IDEXX LABORATORIES INC DE

Previous wording

This Quarterly Report on Form 10-Q contains statements which, to the extent they are not statements of historical fact, constitute “forward-looking statements.” Such forward-looking statements about our business and expectations within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), include statements relating to, among other things, our expectations regarding revenue recognition timing and amounts; business trends, earnings and other measures of financial performance; projected impact of foreign currency exchange rates and hedging activities; realizability of assets; future cash flow and uses of cash; future repurchases of common stock; future levels of indebtedness and capital spending; the working capital and liquidity outlook; critical accounting estimates; deductibility of goodwill; and future commercial and operational efforts. Forward-looking statements can be identified by the use of words such as “expects,” “may,” “anticipates,” “intends,” “would,” “will,” “plans,” “believes,” “estimates,” “should,” “project,” and similar words and expressions. These forward-looking statements are intended to provide our current expectations or forecasts of future events; are based on current estimates, projections, beliefs, and assumptions; and are not guarantees of future performance. Actual events or results may differ materially from those described in the forward-looking statements. These forward-looking statements involve a number of risks and uncertainties, including, among other things, the adverse impact, and the duration, of macroeconomic events, conditions, and uncertainties, such as geopolitical instability (including wars, terrorist attacks, and armed conflicts), general economic uncertainty, inflationary pressures, severe weather and other natural conditions, and supply chain challenges on our business, results of operations, liquidity, financial condition, and stock price, as well as the other matters described under the headings “Business,” “Risk Factors,” “Legal Proceedings,” “Management's Discussion and Analysis of Financial Condition and Results of Operations,” and “Quantitative and Qualitative Disclosure About Market Risk” in our 2023 Annual Report and in the corresponding sections of this Quarterly Report on Form 10-Q, as well as those described from time to time in our other periodic reports filed with the SEC.

Current wording

This Quarterly Report on Form 10-Q contains statements which, to the extent they are not statements of historical fact, constitute “forward-looking statements.” Such forward-looking statements about our business and expectations within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), include statements relating to, among other things, our expectations regarding revenue recognition timing and amounts; business trends, earnings and other measures of financial performance; projected impact of foreign currency exchange rates and hedging activities; realizability of assets; future cash flow and uses of cash; future repurchases of common stock; future levels of indebtedness and capital spending; the working capital and liquidity outlook; critical accounting estimates; deductibility of goodwill; inflation; and an ongoing litigation matter. Forward-looking statements can be identified by the use of words such as “expects,” “may,” “anticipates,” “intends,” “would,” “will,” “plans,” “believes,” “estimates,” “should,” “project,” and similar words and expressions. These forward-looking statements are intended to provide our current expectations or forecasts of future events; are based on current estimates, projections, beliefs, and assumptions; and are not guarantees of future performance. Actual events or results may differ materially from those described in the forward-looking statements. These forward-looking statements involve a number of risks and uncertainties, including, among other things, the adverse impact, and the duration, of macroeconomic events, conditions, and uncertainties, such as geopolitical instability (including wars, terrorist attacks, and armed conflicts), general economic uncertainty, inflationary pressures, severe weather and other natural conditions, and supply chain challenges on our business, results of operations, liquidity, financial condition, and stock price, as well as the other matters described under the headings “Business,” “Risk Factors,” “Legal Proceedings,” “Management's Discussion and Analysis of Financial Condition and Results of Operations,” and “Quantitative and Qualitative Disclosure About Market Risk” in our 2023 Annual Report and in the corresponding sections of this Quarterly Report on Form 10-Q, and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, as well as those described from time to time in our other periodic reports filed with the SEC.

Previous wording

The discussion and analysis of our financial condition and results of operations is based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis. We base our estimates on historical experience and on various 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. The critical accounting policies and the significant judgments and estimates used in the preparation of our unaudited condensed consolidated financial statements for the three months ended March 31, 2024, are consistent with those discussed in our 2023 Annual Report in the section under the heading “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates and Assumptions.”

Current wording

The discussion and analysis of our financial condition and results of operations is based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis. We base our estimates on historical experience and on various 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. The critical accounting policies and the significant judgments and estimates used in the preparation of our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2024, are consistent with those discussed in our 2023 Annual Report in the section under the heading “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates and Assumptions.”

