

Doubtful Accounts Receivable. We recognize revenue when collection from the customer is reasonably assured. We maintain allowances for doubtful accounts for potentially uncollectible receivables. We base our estimates on a detailed analysis of specific customer situations and a percentage of our accounts receivable by aging category. Additional allowances may be required if either the financial condition of our customers were to deteriorate or a strengthening U.S. dollar impacts the ability of foreign customers to make payments to us on their U.S. denominated purchases. Account balances are charged off against the allowance when we believe it is probable the receivable will not be recovered. We do not have any off-balance sheet credit exposure related to our customers. We have no significant customers that accounted for greater than 10% of our consolidated revenues for the year ended December 31, 2015. Similarly, we have no concentration of credit risk as of December 31, 2015.

(k)Research and Development Costs

Research and development costs, which consist of salaries, employee benefits, materials and external consulting and product development costs, are expensed as incurred. We evaluate our software research and development costs for capitalization after the technological feasibility of software and products containing software has been established. No costs were capitalized during the years ended December 31, 2015, 2014 and 2013.

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(l)Advertising Costs

Advertising costs, which are recognized as sales and marketing expense in the period in which they are incurred, were $1.2 million for each of the years ended December 31, 2015 and 2014 and $1.5 million for the year ended December 31, 2013.

(m)Legal Costs

Legal costs are considered period costs and accordingly are expensed in the year services are provided.

(n)Share-Based Compensation

We provide for various forms of share-based compensation awards to our employees and non-employee directors. With the exception of stock options, the fair value of our awards is equal to the closing stock price of IDEXX common stock on the date of grant. We calculate the fair value of our stock option awards using the Black-Scholes-Merton option-pricing model. Share-based compensation expense is recognized net of estimated forfeitures, on a straight-line basis over the requisite service period of the award. See Note 4 for additional information regarding share-based compensation.

(o)Self-Insurance Accruals

We self-insure costs associated with workers’ compensation and health and general welfare claims incurred by our U.S. and Canadian employees up to certain limits. The insurance company provides insurance for claims above these limits. Claim liabilities are recorded for estimates of the loss that we will ultimately incur on reported claims, as well as estimates of claims that have been incurred but not yet reported. Such liabilities are based on individual coverage, the average time from when a claim is incurred to the time it is paid and judgments about the present and expected levels of claim frequency and severity. Estimated claim liabilities could be significantly affected if future occurrences and claims differ from these assumptions and historical trends. Estimated claim liabilities are included in accrued liabilities in the accompanying consolidated balance sheets.

(p)Leases

The majority of our facilities are occupied under operating lease arrangements with various expiration dates through 2030. We are responsible for the real estate taxes and operating expenses related to these facilities. Additionally, we enter into operating leases for certain vehicles and office equipment in the normal course of business. We determine the expected term of any executed agreements using the noncancelable lease term plus any renewal options by which the failure to renew imposes a penalty in such amount that renewal is reasonably assured. The derived expected term is then used in the determination of a capital or operating lease and in the calculation of straight-line rent expense. Rent escalations are considered in the calculation of minimum lease payments in our capital lease tests and in determining straight-line rent expense for operating leases.

(q)Earnings per Share

Basic earnings per share is computed by dividing net income attributable to IDEXX Laboratories, Inc. stockholders by the weighted average number of shares of common stock and vested deferred stock units outstanding during the year. The computation of diluted earnings per share is similar to the computation of basic earnings per share, except that the denominator is increased for the assumed exercise of dilutive options and assumed issuance of unvested restricted stock units and unvested deferred stock units using the treasury stock method unless the effect is anti-dilutive. The treasury stock method assumes that proceeds, including cash received from the exercise of employee stock options, the total unrecognized compensation expense for unvested share-based compensation awards and the excess tax benefits resulting from share-based compensation tax deductions in excess of the related expense recognized for financial reporting purposes, would be used to purchase our common stock at the average market price during the period. Vested deferred stock units outstanding are included in shares outstanding for basic and diluted earnings per share because the associated shares of our common stock are issuable for no cash consideration, the number of shares of our common stock to be issued is fixed and issuance is not contingent. See Note 4 for additional information regarding deferred stock units.

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(r)Foreign Currency

The functional currency of all but three of our subsidiaries is their local currency. Assets and liabilities of these foreign subsidiaries are translated to the U.S. dollar using the exchange rate in effect at the balance sheet date. Revenue and expense accounts are translated to the U.S. dollar using the exchange rate at the date which those elements are recognized, and where it is impractical to do so, an average exchange rate in effect during the period is used to translate those elements. Cumulative translation gains and losses are shown in the accompanying consolidated balance sheets as a separate component of accumulated other comprehensive income (“AOCI”).

Revenues and expenses denominated in a currency other than the respective subsidiary’s functional currency are recorded at the current exchange rate when the transaction is recognized. Monetary assets and liabilities denominated in a currency other than the respective subsidiary’s functional currency are remeasured at each balance sheet date using the exchange rate in effect at each balance sheet date. These foreign currency gains and losses are included in general and administrative expenses. We recognized aggregate foreign currency losses of $0.2 million, $2.0 million and $0.1 million for the years ended December 31, 2015, 2014 and 2013, respectively.

(s)Hedging Instruments

We recognize all derivative and non-derivative instruments (collectively “hedging instruments”) on the balance sheet at fair value at the balance sheet date. Instruments that do not qualify for hedge accounting treatment must be recorded at fair value through earnings. To qualify for hedge accounting treatment, cash flow and net investment hedges must be highly effective in offsetting changes to expected future cash flows or fair value on hedged transactions. If the instrument qualifies for hedge accounting, changes in the fair value of the hedging instrument from the effective portion of the hedge are deferred in AOCI, net of tax, and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. We immediately record in earnings the extent to which a hedging instrument is not effective in achieving offsetting changes in fair value. We de-designate hedging instruments from hedge accounting when the likelihood of the hedged transaction occurring becomes less than probable. For de-designated instruments, the gain or loss from the time of de-designation through maturity of the instrument is recognized in earnings. Any gain or loss in AOCI at the time of de-designation is reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

We enter into master netting arrangements with the counterparties to our derivative transactions which permit certain outstanding receivables and payables to be offset in the event of default. Our derivative contracts do not require either party to post cash collateral. We elect to present our derivative assets and liabilities in the accompanying consolidated balance sheets on a gross basis. All cash flows related to our foreign currency exchange contracts and interest rate swaps are classified as operating cash flows, which is consistent with the cash flow treatment of the underlying items being hedged.

(t)Fair Value Measurements

U.S. GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value.

The Company has certain financial assets and liabilities that are measured at fair value on a recurring basis, certain nonfinancial assets and liabilities that may be measured at fair value on a non-recurring basis and certain financial assets and liabilities that are not measured at fair value in our consolidated balance sheets but for which we disclose the fair value. The fair value disclosures of these assets and liabilities are based on a three-level hierarchy, which is defined as follows:

Level 1	Quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date.

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Level 2	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

Our foreign currency exchange contracts and interest rate swap agreements are measured at fair value on a recurring basis in our accompanying consolidated balance sheets. We measure the fair value of our foreign currency exchange contracts classified as derivative instruments using an income approach, based on prevailing market forward rates less the contract rate multiplied by the notional amount. The product of this calculation is then adjusted for counterparty risk. We measure the fair value of our interest rate swaps classified as derivative instruments using an income approach, utilizing a discounted cash flow analysis based on the terms of the contract and the interest rate curve adjusted for counterparty risk.

The amount outstanding under our unsecured revolving credit facility and long-term debt are measured at carrying value in our accompanying consolidated balance sheets though we disclose the fair value of these financial instruments. We determine the fair value of the amount outstanding under our credit facility and long-term debt using an income approach, utilizing a discounted cash flow analysis based on current market interest rates for debt issues with similar remaining years to maturity, adjusted for applicable credit risk. Our credit facility and long-term debt are valued using Level 2 inputs. The estimated fair value of our credit facility approximates its carrying value. At December 31, 2015, the estimated fair value and carrying value of our long-term debt were $593.7 million and $597.1 million, respectively. At December 31, 2014, the estimated fair value and carrying value of our long-term debt were $367.3 million and $350.0 million, respectively.

(u)Comprehensive Income

We report all changes in equity, including net income and transactions or other events and circumstances from non-owner sources during the period in which they are recognized. We have chosen to present comprehensive income, which encompasses net income, foreign currency translation adjustments, gains and losses on our net investment hedge and the difference between the cost and the fair market value of investments in debt and equity securities, forward currency exchange contracts and interest rate swap agreements, in the consolidated statements of comprehensive income. See Note 19 for information about the effects on net income of significant amounts reclassified out of each component of AOCI for the years ended December 31, 2015 and 2014. We consider the foreign currency cumulative translation adjustment to be permanently invested and, therefore, have not provided income taxes on those amounts.

(v)Concentrations of Risk

Financial Instruments. Financial instruments that potentially subject us to concentrations of credit risk are principally cash, cash equivalents, accounts receivable and derivatives. To mitigate such risk with respect to cash and cash equivalents, we place our cash with highly-rated financial institutions, in non-interest bearing accounts that are insured by the U.S. government and money market funds invested in government securities.

Concentration of credit risk with respect to accounts receivable is limited to certain customers to whom we make substantial sales. To reduce risk, we routinely assess the financial strength of our most significant customers and monitor the amounts owed to us, taking appropriate action when necessary. As a result, we believe that accounts receivable credit risk exposure is limited. We maintain an allowance for doubtful accounts, but historically have not experienced any material losses related to an individual customer or group of customers in any particular industry or geographic area.

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To mitigate concentration of credit risk with respect to derivatives we enter into transactions with highly-rated financial institutions, enter into master netting arrangements with the counterparties to our derivative transactions and frequently monitor the credit worthiness of our counterparties. Our master netting arrangements reduce our exposure in that they permit outstanding receivables and payables with the counterparties to our derivative transactions to be offset in the event of default. We have not incurred such losses and consider the risk of counterparty default to be minimal.

Inventory. If we are unable to obtain adequate quantities of the inventory we need to sell our products, we could face cost increases or delays or discontinuations in product shipments, which could have a material adverse effect on our results of operations. Many of the third parties that provide us with the instruments we sell and certain components, raw materials and consumables used in or with our products are obtained from sole or single source suppliers. Some of the products that we purchase from these sources are proprietary or complex in nature, and, therefore, cannot be readily or easily replaced by alternative sources.

(w)New Accounting Pronouncements Not Yet Adopted

In May 2014, the Financial Accounting Standards Board (“FASB”) issued an amendment which will replace most of the existing revenue recognition guidance within U.S. GAAP. The core principle of this guidance is that an entity should recognize revenue for the transfer of goods or services to customers in an amount that it expects to be entitled to receive for those goods or services. In doing so, companies will be required to make certain judgments and estimates, including identifying contract performance obligations, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price among separate performance obligations. Additionally, the amendment requires disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, significant judgments reached in the application of the guidance and assets recognized from the costs to obtain or fulfill a contract. In July 2015, the FASB voted to defer the effective date of the amendment to apply to public business entities for annual and interim periods ending after December 15, 2017. The amendment allows for two methods of adoption: a full retrospective method or a modified retrospective approach with the cumulative effect recognized at the date of initial application. We are in the process of determining the method of adoption and the impact of this amendment on our consolidated financial statements.

In August 2014, the FASB issued an amendment that requires management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. The amendments in this update provide guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for one year after the date that the financial statements are issued and to provide related footnote disclosures. In doing so, the amendments should reduce diversity in the timing and content of footnote disclosures. The amendments in this update apply to all entities and are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. This amendment is not expected to have a material impact on our financial statements.

In February 2015, the FASB issued amendments which change the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities, placing more emphasis on risk of loss when determining a controlling financial interest. The amendments in this update apply to all entities and are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. This amendment is not expected to have a material impact on our financial statements.

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In April 2015, the FASB issued amendments that require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Under current guidance, our debt issuance costs are reflected as a deferred charge, within other current assets and other long-term assets on our consolidated balance sheets. This update is effective for the annual reporting periods beginning after December 15, 2015. In August 2015, the FASB confirmed that the aforementioned amendments did not address the presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. For line-of-credit arrangements, borrowers have the option of presenting debt issuance costs as an asset which is subsequently amortized ratably over the term of the line-of-credit arrangement, regardless of whether there are any related outstanding borrowings. These amendments are not expected to have a material impact on our financial statements.

In April 2015, the FASB issued amendments that provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The new guidance does not change a customer’s accounting for service contracts. The standard update is effective for fiscal years beginning after December 15, 2015 and interim periods within those years. Early adoption is permitted. The standard allows for adoption retrospectively or prospectively to all arrangements entered into or materially modified after the effective date. The amendment is not expected to have a material impact on our financial statements.

In May 2015, the FASB issued amendments which remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value as a practical expedient for fair value. Removing investments measured using the practical expedient from the fair value hierarchy is intended to eliminate the diversity in practice that currently exists with respect to the categorization of these investments. The new guidance requires reporting entities to continue to disclose information on investments for which fair value is measured at net asset value (or its equivalent) as a practical expedient to help users understand the nature and risks of the investments and whether the investments, if sold, are probable of being sold at amounts different from net asset value. A reporting entity should apply the amendments retrospectively to all periods presented. This update is effective for public business entities during fiscal years beginning after December 15, 2015. Early adoption is permitted. This amendment is not expected to have a material impact on our financial statements.

In July 2015, the FASB issued amendments which simplify the existing guidance which requires entities to subsequently measure inventory at the lower of cost or market value. Under the amendments, an entity should measure inventory valued using a first-in, first-out or average cost method at the lower of cost or net realizable value, which is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This update is effective for public business entities during fiscal years beginning after December 15, 2016. Early adoption is permitted. This amendment is not expected to have a material impact on our financial statements.

In September 2015, the FASB issued amendments which eliminate the requirement for an acquirer in a business combination to retrospectively account for measurement-period adjustments. Under the amendments, an entity is required to record measurement-period adjustments during the period in which the amounts are determined, including changes in depreciation, amortization and any other income effects as if the accounting had been completed at the acquisition date. This update is effective for public business entities during fiscal years beginning after December 15, 2015. Early adoption is permitted. This amendment is not expected to have a material impact on our financial statements.

In November 2015, the FASB issued amendments which simplify the existing guidance which requires an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. Under the amendments, an entity should classify all deferred tax liabilities and assets as noncurrent within the statement of financial position. The amendments apply to all entities that present a classified statement of financial position and are effective for public business entities for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted. In 2016, we intend to early adopt this amendment, which is not expected to have a material impact on our financial statements.

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NOTE 3. ACQUISITIONS AND DISPOSITION OF STRATEGIC INVESTMENT

We believe that our acquisitions of businesses and other assets enhance our existing businesses by either expanding our geographic range and customer base or expanding our existing product lines.

During the year ended December 31, 2015, we paid an aggregate of $7.5 million in cash and recorded contingent consideration of $3.2 million to acquire the assets of two reference laboratory diagnostic and consulting businesses, each accounted for as a separate business combination. As part of these business acquisitions, we recognized $5.2 million in customer list amortizable intangible assets, $5.0 million in goodwill, $1.1 million in working capital, $0.3 million in fixed assets and a deferred tax liability of $0.9 million. The customer lists were each assigned useful lives of 15 years. Goodwill is calculated as the consideration in excess of net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The goodwill recorded from these business acquisitions is not deductible for income tax purposes. All assets acquired in connection with these business acquisitions were assigned to our CAG segment. One of the businesses acquired is located outside of the U.S. and, as such, the assets and liabilities recorded are subject to impacts of changes in foreign currency exchange rates. The results of operations of these acquired businesses have been included since the acquisition date. Pro forma information has not been presented for these business acquisitions because such information is not material to the financial statements.

During the year ended December 31, 2014, we paid an aggregate of $25.1 million, to acquire seven businesses, each accounted for as separate business combinations.

We paid an aggregate of $18.7 million in cash and recorded contingent consideration of $4.2 million upon the acquisition of substantially all outstanding shares of a business and the assets of two other businesses, all of which comprise cloud-based veterinary practice software. As part of the business acquisitions, we recorded $11.7 million in amortizable intangible assets and $12.4 million in goodwill. Amortizable intangible assets primarily consisted of customer lists and software which were assigned weighted average useful lives of 16.4 years and 7.0 years, respectively. The weighted average useful life of all recognized amortizable intangible assets was 11.4 years. Of the total goodwill and amortizable assets acquired, $5.6 million of amortizable intangible assets are deductible for income tax purposes. All assets acquired in connection with these business combinations were assigned to our CAG segment. Two out of three businesses acquired are located outside of the U.S. and, as such, the assets and liabilities recorded are subject to impacts of changes in foreign currency exchange rates. The results of operations of these acquired businesses have been included since the acquisition date. Pro forma information has not been presented for these business acquisitions because such information is not material to the financial statements.

We paid an aggregate of $6.2 million in cash and recorded contingent consideration of $1.5 million upon the acquisition of all outstanding shares of two veterinary reference laboratory testing businesses and to acquire the assets of two veterinary reference laboratory testing businesses. The purchase price in these business acquisitions was allocated primarily to customer list intangible assets, which were assigned a weighted average useful life of 13.3 years. $4.9 million of amortizable intangible assets associated with these acquisitions are deductible for income tax purposes. All assets acquired in connection with these business acquisitions were assigned to our CAG segment. Certain of these business acquisitions were of businesses located outside of the U.S. and, as such, the assets and liabilities recorded are subject to impacts of changes in foreign currency exchange rates. The results of operations of these acquired businesses have been included since the acquisition date. Pro forma information has not been presented for these business acquisitions because such information is not material to the financial statements.

In June 2014, we divested our investment in a company that owns and operates veterinary hospitals. Upon the closing date, we received proceeds of $5.4 million in exchange for two outstanding promissory notes of the company and its subsidiaries and our 11% equity interest in the company. This investment has been accounted for under the equity method of accounting since acquisition in the fourth quarter of 2010. Upon the disposition of this strategic investment, we realized a $0.7 million gain, which has been reflected as a reduction to general and administrative.

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During the year ended December 31, 2013, we paid an aggregate of $10.8 million in cash to acquire all outstanding shares of a distributor of certain of our bovine and dairy test products, as well as other food safety testing products, in Brazil. As part of this business acquisition, we recorded $4.8 million in amortizable intangible assets other than goodwill and $6.5 million in goodwill. The amortizable assets acquired consisted of a customer list, non-compete agreement and a trademark, which were assigned useful lives of 10, 5, and 15 years, respectively. The weighted average useful life of all recognized amortizable intangible assets was 9.9 years. Additionally, we recorded $0.7 million of cash and cash equivalents, $1.0 million in working capital, $0.5 million of fixed assets, $2.1 million in other assets and net deferred tax liabilities of $1.7 million. We deemed certain pre-acquisition contingent liabilities probable and recorded $3.1 million in other liabilities at December 31, 2013. The goodwill and amortizable intangible assets recorded from this business acquisition are not deductible for income tax purposes. All assets acquired in connection with this business acquisition were assigned to our LPD segment. The results of operations of this acquired business have been included since the acquisition date. Pro forma information has not been presented for this business acquisition because such information is not material to the financial statements.

NOTE 4. SHARE-BASED COMPENSATION

Share-Based Awards

Our share-based compensation plans allow for the issuance of a mix of stock options, restricted stock, stock appreciation rights, employee stock purchase rights and other stock unit awards. Other stock unit awards include restricted stock units (“RSUs”) and deferred stock units (“DSUs”). Stock options permit a holder to buy IDEXX stock upon vesting at the stock’s price on the date the option was granted. An RSU is an agreement to issue shares of IDEXX stock at the time of vesting. DSUs are granted under our Executive Deferred Compensation Plan (the “Executive Plan”) and non-employee Director Deferred Compensation Plan (the “Director Plan”). DSUs may or may not have vesting conditions depending on the plan under which they are issued. We did not issue any restricted stock or stock appreciation rights during the years ended December 31, 2015, 2014 and 2013 nor were any restricted stock or stock appreciation rights outstanding as of those years ended. There were no material modifications to the terms of outstanding options, RSUs or DSUs during the years ended December 31, 2015, 2014 or 2013.

We primarily issue shares of common stock to satisfy stock option exercises and employee stock purchase rights and to settle RSUs and DSUs. We issue shares of treasury stock to settle certain RSUs and upon the exercise of certain stock options, which were not material for the years ended December 31, 2015, 2014 and 2013. The number of shares of common stock and treasury stock issued are equivalent to the number of awards exercised or settled.

With the exception of employee stock purchase rights, equity awards are issued to employees and non-employee directors under the 2009 Stock Incentive Plan (the “2009 Stock Plan”). Our Board of Directors has authorized the issuance of 19,900,000 shares of our common stock under this share-based incentive plan. Any shares that are subject to awards of stock options or stock appreciation rights will be counted against the share limit as one share for every share granted. Any shares that are issued other than stock options and stock appreciation rights will be counted against the share limit as two shares for every share granted. If any shares issued under our prior plans are forfeited, settled for cash or expire, these shares, to the extent of such forfeiture, cash settlement or expiration, will again be available for issuance under the 2009 Stock Plan. As of December 31, 2015, there were 12,538,049 remaining shares available for issuance under the 2009 Stock Plan.

Employee stock purchase rights are issued under the 1997 Employee Stock Purchase Plan, under which we reserved and may issue up to an aggregate of 4,700,000 shares of common stock in periodic offerings. Under this plan, stock is sold to employees at a 15% discount off the closing price of the stock on the last day of each quarter. The dollar value of this discount is equal to the fair value of purchase rights recognized as share-based compensation. We issued 105,000, 93,000 and 110,000 shares of common stock in connection with the Employee Stock Purchase Plan during the years ended December 31, 2015, 2014 and 2013, respectively. As of December 31, 2015, there were 1,393,760 remaining shares available for issuance under the 1997 Employee Stock Purchase Plan.

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Share-Based Compensation

Share-based compensation costs are classified in our consolidated financial statements consistent with the classification of cash compensation paid to the employees receiving such share-based compensation. The following is a summary of share-based compensation costs and related tax benefits recorded in our consolidated statements of income for the years ended December 31, 2015, 2014 and 2013 (in thousands):

		For the Years Ended December 31,
		2015			2014			2013
Share-based compensation expense included in cost of revenue	$	2,138		$	1,937		$	1,841
Share-based compensation expense included in operating expenses		17,746			16,162			14,733
Total share-based compensation expense included in consolidated statements of income		19,884			18,099			16,574
Income tax benefit resulting from share-based compensation arrangements		(6,229	)		(6,107	)		(5,584	)
Net impact of share-based compensation on net income	$	13,655		$	11,992		$	10,990

Share-based compensation expense is reduced for an estimate of the number of awards that are expected to be forfeited. We use historical data and other factors to estimate expected employee terminations and to evaluate whether particular groups of employees have significantly different forfeiture expectations.

The total unrecognized compensation expense, net of estimated forfeitures, for unvested share-based compensation awards at December 31, 2015 was $37.8 million, which will be recognized over a weighted average period of approximately 1.6 years.

Stock Options

Option awards are granted with an exercise price equal to the closing market price of our common stock at the date of grant. Options granted to employees primarily vest ratably over five years on each anniversary of the date of grant and options granted to non-employee directors vest fully on the first anniversary of the date of grant. Vesting of option awards issued is conditional based on continuous service. Options granted after May 8, 2013 have a contractual term of ten years, options granted between January 1, 2006 and May 8, 2013 have contractual terms of seven years and options granted prior to January 1, 2006 have contractual terms of ten years. Upon any change in control of the company, 25% of the unvested stock options then outstanding will vest and become exercisable. However, if the acquiring entity does not assume outstanding options, then all options will vest immediately prior to the change in control.