Previous wording

The following revenue analysis and discussion focuses on organic revenue growth, and references in this analysis and discussion to “revenue,” “revenues,” or “revenue growth” are references to “organic revenue growth.” Organic revenue growth is a non-GAAP financial measure and represents the percentage change in revenue during the three months ended March 31, 2024, as compared to the same period for the prior year, net of the effect of changes in foreign currency exchange rates, certain business acquisitions, and divestitures. Organic revenue growth should be considered in addition to, and not as a replacement for, or as a superior measure to, revenue growth reported in accordance with U.S. GAAP, and may not be comparable to similarly titled measures reported by other companies. Management believes that reporting organic revenue growth provides useful information to investors by facilitating easier comparisons of our revenue performance with prior and future periods and to the performance of our peers.

Current wording

The following revenue analysis and discussion focuses on organic revenue growth, and references in this analysis and discussion to “revenue,” “revenues,” or “revenue growth” are references to “organic revenue growth.” Organic revenue growth is a non-GAAP financial measure and represents the percentage change in revenue during the three and six months ended June 30, 2024, as compared to the same period for the prior year, net of the effect of changes in foreign currency exchange rates, certain business acquisitions, and divestitures. Organic revenue growth should be considered in addition to, and not as a replacement for, or as a superior measure to, revenue growth reported in accordance with U.S. GAAP, and may not be comparable to similarly titled measures reported by other companies. Management believes that reporting organic revenue growth provides useful information to investors by facilitating easier comparisons of our revenue performance with prior and future periods and to the performance of our peers.

Previous wording

CAG Diagnostics Capital – Instrument Revenue. The increase in instrument revenue was primarily due to higher premium instrument placements and sales mix. Theoverall change in foreign currency exchange rates decreased revenue growth by 0.4%.

Current wording

CAG Diagnostics Capital – Instrument Revenue. The increase in instrument revenue was primarily due to favorable sales mix and higher premium instrument placements, partially offset by program pricing effects. The overall change in foreign currency exchange rates decreased revenue growth by 1.2%.

Previous wording

Operating Expenses. Sales and marketing expense increased primarily due to increases in personnel-related and travel costs. General and administrative expense increased primarily due to higher bad debt expense. Research and development expense increased primarily due to an increase in personnel-related costs. The overall change in foreign currency exchange rates was not significant to operating expense growth.

Current wording

Operating Expenses. Sales and marketing expense increased primarily due to higher personnel-related costs. General and administrative expense increased primarily due to an increase in bad debt expense. Research and development costs were relatively constant compared to the prior year. The overall change in foreign currency exchange rates resulted in a decrease in operating expense growth by approximately 1%.

Previous wording

Operating Expenses. Sales and marketing expense decreased primarily due to personnel-related costs. General and administrative expense increased primarily due to higher foreign exchange losses on settlements of foreign currency denominated transactions compared to the prior year. Foreign exchange gains and losses on settlements for all operating segments are reported within Other.

Current wording

Operating Expenses. Sales and marketing expense decreased due to lower compensation costs. General and administrative expense increased primarily due to higher foreign exchange losses on settlements of foreign currency denominated transactions compared to the prior year. Foreign exchange gains and losses on settlements for all operating segments are reported within Other.

Previous wording

Interest Expense and Income. Interest expense was $7.9 million for the three months ended March 31, 2024, compared to $13.1 million for the same period in the prior year. The decrease in interest expense was primarily due to lower average debt levels and, to a lesser extent, lower interest rates. Interest income was $4.4 million for the three months ended March 31, 2024, compared to $0.4 million. This increase in interest income is primarily due to the increase in money market investments, as compared to the same period in the prior year.

Current wording

Interest Expense. Interest expense was $8.1 million for the three months ended June 30, 2024, as compared to $10.5 million for the same period during the prior year. The decrease in interest expense was primarily due to lower average debt levels and, to a lesser extent, lower interest rates. Interest income was $3.4 million for the three months ended June 30, 2024, compared to $0.3 million for the same period during the prior year. This increase in interest income is primarily due to the increase in money market investments, compared to the same period during the prior year.

Previous wording

Total Company Revenue. The increase in organic revenue reflects growth in CAG Diagnostics recurring revenue, including benefits from higher realized prices and increased volumes globally. Higher volumes and price gains in veterinary software and diagnostic imaging systems recurring revenue also contributed to higher revenue, supported by demand for subscription-based software. Higher revenue in our Water business was primarily due to the benefit of price increases and increased volume in the U.S. and certain international regions. The decline in our LPD business was primarily due to lower herd health screening and other diagnostic test volumes impacted by lower demand in China, partially offset by higher realized prices and volume growth in the U.S. and Europe. The decrease in Other revenue was primarily due tolower volumes of our OPTI Medical instruments and consumables. The overall change in foreign currency exchange rates was not significant to revenue growth.