We use the Black-Scholes-Merton option-pricing model to determine the fair value of options granted. Option-pricing models require the input of highly subjective assumptions, particularly for the expected stock price volatility and the expected term of options. Changes in the subjective input assumptions can materially affect the fair value estimate. Our expected stock price volatility assumptions are based on the historical volatility of our stock over periods that are similar to the expected terms of grants and other relevant factors. We derive the expected term based on historical experience and other relevant factors concerning expected employee behavior with regard to option exercise. The risk-free interest rate is based on U.S. Treasury yields for a maturity approximating the expected term calculated at the date of grant. We have never paid any cash dividends on our common stock and we have no intention to pay a dividend at this time; therefore, we assume that no dividends will be paid over the expected terms of option awards.

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We determine the assumptions used in the valuation of option awards as of the date of grant. Differences in the expected stock price volatility, expected term or risk-free interest rate may necessitate distinct valuation assumptions at those grant dates. As such, we may use different assumptions for options granted throughout the year. The weighted averages of the valuation assumptions used to determine the fair value of each option award on the date of grant and the weighted average estimated fair values were as follows:

		For the Years Ended December 31,
			2015				2014				2013
Expected stock price volatility			23	%			28	%			32	%
Expected term, in years			5.6				5.7				4.9
Risk-free interest rate			1.5	%			1.5	%			1.0	%
Weighted average fair value of options granted		$	19.72			$	18.07			$	13.59

A summary of the status of options granted under our share-based compensation plans at December 31, 2015, and changes during the year then ended, are presented in the table below:

	Number of Options (000)		Weighted Average Exercise Price			Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value ($000)
Outstanding as of December 31, 2014	3,560		$	40.08
Granted	611			78.08
Exercised	(675)			23.65
Forfeited	(112)			53.64
Expired	-
Outstanding as of December 31, 2015	3,384		$	49.76		4.8		$	81,936
Fully vested as of December 31, 2015	1,748		$	39.67		3.0		$	58,132
Fully vested and expected to vest as of December 31, 2015	3,276		$	49.41		4.7		$	80,453

The total fair value of options vested during the years ended December 31, 2015, 2014 and 2013 was $8.7 million, $7.8 million and $8.4 million, respectively.

Intrinsic value of stock options exercised represents the amount by which the market price of the common stock exceeded the exercise price, before applicable income taxes. During the years ended December 31, 2015, 2014 and 2013 the total intrinsic value of stock options exercised was $35.1 million, $51.2 million and $49.0 million, respectively.

Restricted Stock Units

The majority of RSUs granted to employees vest ratably over five years on each anniversary of the date of grant. RSUs granted to non-employee directors vest fully on the first anniversary of the date of grant. Vesting as it relates to RSUs issued is conditional based on continuous service. Upon any change in control of the company, 25% of the unvested RSUs then outstanding will vest, provided, however, that if the acquiring entity does not assume the RSUs, then all such units will vest immediately prior to the change in control.

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A summary of the status of RSUs granted under our share-based compensation plans at December 31, 2015, and changes during the period then ended, are presented in the table below:

						Number of Units (000)		Weighted Average Grant-Date Fair Value
Nonvested as of December 31, 2014						578		$	47.98
Granted						153			78.46
Vested						(196)			43.14
Forfeited						(37)			56.01
Nonvested as of December 31, 2015						498		$	58.94
Expected to vest as of December 31, 2015						456		$	58.52

The total fair value of RSUs vested during the years ended December 31, 2015, 2014 and 2013 was $15.3 million, $15.4 million and $12.7 million, respectively. The aggregate intrinsic value of nonvested RSUs as of December 31, 2015 is equal to the fair value of IDEXX’s common stock as of December 31, 2015 multiplied by the number of nonvested units as of December 31, 2015.

Deferred Stock Units

Under our Director Plan, non-employee directors may defer a portion of their cash fees in the form of vested DSUs. Prior to 2014, certain members of our management could elect to defer a portion of their cash compensation in the form of vested deferred stock units under our Executive Plan. Each DSU represents the right to receive one unissued share of our common stock. These recipients receive a number of DSUs equal to the amount of cash fees or compensation deferred divided by the closing sale price of the common stock on the date of deferral. Also under the Director Plan, non-employee directors are awarded annual grants of DSUs that vest fully on the first anniversary of the date of grant. Vesting for these annual DSU grants is conditional based on continuous service. DSUs are exchanged for a fixed number of shares of common stock, upon vesting if vesting criteria apply, subject to the limitations of the Director and Executive Plans and applicable law.

There were approximately 240,000 and 235,000 vested DSUs outstanding under our share-based compensation plans as of December 31, 2015 and 2014, respectively. Unvested DSUs as of December 31, 2015 and 2014 were not material.

NOTE 5. MARKETABLE SECURITIES

The amortized cost and fair value of marketable securities were as follows (in thousands):

As of December 31, 2015			Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
Corporate bonds		$	177,810		$	24		$	(221)		$	177,613
U.S. government bonds			12,881			-			(10)			12,871
Agency bonds			12,068			-			(3)			12,065
Certificates of deposit			3,500			-			-			3,500
Commercial paper			3,491			-			-			3,491
International government bonds			1,462			-			(3)			1,459
Municipal bonds			1,400			-			(1)			1,399
Treasury bill			1,192			1			-			1,193
Total marketable securities		$	213,804		$	25		$	(238)		$	213,591

No marketable securities have been in a continuous unrealized loss position for more than twelve months. Our portfolio of marketable securities had an average AA- credit rating as of December 31, 2015. There were no marketable securities that we consider to be other-than-temporarily impaired as of December 31, 2015.

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Remaining contractual maturities of marketable securities were as follows (in thousands):

As of December 31, 2015			Amortized Cost			Fair Value
Due in one year or less		$	147,735		$	147,626
Due after one through two years			66,069			65,965
		$	213,804		$	213,591

NOTE 6. INVENTORIES

The components of inventories are as follows (in thousands):

		December 31,			December 31,
			2015			2014
Raw materials		$	31,184		$	26,908
Work-in-process			18,698			16,859
Finished goods			138,951			116,575
Total inventories		$	188,833		$	160,342

NOTE 7. PROPERTY AND EQUIPMENT, NET

Property and equipment, net, consisted of the following (in thousands):

		December 31,			December 31,
			2015			2014
Land and improvements		$	7,357		$	7,417
Buildings and improvements			162,146			159,298
Leasehold improvements			40,526			45,655
Machinery and equipment			224,100			183,575
Office furniture and equipment			39,334			35,696
Computer hardware and software			169,615			151,404
Construction in progress			35,546			20,890
			678,624			603,935
Less accumulated depreciation and amortization			345,598			300,348
Total property and equipment, net		$	333,026		$	303,587

Depreciation and amortization expense of property and equipment was $57.0 million, $48.8 million and $42.8 million for the years ended December 31, 2015, 2014 and 2013, respectively.

During the years ended December 31, 2015, 2014 and 2013, we capitalized $19.1 million, $11.9 million and $10.9 million, respectively, related to computer software developed for internal use.

We recorded an $8.2 million impairment charge related to internally-developed software not yet placed into service within Unallocated Amounts operating expenses during the year ended December 31, 2015 as a result of a strategic shift to refocus our development efforts within our information management business.

Unpaid property and equipment reflected within accounts payable and accrued liabilities in our consolidated balance sheets at December 31, 2015, 2014, and 2013 totaled $8.5 million, $6.5 million, and $2.2 million, respectively.

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NOTE 8. OTHER CURRENT AND NONCURRENT ASSETS

Other current assets consisted of the following (in thousands):

		December 31,			December 31,
			2015			2014
Prepaid expenses		$	27,244		$	32,672
Taxes receivable			11,792			28,926
Customer acquisition costs, net			16,412			11,262
Other assets			6,621			13,591
Total other current assets		$	62,069		$	86,451

Other noncurrent assets consisted of the following (in thousands):

		December 31,			December 31,
			2015			2014
Investment in long-term product supply arrangements		$	12,165		$	10,765
Customer acquisition costs, net			43,570			28,165
Other assets			29,755			32,724
Total other long-term assets		$	85,490		$	71,654

NOTE 9. GOODWILL AND INTANGIBLE ASSETS, NET

Intangible assets other than goodwill consisted of the following (in thousands):

		December 31, 2015						December 31, 2014
			Cost			Accumulated Amortization			Cost			Accumulated Amortization
Patents		$	2,192		$	1,907		$	4,871		$	4,308
Product rights (1)			35,318			22,976			36,912			20,657
Customer-related intangible assets (2)			86,806			44,232			88,494			40,933
Noncompete agreements			1,413			705			1,125			382
		$	125,729		$	69,820		$	131,402		$	66,280

	(1)		Product rights comprise certain technologies, licenses and trade names acquired from third parties.

	(2)		Customer-related intangible assets are comprised of customer lists and customer relationships acquired from third parties.

Amortization expense of intangible assets other than goodwill was $10.4 million, $9.8 million and $9.7 million for the years ended December 31, 2015, 2014 and 2013, respectively. The decrease in intangible assets other than goodwill during the twelve months ended December 31, 2015 was driven by amortization expense and changes in foreign currency exchange rates, partly offset by intangibles recognized in connection with the acquisition of businesses.

At December 31, 2015, the aggregate amortization expense associated with intangible assets is estimated to be as follows for each of the next five years and thereafter (in thousands):

		Amortization Expense
2016		$	9,952
2017			9,144
2018			7,854
2019			6,541
2020			5,123
Thereafter			17,295
		$	55,909

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The decrease in goodwill during the twelve months ended December 31, 2015 resulted from changes in foreign currency exchange rates, partly offset by goodwill recognized in connection with the acquisition of businesses. See Note 3 for information regarding goodwill and other intangible assets recognized in connection with the acquisition of businesses and other assets during the years ended December 31, 2015, 2014 and 2013.

The changes in the carrying amount of goodwill for the years ended December 31, 2015, 2014, and 2013 were as follows (in thousands):

		CAG			Water			LPD			Other			Consolidated Total
Balance as of December 31, 2012	$	143,155		$	14,179		$	11,129		$	6,531		$	174,994
Business Combinations		250			-			6,491			-			6,741
Impact of Changes in Foreign Currency Exchange Rates		(1,997)			336			447			-			(1,214)
Balance as of December 31, 2013	$	141,408		$	14,515		$	18,067		$	6,531		$	180,521
Business Combinations		13,077			-			-			-			13,077
Impact of Changes in Foreign Currency Exchange Rates		(6,334)			(826)			(1,988)			-			(9,148)
Balance as of December 31, 2014	$	148,151		$	13,689		$	16,079		$	6,531		$	184,450
Business Combinations		5,047			-			-			-			5,047
Impact of Changes in Foreign Currency Exchange Rates		(8,007)			(651)			(1,905)			-			(10,563)
Balance as of December 31, 2015	$	145,191		$	13,038		$	14,174		$	6,531		$	178,934

NOTE 10. ACCRUED LIABILITIES

Accrued liabilities consisted of the following (in thousands):

		December 31,			December 31,
		2015			2014
Accrued expenses		$	65,665		$	55,655
Accrued employee compensation and related expenses			77,027			75,232
Accrued taxes			18,963			28,439
Accrued customer programs			43,875			36,025
Total accrued liabilities		$	205,530		$	195,351

NOTE 11. DEBT

Credit Facility

In December 2015, we refinanced our existing $700 million unsecured revolving credit facility by entering into a second amended and restated credit agreement relating to a five-year unsecured revolving credit facility in the principal amount of $850 million with a syndicate of multinational banks, which matures on December 4, 2020 (the new credit facility and the prior credit facility are referred to collectively as the “Credit Facility”) and requires no scheduled prepayments before that date. Although the Credit Facility does not mature until December 4, 2020, all individual borrowings under the terms of the Credit Facility have a stated term between 30 and 180 days. At the end of each term, the obligation is either repaid or rolled over into a new borrowing. The Credit Facility contains a subjective material adverse event clause, which allows the debt holders to call the loans under the Credit Facility if we fail to provide prompt written notice to the syndicate of such an event. Based on the stated term and the existence of the subjective material adverse event clause, this Credit Facility is reflected in the current liabilities section of our consolidated balance sheets. At December 31, 2015 and 2014, we had $573.0 million and $549.0 million, respectively, outstanding under the Credit Facility with weighted average effective interest rates of 1.9% and 1.5%, respectively. The funds available under the Credit Facility at December 31, 2015 and December 31, 2014 reflect a further reduction due to the issuance of a letter of credit for $1.0 million, which was issued in connection with our workers’ compensation policy.

Applicable interest rates on borrowings under the Credit Facility generally range from 0.875 to 1.375 percentage points (“Credit Spread”) above the London interbank offered rate, based on our leverage ratio, or the

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prevailing prime rate plus a maximum spread of up to 0.375%, based on our leverage ratio. We have entered into forward fixed interest rate swap agreements to manage the economic effect of the first $80 million of variable interest rate borrowings. As such, we continue to designate the existing interest rate swaps as cash flow hedges. See Note 17 for a discussion of our derivative instruments and hedging activities. Under the Credit Facility, we pay quarterly commitment fees of 0.075% to 0.25%, based on our leverage ratio, on any unused commitment.

The obligations under the Credit Facility may be accelerated upon the occurrence of an event of default under the Credit Facility, which includes customary events of default including payment defaults, defaults in the performance of the affirmative, negative and financial covenants, the inaccuracy of representations or warranties, bankruptcy and insolvency related defaults, defaults relating to judgments, certain events related to employee pension benefit plans under the Employee Retirement Income Security Act of 1974, the failure to pay specified indebtedness, cross-acceleration to specified indebtedness and a change of control default. The Credit Facility contains affirmative, negative and financial covenants customary for financings of this type. The negative covenants include restrictions on liens, indebtedness of subsidiaries of the Company, fundamental changes, investments, transactions with affiliates and certain restrictive agreements. The sole financial covenant is a consolidated leverage ratio test that requires our ratio of debt to earnings before interest, taxes, depreciation, amortization and share-based compensation defined as the consolidated leverage ratio under the terms of the Credit Facility, not to exceed 3.5-to-1. At December 31, 2015, we were in compliance with the covenants of the Credit Facility.

Senior Notes

In December 2013, we issued and sold through a private placement an aggregate principal amount of $150 million of unsecured senior notes consisting of $75 million of 3.94% Series A Senior Notes due December 11, 2023 (the “2023 Notes”) and $75 million of 4.04% Series B Senior Notes due December 11, 2025 (the “2025 Notes” and together with the 2023 Notes, the “December Notes”) under a Note Purchase Agreement among the Company, New York Life Insurance Company and the accredited institutional purchasers named therein (the “December 2013 Note Agreement”).

In July 2014, we issued and sold through a private placement an aggregate principal amount of $125 million of unsecured senior notes consisting of $75 million of 3.76% Series B Senior Notes due July 21, 2024 (the “2024 Notes”) and $50 million of 3.32% Series A Senior Notes due July 21, 2021 (the “2021 Notes” and together with the 2024 Notes, the “Prudential Notes”) under a Note Purchase and Private Shelf Agreement among the Company, Prudential Investment Management, Inc. (“Prudential”) and the accredited institutional purchasers named therein (the “July 2014 Note Agreement”).

In September 2014, we issued and sold through a private placement an aggregate principal amount of $75 million of unsecured 3.72% senior notes due September 4, 2026 (the “2026 Notes”) under a Note Purchase Agreement dated as of July 22, 2014 among the Company, New York Life Insurance Company and the accredited institutional purchasers named therein (the “September 2014 Note Agreement”).

In December 2014, we entered into a Multi-Currency Note Purchase and Private Shelf Agreement among the Company, Metropolitan Life Insurance Company (“MetLife”), and the accredited institutional purchasers named therein pursuant to which the Company agreed to issue and sell $75 million of its unsecured 3.25% Series A Senior Notes having a seven-year term, and $75 million of its unsecured 3.72% Series B Senior Notes having a twelve-year term. The issuance, sale and purchase of these notes occurred in February 2015 (the “MetLife Notes”). The agreement (the “December 2014 Note Agreement”) also provides for an uncommitted shelf facility by which the Company may request that MetLife purchase, over the subsequent three years, up to $50 million of additional senior promissory notes of the Company at a fixed interest rate to be determined at the time of purchase and with a maturity date not to exceed fifteen years.

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In June 2015, we entered into an Amended and Restated Multi-Currency Note Purchase and Private Shelf Agreement (the “Amended Agreement”), among the Company, Prudential Investment Management, Inc. and the accredited institutional purchasers named therein, which amends and restates the Note Purchase and Private Shelf Agreement dated July 21, 2014. We refer to the Amended Agreement together with the December 2013 Note Agreement, September 2014 Note Agreement, and December 2014 Note Agreement collectively as the “Senior Note Agreements”).

Pursuant to the Amended Agreement, we issued and sold through a private placement a principal amount of €88.9 million (approximately $100 million) of unsecured 1.785% Series C Senior Notes due June 18, 2025 (the “2025 Notes”). We refer to the 2025 Notes together with the Prudential Notes, December Notes, MetLife Notes and the 2026 Notes, collectively, as the “Senior Notes”). We used the net proceeds from this issuance and sale of the 2025 Notes for general corporate purposes, including repaying amounts outstanding under our Credit Facility.

The Amended Agreement also provides for an uncommitted shelf facility by which we may request that Prudential purchase, over the next three years, up to $75 million (or the foreign currency equivalent) of additional senior promissory notes of the Company at a fixed interest rate and with a maturity date not to exceed twelve years (the “Shelf Notes”). Prudential is under no obligation to purchase any of the Shelf Notes. The interest rate of any series of Shelf Notes will be determined at the time of purchase. The proceeds of any series of Shelf Notes are able to be used for general corporate purposes.

The Senior Note Agreements contain affirmative, negative and financial covenants customary for agreements of this type. The negative covenants include restrictions on liens, indebtedness of our subsidiaries, priority indebtedness, fundamental changes, investments, transactions with affiliates, certain restrictive agreements and violations of laws and regulations. The sole financial covenant is a consolidated leverage ratio test that requires our ratio of debt to earnings before interest, taxes, depreciation, amortization and share-based compensation, as defined in the Senior Note Agreements, not to exceed 3.5-to-1. At December 31, 2015, we were in compliance with the covenants of the Senior Note Agreements.

Should we elect to prepay the Senior Notes, such aggregate prepayment will include the applicable make-whole amount(s), as defined within the applicable Senior Note Agreements. Additionally, in the event of a change in control of the Company or upon the disposition of certain assets of the Company the proceeds of which are not reinvested (as defined in the Senior Note Agreements), we may be required to prepay all or a portion of the Senior Notes. The obligations under the Senior Notes may be accelerated upon the occurrence of an event of default under the applicable Senior Note Agreement, each of which includes customary events of default including payment defaults, defaults in the performance of the affirmative, negative and financial covenants, the inaccuracy of representations or warranties, bankruptcy and insolvency related defaults, defaults relating to judgments, certain events related to employee pension benefit plans under the Employee Retirement Income Security Act of 1974, the failure to pay specified indebtedness and cross-acceleration to specified indebtedness.

Annual principal payments on long-term debt at December 31, 2015 are as follows (in thousands):

Years Ending December 31,			Amount
2016		$	-
2017			-
2018			-
2019			-
2020			-
Thereafter			597,085
		$	597,085

F-30

NOTE 12. INCOME TAXES

Earnings before income taxes were as follows (in thousands):

	For the Years Ended December 31,
		2015			2014			2013
Domestic	$	187,200		$	148,510		$	184,086
International		85,941			98,045			79,175
	$	273,141		$	246,555		$	263,261

The provision (benefit) for income taxes comprised the following (in thousands):

	For the Years Ended December 31,
		2015			2014			2013
Current
Federal	$	52,966		$	39,713		$	50,999
State		5,353			4,692			5,639
International		17,681			20,213			16,657
		76,000			64,618			73,295
Deferred
Federal		5,762			2,301			3,203
State		526			33			329
International		(1,282)			(2,348)			(1,360)
		5,006			(14)			2,172
	$	81,006		$	64,604		$	75,467

The provision for income taxes differs from the amounts computed by applying the statutory federal income tax rate as follows:

	For the Years Ended December 31,
		2015			2014			2013
U.S. federal statutory rate		35.0	%		35.0	%		35.0	%
State income tax, net of federal tax benefit		1.6			1.5			1.5
International income taxes		(5.3)			(7.0)			(4.6)
Domestic manufacturing exclusions		(1.5)			(1.2)			(1.4)
Research and development credit		(1.2)			(1.3)			(2.3)
Other, net		1.1			(0.8)			0.5
Effective tax rate		29.7	%		26.2	%		28.7	%

Our effective income tax rate was 29.7% for the year ended December 31, 2015 and 26.2% for the year ended December 31, 2014. The increase in our effective income tax rate for the year ended December 31, 2015, as compared to the year ended December 31, 2014, was related to lower relative earnings subject to international tax rates that are lower than domestic tax rates, including the impact of foreign currency exchange rates, as well as a non-recurring benefit recognized during period ended December 31, 2014 related to the deferral of inter-company profits that were included in prior year tax provisions in error, which is not material to prior interim or annual periods.

Our effective income tax rate was 26.2% for the year ended December 31, 2014 and 28.7% for the year ended December 31, 2013. The decrease in our effective income tax rate for the year ended December 31, 2014, as compared to the year ended December 31, 2013, was related to higher relative earnings subject to international tax rates that are lower than domestic tax rates, a non-recurring benefit related to the deferral of intercompany profits that were included in prior year tax provisions in error, which is not material to current or prior interim or annual periods, and the resolution of domestic and international tax audits, which resulted in a net reduction in our provision for uncertain tax positions. These favorable factors were partly offset by a reduction in the benefit from the U.S. research and development (“R&D”) tax credit. During the three months ended March 31, 2013, legislation in the U.S. retroactively allowed the R&D tax credit for all of 2012 and extended the R&D tax credit through the year ended December 31, 2013. As a result, in the year ended December 31, 2013 we recorded the benefit of two years of R&D tax credit as compared to the year ended December 31, 2014 in which we have recorded only the benefit related to that year’s activities.

F-31

We have business operations in Switzerland and the Netherlands and have been granted tax rulings by each jurisdiction. Our tax rulings in Switzerland expired December 31, 2015 and the Netherlands ruling is set to expire on December 31, 2022. As a result of the tax rulings, our net income was higher by $8.5 million, $8.5 million and $6.5 million for the years ended December 31, 2015, 2014 and 2013, respectively. The benefit from these tax rulings is reflected within the overall benefit received from international income taxes in the table above.

We consider the majority of the operating earnings of non-U.S. subsidiaries to be indefinitely invested outside the U.S. The cumulative earnings of these subsidiaries were $493.3 million at December 31, 2015. No provision has been made for U.S. federal and state, or international taxes that may result from future remittances of the undistributed earnings of non-U.S. subsidiaries. Should we repatriate these earnings in the future, we would have to adjust the income tax provision in the period in which the decision to repatriate earnings is made. A determination of the related tax liability that would be paid on these undistributed earnings if repatriated is not practicable for several reasons including the complexity of laws and regulations in the various jurisdictions where we operate, the varying tax treatment of potential repatriation scenarios and the timing of any future repatriation. For the operating earnings not considered to be indefinitely invested outside the U.S., we have accounted for the tax impact on a current basis.

The components of the net deferred tax assets (liabilities) included in the accompanying consolidated balance sheets are as follows (in thousands):

		December 31, 2015						December 31, 2014
			Current			Long-Term			Current			Long-Term
Assets
Accrued expenses		$	23,298		$	5,329		$	20,377		$	7,824
Accounts receivable reserves			2,973			-			2,591			-
Deferred revenue			7,392			3,656			8,697			3,084
Inventory basis differences			3,292			293			3,154			347
Property-based differences			-			1,524			-			1,601
Share-based compensation			2,565			10,580			2,490			8,936
Other			234			361			171			255
Net operating loss carryforwards			65			4,059			65			4,368
Unrealized losses on foreign currency exchange contracts, interest rate swaps and investments			-			53			-			-
Total assets			39,819			25,855			37,545			26,415
Valuation allowance			(507)			(3,939)			(457)			(4,221)
Total assets, net of valuation allowance			39,312			21,916			37,088			22,194
Liabilities
Deferred instrument costs			-			(16,090)			-			(10,149)
Property-based differences			-			(35,079)			-			(33,978)
Intangible asset basis differences			-			(17,109)			-			(16,882)
Other			(550)			(1,460)			(610)			(517)
Unrealized gains on foreign currency exchange contracts, interest rate swaps and investments			(882)			-			(2,603)			-
Total liabilities			(1,432)			(69,738)			(3,213)			(61,526)
Net deferred tax assets (liabilities)		$	37,880		$	(47,822)		$	33,875		$	(39,332)

We record a liability for uncertain tax positions that do not meet the more likely than not standard as prescribed by the authoritative guidance for income tax accounting. We record tax benefits for only those positions that we believe will more likely than not be sustained. Unrecognized tax benefits are the differences between tax positions taken, or expected to be taken, in tax returns, and the benefits recognized for accounting purposes. We classify certain uncertain tax positions as long-term liabilities.

F-32

The total amount of unrecognized tax benefits at December 31, 2015 and December 31, 2014 was $7.2 million and $5.9 million, respectively. Of the total unrecognized tax benefits at December 31, 2015 and 2014, $5.9 million and $5.0 million, respectively, comprise unrecognized tax positions that would, if recognized, affect our effective tax rate. The ultimate deductibility of the remaining unrecognized tax positions is highly certain but there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

During each of the years ended December 31, 2015, 2014 and 2013, we recorded interest expense and penalties of $0.3 million as income tax expense in our consolidated statement of income. At December 31, 2015 and 2014, we had $0.6 million and $0.5 million, respectively, of estimated interest expense and penalties accrued in our consolidated balance sheets.

The following table summarizes the changes in unrecognized tax benefits during the years ended December 31, 2015, 2014 and 2013 (in thousands):

	For the Years Ended December 31,
		2015			2014			2013
Total amounts of unrecognized tax benefits, beginning of period	$	5,942		$	6,325		$	5,906
Gross increases in unrecognized tax benefits as a result of tax positions taken during a prior period		47			432			8
Gross increases in unrecognized tax benefits as a result of tax positions taken in the current period		1,569			1,789			1,954
Decreases in unrecognized tax benefits relating to settlements with taxing authorities		-			(2,242)			(317)
Decreases in unrecognized tax benefits as a result of a lapse of the applicable statutes of limitations		(354)			(362)			(1,226)
Total amounts of unrecognized tax benefits, end of period	$	7,204		$	5,942		$	6,325

In the ordinary course of our business, our income tax filings are regularly under audit by tax authorities. While we believe we have appropriately provided for all uncertain tax positions, amounts asserted by taxing authorities could be greater or less than our accrued position. Accordingly, additional provisions on income tax matters, or reductions of previously accrued provisions, could be recorded in the future as we revise our estimates due to changing facts and circumstances or the underlying matters are settled or otherwise resolved. We are currently under tax examinations by various state and international tax authorities. We anticipate that these examinations will be concluded within the next year. We are no longer subject to U.S. federal examinations for tax years before 2013. With few exceptions, we are no longer subject to income tax examinations in any state and local, or international jurisdictions in which we conduct significant taxable activities for years before 2007.

At December 31, 2015, we had net operating loss carryforwards in certain state and international jurisdictions of approximately $31.5 million available to offset future taxable income. Most of these net operating loss carryforwards will expire at various dates through 2018 and the remainder have indefinite lives. We have recorded a valuation allowance of $4.4 million against certain deferred tax assets related to temporary differences including net operating loss carryforwards, as it is more likely than not that they will not be realized or utilized within the carryforward period.

F-33

NOTE 13. EARNINGS PER SHARE

The following is a reconciliation of shares outstanding for basic and diluted earnings per share for the years ended December 31, 2015, 2014 and 2013 (in thousands):

		For the Years Ended December 31,
		2015		2014		2013
Shares outstanding for basic earnings per share:		92,601		100,094		106,318
Shares outstanding for diluted earnings per share:
Shares outstanding for basic earnings per share		92,601		100,094		106,318
Dilutive effect of share-based payment awards		1,048		1,409		1,652
		93,649		101,503		107,970

Certain options to acquire shares have been excluded from the calculation of shares outstanding for dilutive earnings per share because they were anti-dilutive. The following table presents information concerning those anti-dilutive options for the years ended December 31, 2015, 2014 and 2013 (in thousands):

		For the Years Ended December 31,
		2015		2014		2013
Weighted average number of shares underlying anti-dilutive options		644		644		1,054

NOTE 14. COMMITMENTS, CONTINGENCIES AND GUARANTEES

Commitments

Rent expense charged to operations under operating leases was approximately $20.5 million, $17.2 million and $15.8 million for the years ended December 31, 2015, 2014 and 2013, respectively.

Minimum annual rental payments under these agreements are estimated as follows (in thousands):

Years Ending December 31,			Amount
2016		$	16,222
2017			14,005
2018			10,719
2019			7,321
2020			5,607
Thereafter			11,006
		$	64,880

We have various minimum royalty payments due through 2027 of $3.1 million. If these obligations are not satisfied, the related license arrangements may be terminated, resulting in either a loss in exclusivity or the right to use the technology.

We are required to annually purchase a minimum amount of inventory from certain suppliers. Through 2022, we have a total of $15.2 million in minimum purchase commitments under these arrangements.

Contingencies

We are subject to claims that arise in the ordinary course of business, including with respect to actual and threatened litigation and other matters. We accrue for loss contingencies when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. However, our actual losses with respect to these contingencies could exceed our accruals.

F-34

Under our workers’ compensation insurance policies for U.S. employees, we have retained the first $300,000, $300,000 and $250,000 in claim liability per incident with aggregate maximum claim liabilities per year of $3.5 million, $2.3 million and $2.0 million for the years ended December 31, 2015, 2014 and 2013, respectively. Workers’ compensation expense recognized during the years ended December 31, 2015, 2014 and 2013 and our respective liability for such claims as of December 31, 2015, 2014, and 2013 was not material. Claims incurred during the years ended December 31, 2015 and 2014 are relatively undeveloped as of December 31, 2015. Therefore, it is possible that we could incur additional healthcare and wage indemnification costs beyond those previously recognized up to our aggregate liability for each of the respective claim years. For the years ended on or prior to December 31, 2013, based on our retained claim liability per incident and our aggregate claim liability per year, our maximum liability in excess of the amounts deemed probable and previously recognized is not material as of December 31, 2015. As of December 31, 2015, we had outstanding letters of credit totaling $1.3 million to the insurance companies as security for these claims in connection with these policies.

Under our current employee healthcare insurance policy for U.S. employees, we retain claims liability risk up to $425,000, $375,000 and $325,000 per incident per year in 2015, 2014 and 2013, respectively. We recognized employee healthcare claim expense of $34.6 million, $32.0 million and $29.2 million during the years ended December 31, 2015, 2014 and 2013, respectively, which represents actual claims paid and an estimate of our liability for the uninsured portion of employee healthcare obligations that have been incurred but not paid. Should employee health insurance claims exceed our estimated liability, we would have further obligations. Our estimated liability for healthcare claims that have been incurred but not paid as of December 31, 2015 and 2014 was $4.8 million and $4.1 million, respectively.

We have entered into an employment agreement with our chief executive officer whereby payment may be required if we terminate his employment without cause other than following a change in control. The amount payable is based upon the executive’s salary at the time of termination and the cost to us of continuing to provide certain benefits. Had this officer been terminated without cause at December 31, 2015, other than following a change in control, we would have had an obligation for salaries and benefits of approximately $1.6 million under such agreement. In addition, the agreement provides for continued vesting of his outstanding equity awards for a period of two years.

We have entered into employment agreements with each of our officers that require us to make certain payments in the event the officer’s employment is terminated under certain circumstances within a certain period following a change in control. The amount payable by us under each of these agreements is based on the officer’s salary and bonus history at the time of termination and the cost to us of continuing to provide certain benefits. Had all of our officers been terminated in qualifying terminations following a change in control at December 31, 2015, we would have had aggregate obligations of approximately $26.4 million under these agreements. These agreements also provide for the acceleration of the vesting of all stock options and restricted stock units upon any qualifying termination following a change in control. At this time, we believe the likelihood of terminations as a result of the scenarios described is remote, and therefore, we have not accrued for such loss contingencies.

We have total contingent consideration liabilities outstanding of up to $11.4 million primarily related to the achievement of certain revenue milestones. We have recorded $5.9 and $6.3 million of contingent consideration liabilities on our consolidated balance sheets at December 31, 2015 and 2014, respectively. We have not accrued for $5.5 million of contingent consideration liabilities, related to the acquisition of an intangible asset in 2008, as we do not deem the achievement of associated revenue milestones to be probable of occurring as of December 31, 2015.

From time to time, we have received notices alleging that our products infringe third-party proprietary rights, although we are not aware of any pending litigation with respect to such claims. Patent litigation frequently is complex and expensive, and the outcome of patent litigation can be difficult to predict. There can be no assurance that we will prevail in any infringement proceedings that may be commenced against us. If we lose any such litigation, we may be stopped from selling certain products and/or we may be required to pay damages as a result of the litigation.

F-35

Guarantees

We enter into agreements with third parties in the ordinary course of business under which we are obligated to indemnify such third parties for and against various risks and losses. The precise terms of such indemnities vary with the nature of the agreement. In many cases, we limit the maximum amount of our indemnification obligations, but in some cases those obligations may be theoretically unlimited. We have not incurred material expenses in discharging any of these indemnification obligations, and based on our analysis of the nature of the risks involved, we believe that the fair value of these agreements is minimal. Accordingly, we have recorded no liabilities for these obligations at December 31, 2015 and 2014.

When acquiring a business, we sometimes assume liability for certain events or occurrences that took place prior to the date of acquisition. We have recorded $1.4 million and $2.5 million of probable pre-acquisition liabilities in the accompanying consolidated balance sheets at December 31, 2015 and 2014, respectively.

NOTE 15. SEGMENT REPORTING

We operate primarily through three business segments: diagnostic and information technology-based products and services for the veterinary market, which we refer to as CAG; water quality products (“Water”); and diagnostic products and services for livestock and poultry health and to ensure the quality and safety of milk and food, which we refer to as 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 our CAG Reference Laboratories. We have transitioned the responsibility for these diagnostic services from our CAG segment 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 years ended December 31, 2014 and 2013 have been retrospectively revised in this Annual Report on Form 10-K to reflect this change in the composition of our reportable segments. Revenue related to these livestock diagnostic services was $13.8 million and $9.9 million for the years ended December 31, 2014 and 2013, respectively.

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 operating segments include: CAG, Water, LPD, and Other. Assets are not allocated to segments for internal reporting purposes.

CAG develops, designs, manufactures and distributes products and performs services for veterinarians and the bioresearch market, primarily related to diagnostics and information management. Water develops, designs, manufactures and distributes a range of products used in the detection of various microbiological parameters in water. LPD develops, designs, manufactures and distributes diagnostic tests and related instrumentation and performs services that are used to manage the health status of livestock and poultry, to improve bovine reproductive efficiency, and to ensure the quality and safety of milk and food. OPTI Medical develops, designs, manufactures and distributes point-of-care electrolyte and blood gas analyzers and related consumable products for the human medical diagnostics market.

The accounting policies of our segments are the same as those described in the summary of significant accounting policies in Note 2 except for inventories, as discussed below. Intersegment revenues, which are not included in the table below, were not material for the years ended December 31, 2015, 2014 and 2013.

F-36

Certain costs are not allocated to our operating segments and are instead reported under the caption “Unallocated Amounts.” Our business segments generally have limited control over the timing and amount of these expenses. The major categories of these costs include:

Gross Profit:

	·		The capitalization of variances between standard and actual manufacturing costs to adjust the timing of expense recognition from when the variance is created to the period in which the related inventory is sold.

Operating Expenses:

	·		Costs that do not align with one of our existing operating segments or are cost prohibitive to allocate, primarily our R&D function, regional or country expenses and certain foreign currency revaluation gains/losses on monetary balances in currencies other than our subsidiaries’ functional currency.

	·		Corporate support function costs (such as information technology, facilities, human resources, finance and legal), health benefits and incentive compensation, which are charged to our business segments at pre-determined budgeted amounts or rates. Differences from pre-determined budgeted amounts or rates are captured within our Unallocated Segment.

	·		Unusual or extraordinary items.

F-37

Below is our segment information (in thousands):

For the Years Ended December 31,
		CAG			Water			LPD			Other			Unallocated Amounts			Consolidated Total
2015
Revenue		$	1,356,287		$	96,884		$	127,143		$	21,578		$	-		$	1,601,892
Income (loss) from operations		$	231,642		$	44,584		$	24,397		$	156		$	(867)		$	299,912
Interest expense, net																		(26,771)
Income before provision for income taxes																		273,141
Provision for income taxes																		81,006
Net income																		192,135
Less: Net income attributable to noncontrolling interest																		57
Net income attributable to IDEXX Laboratories, Inc. stockholders																	$	192,078
Depreciation and amortization		$	60,715		$	3,188		$	4,367		$	686		$	-		$	68,956
Expenditures for long-lived assets (1)		$	69,371		$	2,781		$	9,110		$	1,659		$	-		$	82,921
2014
Revenue		$	1,223,064		$	94,725		$	141,179		$	26,839		$	-		$	1,485,807
Income (loss) from operations		$	203,536		$	39,262		$	33,788		$	2,479		$	(18,810)		$	260,255
Interest expense, net																		(13,700)
Income before provision for income taxes																		246,555
Provision for income taxes																		64,604
Net income																		181,951
Less: Net income attributable to noncontrolling interest																		45
Net income attributable to IDEXX Laboratories, Inc. stockholders																	$	181,906
Depreciation and amortization		$	48,740		$	2,553		$	5,144		$	2,451		$	-		$	58,888
Expenditures for long-lived assets (1)		$	49,270		$	2,499		$	4,025		$	4,729		$	-		$	60,523
2013
Revenue		$	1,140,292		$	87,959		$	123,688		$	25,119		$	-		$	1,377,058
Income (loss) from operations		$	212,558		$	37,321		$	20,246		$	2,405		$	(5,768)		$	266,762
Interest expense, net																		(3,501)
Income before provision for income taxes																		263,261
Provision for income taxes																		75,467
Net income																		187,794
Less: Net loss attributable to noncontrolling interest																		(6)
Net income attributable to IDEXX Laboratories, Inc. stockholders																	$	187,800
Depreciation and amortization		$	45,079		$	2,470		$	4,906		$	2,141		$	-		$	54,596
Expenditures for long-lived assets (1)		$	66,134		$	3,254		$	5,569		$	2,655		$	-		$	77,612

---

(1)Expenditures for long-lived assets exclude expenditures for intangible assets. See Note 3 for information regarding acquisitions of intangible assets during the years ended December 31, 2015, 2014 and 2013.

F-38

Revenue by product and service categories was as follows (in thousands):

		For the Years Ended December 31,
			2015			2014			2013
CAG segment revenue:
CAG Diagnostics recurring revenue:		$	1,146,527		$	1,039,252		$	964,009
VetLab consumables			396,526			341,407			312,457
VetLab service and accessories			55,176			53,006			50,675
Rapid assay products			182,670			165,647			169,547
Reference laboratory diagnostic and consulting services			512,155			479,192			431,330
CAG Diagnostics capital instruments			99,001			79,993			83,492
Customer information management and diagnostic imaging systems			110,759			103,819			92,791
CAG segment revenue			1,356,287			1,223,064			1,140,292
Water segment revenue			96,884			94,725			87,959
LPD segment revenue			127,143			141,179			123,688
Other segment revenue			21,578			26,839			25,119
Total revenue		$	1,601,892		$	1,485,807		$	1,377,058

Revenue by principal geographic area, based on customers’ domiciles, was as follows (in thousands):

		For the Years Ended December 31,
			2015			2014			2013
Americas
United States		$	980,281		$	848,928		$	802,345
Canada			69,303			69,743			69,947
Latin America			34,725			34,086			26,893
			1,084,309			952,757			899,185
Europe, the Middle East and Africa
Germany			73,395			85,189			78,109
United Kingdom			74,879			74,131			65,027
France			46,972			53,322			49,093
Italy			25,903			28,794			26,443
Spain			19,998			21,566			20,194
Switzerland			15,631			14,544			12,246
Netherlands			11,645			10,643			9,352
Other			79,910			78,201			66,221
			348,333			366,390			326,685
Asia Pacific Region
Australia			49,274			58,448			53,063
Japan			43,171			44,132			44,869
China			40,619			34,674			29,044
Other			36,186			29,406			24,212
			169,250			166,660			151,188
Total		$	1,601,892		$	1,485,807		$	1,377,058

F-39

Net long-lived assets, consisting of net property and equipment, are subject to geographic risks because they are generally difficult to move and to effectively utilize in another geographic area in a reasonable time period and because they are relatively illiquid. Net long-lived assets by principal geographic areas were as follows (in thousands):

					December 31,			December 31,
						2015			2014
Americas
United States					$	285,391		$	262,475
Brazil						8,404			3,206
Canada						1,796			2,270
						295,591			267,951
Europe, the Middle East and Africa
United Kingdom						13,269			14,366
Germany						5,159			4,836
Netherlands						4,425			3,456
France						2,679			3,172
Switzerland						2,831			2,631
Other						2,047			1,674
						30,410			30,135
Asia Pacific Region
Japan						2,210			2,204
Australia						2,135			1,789
Other						2,680			1,508
						7,025			5,501
Total					$	333,026		$	303,587

NOTE 16. FAIR VALUE MEASUREMENTS

The following table sets forth our assets and liabilities that were measured at fair value on a recurring basis at December 31, 2015 and at December 31, 2014 by level within the fair value hierarchy (in thousands):

		Quoted Prices			Significant
		in Active			Other			Significant
		Markets for			Observable			Unobservable
		Identical Assets			Inputs			Inputs			Balance at
As of December 31, 2015		(Level 1)			(Level 2)			(Level 3)			December 31, 2015
Assets
Money market funds(1)		$	15,490		$	-		$	-		$	15,490
Agency bonds			-			1,999			-			1,999
Commercial paper			-			1,800			-			1,800
Marketable securities
Corporate bonds			-			177,613			-			177,613
U.S. government bonds			-			12,871			-			12,871
Agency bonds			-			12,065			-			12,065
Certificates of deposit			-			3,500			-			3,500
Commercial paper			-			3,491			-			3,491
International government bonds			-			1,459			-			1,459
Municipal bonds			-			1,399			-			1,399
Treasury bills			-			1,193			-			1,193
Total marketable securities			-			213,591			-			213,591
Equity mutual funds(2)			2,264			-			-			2,264
Foreign currency exchange contracts(3)			-			4,876			-			4,876
Liabilities
Foreign currency exchange contracts(3)			-			1,365			-			1,365
Deferred compensation(4)			2,264			-			-			2,264
Interest rate swaps(5)			-			384			-			384

F-40

		Quoted Prices			Significant
		in Active			Other			Significant
		Markets for			Observable			Unobservable
		Identical Assets			Inputs			Inputs			Balance at
As of December 31, 2014		(Level 1)			(Level 2)			(Level 3)			December 31, 2014
Assets
Money market funds(1)		$	204,743		$	-		$	-		$	204,743
Equity mutual funds(2)			2,654			-			-			2,654
Foreign currency exchange contracts(3)			-			12,226			-			12,226
Liabilities
Foreign currency exchange contracts(3)			-			1,323			-			1,323
Deferred compensation(4)			2,654			-			-			2,654
Interest rate swaps(5)			-			1,117			-			1,117

---

	(1)		Money market funds, agency bonds and commercial paper with an original maturity of less than ninety days are included within cash and cash equivalents. The remaining balance of cash and cash equivalents as of December 31, 2015 and December 31, 2014 consisted of demand deposits. Commercial paper with an original maturity of over ninety days is included within marketable securities.

	(2)		Equity mutual funds relate to a deferred compensation plan that was assumed as part of a previous business combination. This amount is included within other long-term assets, net. See number (4) below for a discussion of the related deferred compensation liability.

	(3)		Foreign currency exchange contracts are included within other current assets, net; other long-term assets, net; accrued liabilities; or other long-term liabilities depending on the gain (loss) position and anticipated settlement date.

	(4)		A deferred compensation plan assumed as part of a previous business combination is included within other long-term liabilities. The fair value of our deferred compensation plan is indexed to the performance of the underlying equity mutual funds discussed in number (2) above.

	(5)		Interest rate swaps are included within accrued liabilities.

We did not have any transfers between Level 1 and Level 2 or transfers in or out of Level 3 of the fair value hierarchy during the years ended December 31, 2015 and 2014.

The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable and accounts payable, approximate carrying value due to their short maturity. See Note 2 for additional information regarding valuation methodology for assets and liabilities for which fair value is measured on a recurring basis and for information regarding the fair values of our unsecured revolving credit facility and long-term debt.

Note 17. HEDGING Instruments

Disclosure within this footnote is presented to provide transparency about how and why we use derivative and non-derivative instruments (collectively “hedging instruments”) and how the hedging instruments and related hedged items affect our financial position, results of operations, and cash flows. See Note 2 for a discussion surrounding our hedging instruments and hedging accounting policies, Note 16 for additional information regarding the fair value of our derivative instruments and Note 19 for additional information regarding the effect of derivative instruments designated as cash flow hedges on the consolidated statement of operations.

We are exposed to certain risks related to our ongoing business operations. The primary risks that we manage by using hedging instruments are foreign currency exchange risk and interest rate risk. Our subsidiaries enter into foreign currency exchange contracts to manage the exchange risk associated with their forecasted intercompany inventory purchases and sales for the next year. From time to time, we may also enter into other foreign currency exchange contracts or foreign-denominated debt issuances to minimize the impact of foreign currency fluctuations associated with specific balance sheet exposures, including net investments in certain foreign subsidiaries. We enter into interest rate swaps to minimize the impact of interest rate fluctuations associated with borrowings under our variable-rate Credit Facility.

F-41

The primary purpose of our foreign currency hedging activities is to protect against the volatility associated with foreign currency transactions, including transactions denominated in euro, British pound, Japanese yen, Canadian dollar, Australian dollar and Swiss franc. We also utilize natural hedges to mitigate our transaction and commitment exposures. Our corporate policy prescribes the range of allowable hedging activity. We enter into foreign currency exchange contracts with well-capitalized multinational financial institutions, and we do not hold or engage in transactions involving hedging instruments for purposes other than risk management. Our accounting policies for these contracts are based on our designation of such instruments as hedging transactions.

Cash Flow Hedges

We have designated our foreign currency exchange contracts and variable-to-fixed interest rate swaps as cash flow hedges as these derivative instruments mitigate the exposure to variability in the cash flows of forecasted transactions attributable to foreign currency exchange and interest rates. Unless noted otherwise, we have also designated our derivative instruments as qualifying for hedge accounting treatment.

We did not de-designate any instruments from hedge accounting treatment during the years ended December 31, 2015, 2014 and 2013. Gains or losses related to hedge ineffectiveness recognized in earnings during the years ended December 31, 2015, 2014 and 2013 were not material. At December 31, 2015, the estimated amount of net gains, net of income tax expense, which are expected to be reclassified out of AOCI and into earnings within the next twelve months is $2.3 million if exchange and interest rates do not fluctuate from the levels at December 31, 2015.

We hedge approximately 85% of the estimated exposure from intercompany product purchases and sales denominated in the euro, British pound, Canadian dollar, Japanese yen, Australian dollar and Swiss franc. We have additional unhedged foreign currency exposures related to foreign services and emerging markets where it is not practical to hedge. We primarily utilize foreign currency exchange contracts with durations of less than 24 months. Quarterly, we enter into contracts to hedge incremental portions of anticipated foreign currency transactions for the current and following year. As a result, our risk with respect to foreign currency exchange rate fluctuations and the notional value of foreign currency exchange contracts may vary throughout the year. The U.S. dollar is the currency purchased or sold in all of our foreign currency exchange contracts. The notional amount of foreign currency exchange contracts to hedge forecasted intercompany inventory purchases and sales totaled $176.1 million and $186.7 million at December 31, 2015 and December 31, 2014, respectively.

We have entered into forward fixed interest rate swap agreements to manage the economic effect of variable interest obligations on amounts borrowed under the terms of our Credit Facility. Beginning on March 30, 2012, the variable interest rate associated with $40 million of borrowings outstanding under the Credit Facility became effectively fixed at 1.36% plus the range of applicable interest rate fixed credit spreads (“Credit Spread”) through June 30, 2016. Beginning on March 28, 2013, the variable interest rate associated with an additional $40 million of borrowings outstanding under the Credit Facility became effectively fixed at 1.64% plus the Credit Spread through June 30, 2016.

Net Investment Hedge

In June 2015, we issued and sold our 2025 Notes through a private placement an aggregate principal amount of €88.9 million (approximately USD $100 million). We have designated these euro-denominated notes as a hedge of our euro net investment in certain foreign subsidiaries to reduce the volatility in stockholders’ equity caused by changes in foreign currency exchange rates in the euro relative to the U.S. dollar. As a result of this designation, gains and losses from the change in translated U.S. dollar value of these euro-denominated notes are recorded in AOCI rather than to earnings. We recorded a $1.9 million gain, net of income tax, within AOCI as a result of this net investment hedge for the year ended December 31, 2015. This unrealized gain recorded at December 31, 2015 will not be reclassified in earnings until the complete or substantially complete liquidation of the net investment in the hedged foreign operations or all or a portion of the hedge no longer qualifies for hedge accounting treatment. See Note 11 to the consolidated financial statements included in this Annual Report on Form 10-K for further information regarding the issuance of these 2025 Notes.

F-42

Fair Values of Hedging Instruments Designated as Hedges in Consolidated Balance Sheets

The fair values of hedging instruments, and their respective classification on the consolidated balance sheets and amounts subject to offset under master netting arrangements consisted of the following (in thousands):

				Hedging Assets
					December 31,			December 31,
					2015			2014
Derivatives designated as hedging instruments		Balance Sheet Classification
Foreign currency exchange contracts		Other current assets		$	4,876		$	12,226
Gross amounts subject to master netting arrangements not offset on the balance sheet					1,268			1,323
Net amount				$	3,608		$	10,903

				Hedging Liabilities
					December 31,			December 31,
					2015			2014
Derivatives designated as hedging instruments		Balance Sheet Classification
Foreign currency exchange contracts		Accrued liabilities		$	1,365		$	1,323
Interest rate swaps		Accrued liabilities			384			1,117
Total derivative instruments presented as cash flow hedges on the balance sheet					1,749			2,440
Foreign currency borrowings designated as net investment hedge on the balance sheet		Long-term debt			97,085			-
Total hedging instruments presented on the balance sheet					98,834			2,440
Gross amounts subject to master netting arrangements not offset on the balance sheet					1,268			1,323
Net amount				$	97,566		$	1,117

The effect of derivative instruments designated as cash flow hedges on the consolidated balance sheets for the years ended December 31, 2015, 2014 and 2013 consisted of the following (in thousands):

			Gain (Loss) Recognized in AOCI on Derivative Instruments (Effective Portion)
			For Year Ended December 31,
Derivative instruments				2015			2014			2013
Foreign currency exchange contracts, net of tax			$	(5,604)		$	7,098		$	1,350
Interest rate swaps, net of tax				461			442			541
Total derivative instruments, net of tax			$	(5,143)		$	7,540		$	1,891

NOTE 18. REPURCHASES OF COMMON STOCK

Our Board of Directors has authorized the repurchase of up to 65,000,000 shares of our common stock in the open market or in negotiated transactions pursuant to the Company’s share repurchase program. We believe that the repurchase of our common stock is a favorable means of returning value to our shareholders, and we also repurchase to offset the dilutive effect of our share-based compensation programs. Repurchases of our common stock may vary depending upon the level of other investing activities and the share price. As of December 31, 2015, there are 6,806,152 remaining shares available for repurchase under this authorization.

We primarily acquire shares by means of repurchases in the open market. However, we also acquire shares that are surrendered by employees in payment for the minimum required withholding taxes due on the vesting of restricted stock units and the settlement of deferred stock units, otherwise referred to herein as employee surrenders.

F-43

The following is a summary of our open market common stock repurchases and shares acquired through employee surrender for the years ended December 31, 2015, 2014 and 2013 (in thousands, except per share amounts):

		For the Years Ended December 31,
		2015			2014			2013
Share repurchases during the period(1)			5,659			9,761			7,903
Shares acquired through employee surrender(1)			69			92			99
Total shares repurchased(1)			5,728			9,853			8,002
Cost of share repurchases during the period		$	406,430		$	618,158		$	367,762
Cost of employee surrenders			5,457			5,809			4,548
Total cost of shares repurchased		$	411,887		$	623,967		$	372,310
Average cost per share		$	71.90		$	63.32		$	46.53

	(1)		Shares repurchased and acquired through employee surrender for payment of minimum required withholding taxes on and before June 15, 2015 and the associated average cost per share have been adjusted to reflect the June 2015 two-for-one stock split. Actual shares repurchased were approximately 4,313,000, 4,927,000 and 4,001,000 for the years ended December 31, 2015, 2014, and 2013, respectively.

NOTE 19. ACCUMULATED OTHER COMPREHENSIVE INCOME

The changes in accumulated other comprehensive income, net of tax, for the years ended December 31, 2015 and 2014 consisted of the following (in thousands):

			Unrealized gain (loss) on investments, net of tax			Unrealized gain (loss) on derivatives instruments, net of tax			Unrealized gain on net investment hedge, net of tax			Cumulative translation adjustment			Total
Balance as of December 31, 2013		$	108		$	(179)		$	-		$	13,693		$	13,622
Other comprehensive income (loss) before reclassifications			(107)			9,542			-			(29,126)			(19,691)
Gains reclassified from accumulated other comprehensive income			-			(2,002)			-			-			(2,002)
Balance as of December 31, 2014			1			7,361			-			(15,433)			(8,071)
Other comprehensive income (loss) before reclassifications			(226)			8,839			1,894			(30,718)			(20,211)
Gains reclassified from accumulated other comprehensive income			-			(13,983)			-			-			(13,983)
Balance as of December 31, 2015		$	(225)		$	2,217		$	1,894		$	(46,151)		$	(42,265)

The following is a summary of reclassifications out of accumulated other comprehensive income for the years ended December 31, 2015, 2014 and 2013 (in thousands):

				Amounts Reclassified from Accumulated Other
		Affected Line Item in the		Comprehensive Income
Details about Accumulated Other		Statement Where		For the Years Ended December 31,
Comprehensive Income Components		Net Income in Presented			2015			2014			2013
Gains (losses) on derivative instruments included in net income:
Foreign currency exchange contracts		Cost of revenue		$	20,878		$	3,822		$	3,469
Interest rate swaps		Interest expense			(1,042)			(1,064)			(900)
		Total gains before tax			19,836			2,758			2,569
		Tax expense			5,853			756			679
		Gains, net of tax		$	13,983		$	2,002		$	1,890

F-44

NOTE 20. PREFERRED STOCK

Our Board of Directors is authorized, subject to any limitations prescribed by law, without further stockholder approval, to issue from time to time up to 500,000 shares of Preferred Stock, $1.00 par value per share (“Preferred Stock”), in one or more series. Each such series of Preferred Stock shall have such number of shares, designations, preferences, voting powers, qualifications and special or relative rights or privileges as shall be determined by the Board of Directors, which may include, among others, dividend rights, voting rights, redemption and sinking fund provisions, liquidation preferences, conversion rights and preemptive rights. There are no shares of Preferred Stock outstanding as of December 31, 2015.

NOTE 21. IDEXX RETIREMENT AND INCENTIVE SAVINGS PLAN

We have established the IDEXX Retirement and Incentive Savings Plan (the “401(k) Plan”). U.S. employees eligible to participate in the 401(k) Plan may contribute specified percentages of their salaries. We match a portion of these contributions, not to exceed 4% of participants’ eligible compensation. We matched $11.5 million, $8.8 million and $7.8 million for the years ended December 31, 2015, 2014 and 2013, respectively. In addition, we may make contributions to the 401(k) Plan at the discretion of the Board of Directors. There were no discretionary contributions in 2015, 2014 or 2013.

We also have established defined contribution plans for regional employees in Europe and in Canada. With respect to these plans, we contributed $3.5 million, $3.7 million and $3.1 million for the years ended December 31, 2015, 2014 and 2013, respectively.

NOTE 22. SUMMARY OF QUARTERLY DATA (UNAUDITED)

A summary of quarterly data(1) follows (in thousands, except per share data):

		For the Three Months Ended
			March 31,			June 30,			September 30,			December 31,
2015
Revenue		$	382,477		$	413,343		$	406,387		$	399,685
Gross profit			215,544			232,757			224,274			217,695
Operating income			72,803			88,303			71,895			66,911
Net income attributable to IDEXX Laboratories, Inc. stockholders			46,594			56,912			44,223			44,349
Earnings per share:
Basic		$	0.49		$	0.61		$	0.48		$	0.49
Diluted		$	0.49		$	0.60		$	0.48		$	0.48
2014
Revenue		$	360,203		$	390,122		$	383,523		$	351,959
Gross profit			202,097			218,518			213,336			182,165
Operating income			70,046			83,219			72,189			34,801
Net income attributable to IDEXX Laboratories, Inc. stockholders			46,585			57,218			52,142			25,961
Earnings per share:
Basic		$	0.45		$	0.56		$	0.52		$	0.27
Diluted		$	0.45		$	0.55		$	0.52		$	0.27

	(1)		Amounts presented may not recalculate to full-year totals due to rounding.

			F-45

SCHEDULE II

IDEXX LABORATORIES, INC. AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS

(in thousands)

		Balance at Beginning of Year			Charges to Costs and Expenses		Charges to Other Accounts(1)			Write-Offs/Cash Payments			Foreign Currency Translation			Balance at End of Year
Reserves for doubtful accounts receivable:
December 31, 2013	$	2,632		$	1,601	$	-		$	(762)		$	62		$	3,533
December 31, 2014		3,533			2,035		-			(1,146)			(116)			4,306
December 31, 2015		4,306			2,200		-			(817)			(561)			5,128
Valuation allowance for deferred tax assets:
December 31, 2013	$	4,547		$	735	$	742		$	(701)		$	(122)		$	5,201
December 31, 2014		5,201			799		-			(1,042)			(280)			4,678
December 31, 2015		4,678			634		-			(468)			(398)			4,446
(1) Amount relates to net operating losses obtained through acquisitions where uncertainty exists as to our ability to use the tax attribute.

F-46

EXHIBIT INDEX

Exhibit No.	Description
3.1	Restated Certificate of Incorporation of the Company, as amended (filed as Exhibit No. 3(i) to Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, File No. 0-19271, and incorporated herein by reference).
3.2	Amended and Restated By-Laws of the Company (filed herewith).
4.1	Note Purchase Agreement, dated as of December 11, 2013, among the Company, as issuer, New York Life Insurance Company, and New York Life Investment Management LLC, as investment manager for New York Life Insurance and Annuity Corporation and New York Life Insurance and Annuity Corporation Institutionally Owned Life Insurance Separate Account (BOLI 30C), as purchasers (filed as Exhibit No. 99.1 to Current Report on Form 8-K filed December 11, 2013, File No. 0-19271, and incorporated herein by reference).
4.2	Note Purchase and Private Shelf Agreement, dated as of July 21, 2014, among the Company, as issuer, Prudential Investment Management, Inc., Pruco Life Insurance Company, The Prudential Insurance Company of America, Prudential Investment Japan Co., Ltd., as investment manager, and Prudential Investment Management, Inc., as sub-adviser for The Gibraltar Life Insurance Co., Ltd., Prudential Arizona Reinsurance Universal Company, as grantor, and Prudential Investment Management, Inc., as investment manager for PAR U Hartford Life Insurance Comfort Trust, Prudential Private Placement Investors, L.P., as investment advisor, and Prudential Private Placement Investors, Inc., as general partner to each of, The Independent Order of Foresters, Zurich American Insurance Company, Globe Life and Accident Insurance Company, Family Heritage Life Insurance Company of America, MTL Insurance Company, The Lincoln National Life Insurance Company, William Penn Life Insurance Company of New York, Farmers Insurance Exchange and Mid Century Insurance Company, as purchasers (filed as Exhibit No. 99.1 to Current Report on Form 8-K filed July 25, 2014, File No. 0-19271, and incorporated herein by reference).
4.3	Note Purchase Agreement, dated as of July 22, 2014, among the Company, as issuer, New York Life Insurance Company, and NYL Investors LLC, as investment manager for New York Life Insurance and Annuity Corporation and New York Life Insurance and Annuity Corporation Institutionally Owned Life Insurance Separate Account (BOLI 30C), as purchasers (filed as Exhibit No. 99.2 to Current Report on Form 8-K file July 25, 2014, File No. 0-19271, and incorporated herein by reference).
4.4	Multicurrency Note Purchase and Private Shelf Agreement, dated as of December 19, 2014, among the Company, as issuer, and Metropolitan Life Insurance Company, White Mountains Advisors, LLC, as investment manager, and MetLife Investment Management, LLC, as sub-investment manager for Symetra Life Insurance Company, and MetLife Investment Management, LLC, as investment manager for each of MetLife Insurance K.K., AXIS Reinsurance Company, and Union Fidelity Life Insurance Company, as purchasers (filed as Exhibit No. 99.1 to Current Report on Form 8-K filed December 29, 2014, File No. 0-19271, and incorporated herein by reference).

4.5	Amended and Restated Multicurrency Note Purchase and Private Shelf Agreement, dated as of June 18, 2015, among the Company, as issuer, Prudential Investment Management, Inc., Pruco Life Insurance Company, The Prudential Insurance Company of America, Prudential Investment Japan Co., Ltd., as investment manager, and Prudential Investment Management, Inc., as sub-adviser for The Gibraltar Life Insurance Co., Ltd., Prudential Arizona Reinsurance Universal Company, as grantor, and Prudential Investment Management, Inc., as investment manager for PAR U Hartford Life Insurance Comfort Trust, Prudential Private Placement Investors, L.P., as investment advisor, and Prudential Private Placement Investors, Inc., as general partner to each of, The Independent Order of Foresters, Zurich American Insurance Company, Globe Life and Accident Insurance Company, Family Heritage Life Insurance Company of America, MTL Insurance Company, The Lincoln National Life Insurance Company, William Penn Life Insurance Company of New York, Farmers Insurance Exchange and Mid Century Insurance Company, as purchasers (filed as Exhibit No. 99.1 to Current Report on Form 8-K filed June 24, 2015 and incorporated herin by reference).
10.1*	U.S. Supply Agreement, effective as of October 16, 2003, between the Company and Ortho-Clinical Diagnostics, Inc. (“Ortho”) (filed as Exhibit No. 10.7 to Annual Report on Form 10-K for the year ended December 31, 2003, File No. 0-19271 (“2003 Form 10-K”), and incorporated herein by reference).
10.2*	Amendment No. 1 to U.S. Supply Agreement effective as of January 1, 2005, between the Company and Ortho (filed as Exhibit No. 10.1 to Quarterly Report on Form 10-Q for the quarter ended June 30, 2005, File No. 0-19271 (“June 2005 Form 10-Q”), and incorporated herein by reference).
10.3	Amendment No. 2 to U.S. Supply Agreement effective as of October 15, 2006, between the Company and Ortho (filed as Exhibit No. 10.4 to Annual Report on Form 10-K for the year ended December 31, 2007, File No. 0-19271 (“2007 Form 10-K”), and incorporated herein by reference).
10.4*	Amendment No. 3 to U.S. Supply Agreement effective as of January 18, 2008, between the Company and Ortho (filed as Exhibit No. 10.5 to 2007 Form 10-K, and incorporated herein by reference).
10.5*	Amendment No. 4 to U.S. Supply Agreement effective as of December 28, 2011, between the Company and Ortho (filed as Exhibit No. 10.5 to Annual Report on Form 10-K for the year ended December 31, 2011, File No. 0-19271 (“2011 Form 10-K”), and incorporated herein by reference).
10.6*	Amendment No. 5 to U.S. Supply Agreement effective as of December 9, 2013, between the Company and Ortho (filed as Exhibit No. 10.6 to Annual Report on Form 10-K for the year ended December 31, 2013, File No. 0-19271 (“2013 Form 10-K”), and incorporated herein by reference).
10.7*	European Supply Agreement, effective as of October 17, 2003, between the Company and Ortho (filed as Exhibit No. 10.8 to 2003 Form 10-K, and incorporated herein by reference).
10.8*	Amendment No. 1 to European Supply Agreement effective as of January 1, 2005, between the Company and Ortho (filed as Exhibit No. 10.2 to June 2005 10-Q, and incorporated herein by reference).
10.9*	Amendment No. 2 to European Supply Agreement effective as of January 18, 2008, between the Company and Ortho (filed as Exhibit No. 10.8 to 2007 Form 10-K, and incorporated herein by reference).
10.10*	Amendment No. 3 to European Supply Agreement effective as of December 28, 2011, between the Company and Ortho (filed as Exhibit No. 10.9 to 2011 Form 10-K, and incorporated herein by reference).
10.11*	Amendment No. 4 to European Supply Agreement effective as of December 9, 2013, between the Company and Ortho (filed as Exhibit No. 10.11 to 2013 Form 10-K, and incorporated herein by reference).
10.12	Amendment, Release and Settlement Agreement dated as of September 12, 2002, among the Company, IDEXX Europe B.V., and Ortho (filed as Exhibit No. 10.1 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2002, File No. 0-19271, and incorporated herein by reference).

10.13*	Supply Agreement, effective as of May 7, 2007 between the Company and Moss, Inc. (filed as Exhibit No. 10.1 to Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 0-19271 (“June 2010 Form 10-Q”), and incorporated herein by reference).
10.14**	Employment Agreement dated January 22, 2002, between the Company and Jonathan W. Ayers (filed as Exhibit No. 10.13 to Annual Report on Form 10-K for the year ended December 31, 2001, File No. 0-19271, and incorporated herein by reference).
10.15**	Amended and Restated Executive Employment Agreement dated May 26, 2013, between the Company and Jonathan W. Ayers (filed as Exhibit No. 10.2 to July 23, 2013 Form 10-Q for the quarter ended June 30, 2013, File No. 0-19271 (“June 2013 Form 10-Q”), and incorporated herein by reference).
10.16**	Form of Executive Employment Agreement dated May 26, 2013, between the Company and each of the Company’s Executive Officers, other than the Chief Executive Officer (filed as Exhibit No. 10.3 to June 2013 Form 10-Q, and incorporated herein by reference).
10.17**	Restated Director Deferred Compensation Plan, as amended (filed as Exhibit No. 10.1 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2010, File No. 0-19271, and incorporated herein by reference).
10.18*	Restated Executive Deferred Compensation Plan, as amended (filed as Exhibit No. 10.3 to June 2010 Form 10-Q, and incorporated herein by reference).
10.19**	Form of Director Stock Option Agreement, as amended pursuant to the 2009 Stock Incentive Plan (filed herewith).
10.20**	Form of Employee Stock Option Agreement, as amended pursuant to the 2009 Stock Incentive Plan (filed herewith).
10.21**	IDEXX Laboratories 1997 Employee Stock Purchase Plan, as amended (filed as Exhibit No. 10.2 to the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015 filed July 30, 2015 and incorporated herein by reference).
10.22**	Form of Restricted Stock Unit Agreement, as amended pursuant to the 2009 Stock Incentive Plan (filed herewith).
10.23**	2009 Stock Incentive Plan, as amended (filed as Exhibit No. 99.1 to Registration Statement on Form S-8 filed December 30, 2013, File No. 333-193136, and incorporated herein by reference).
10.24**	2014 Incentive Compensation Plan, (filed as Exhibit No. 10.2 to Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, File No. 0-19271 (“June 2014 Form 10-Q”), and incorporated herein by reference).
10.25**	Form of Performance-Based Restricted Stock Unit Agreement pursuant to the 2009 Stock Incentive Plan (filed herewith).
10.26	Second Amended and Restated Credit Agreement, dated as of December 4, 2015, among the Company, IDEXX Distribution, Inc., IDEXX Operations, Inc., OPTI Medical Systems, Inc., IDEXX Laboratories Canada Corporation and IDEXX Europe B.V., as borrowers, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, JPMorgan Chase Bank, N.A., Toronto Branch, as Toronto agent, and J.P. Morgan Europe Limited, as London agent (filed as Exhibit No. 10.1 to the Current Report on Form 8-K filed December 8, 2015 and incorporated herein by reference).
21	Subsidiaries of the Company (filed herewith).
23	Consent of PricewaterhouseCoopers LLP, an independent registered public accounting firm (filed herewith).

31.1	Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2	Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.
*	Confidential treatment requested as to certain portions.
**	Management contract or compensatory arrangement required to be filed as an exhibit pursuant to Item 15(a)(3) of Form 10-K.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	IDEXX LABORATORIES, INC.
	By: /s/ Jonathan W. Ayers
Date: February 16, 2016	Jonathan W. Ayers
	President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

	SIGNATURE		TITLE		DATE
	/s/ Jonathan W. Ayers		President, Chief Executive Officer and		February 16, 2016
	Jonathan W. Ayers		Chairman of the Board of Directors (Principal Executive Officer)
	/s/ Brian P. McKeon		Executive Vice President, Chief Financial		February 16, 2016
	Brian P. McKeon		Officer and Treasurer (Principal Financial and Accounting Officer)
	/s/ Bruce L. Clafin		Director		February 16, 2016
	Bruce L. Clafin
	/s/ Thomas Craig		Director		February 16, 2016
	Thomas Craig
	/s/ William T. End		Director		February 16, 2016
	William T. End
	/s/ Rebecca M. Henderson, PhD		Director		February 16, 2016
	Rebecca M. Henderson, PhD
	/s/ Barry C. Johnson, PhD		Director		February 16, 2016
	Barry C. Johnson, PhD
	/s/ Daniel M. Junius		Director		February 16, 2016
	Daniel M. Junius
	/s/ M. Anne Szostak		Director		February 16, 2016
	M. Anne Szostak
	/s/ Sophie V. Vandebroek, PhD		Director		February 16, 2016
	Sophie V. Vandebroek, PhD