Current wording

Total Company Revenue. The increase in organic revenue reflects growth in CAG Diagnostics recurring revenue, including benefits from higher realized prices and increased volumes globally. Higher volumes and price gains in veterinary software and diagnostic imaging systems recurring revenue also contributed to higher revenue, supported by demand for subscription-based software. Higher revenue in our Water business was primarily due to the benefit of price increases and increased volume in the U.S. and certain international regions. The decline in our LPD business was primarily due to lower demand in China, partially offset by higher realized prices and volume growth in the U.S. and Europe. The decrease in Other revenue was primarily due tolower volumes of our OPTI Medical instruments and consumables. The overall change in foreign currency exchange rates decreased revenue growth by 0.4%. Acquisitions increased revenue growth by 0.3%.

Previous wording

Gross Profit. Gross profit increased due to higher revenue and a 110 basis point increase in the gross profit margin. The increase in the gross profit margin was primarily due to sales mix, including the effects from higher CAG Diagnostic consumable growth, lower instrument costs, and software services gross margin expansion. Recurring revenue net price gains offset inflationary cost impacts. The overall change in foreign currency exchange rates on the gross profit margin was not significant.

Current wording

Gross Profit. Gross profit increased due to higher revenue and a 110 basis point increase in the gross profit margin. The increase in the gross profit margin reflected benefits from net price realization, offsetting inflationary cost impacts, lower instrument costs, software services gross margin gains, and favorable business mix. The overall change in foreign currency exchange rates on the gross profit margin was not significant.

Previous wording

Operating Expenses. Sales and marketing expense increased primarily due to higher travel and personnel-related costs. General and administrative expense increased primarily due to the comparison to the prior year benefit of a $16 million customer contract resolution gain and higher third-party costs. Research and development expense increased primarily due to project costs, including software development, and higher personnel-related costs. The overall change in foreign currency exchange rates was not significant to operating expense growth.

Current wording

Operating Expenses. Sales and marketing expense increased primarily due to higher travel costs and, to a lesser extent, higher personnel-related costs. General and administrative expense increased primarily due to a $61.5 million expense related to an ongoing litigation matter, the comparison to the prior year benefit of a $16 million customer contract resolution gain, and higher outside service costs. Research and development expense increased primarily due to project costs and higher personnel-related costs. The overall change in foreign currency exchange rates was not significant to operating expense growth.

Previous wording

CAG Diagnostics Recurring Revenue. The increase in CAG Diagnostics recurring revenue was primarily due to higher realized prices and, to a lesser extent, higher volumes. The overall change of foreign currency movements on CAG Diagnostics recurring revenuewas not significant to revenue growth.

Current wording

CAG Diagnostics Recurring Revenue. The increase in CAG Diagnostics recurring revenue was primarily due to higher realized prices and, to a lesser extent, higher volumes. The impact of foreign currency exchange rates decreased CAG Diagnostics recurring revenue growth by 0.3%.

Previous wording

The increase in IDEXX VetLab consumables revenue was primarily due to higher price realization and volume increases supported by the expansion of our installed base of instruments and our expanded menu of available tests. Theoverall change in foreign currency exchange rates was not significant to revenue growth.

Current wording

The increase in IDEXX VetLab consumables revenue was primarily due to higher price realization and, to a lesser extent, volume increases supported by the expansion of our installed base of instruments and our expanded menu of available tests. Theoverall change in foreign currency exchange rates decreased revenue growth by 0.5%.

Previous wording

The increase inrapid assay revenue resulted primarily from higher price realization, partially offset by lower volumes. Theoverall change in foreign currency exchange rates decreased revenue growth by 0.1%.

Current wording

The increase inrapid assay revenue resulted primarily from higher price realization, partially offset by lower volumes. Theoverall change in foreign currency exchange rates decreased revenue growth by 0.2%.

Previous wording

The increase in reference laboratory diagnostic and consulting services revenue was primarily due to higher price realization and to a lesser extent, higher testing volumes. Theoverall change in foreign currency exchange rates increased revenue growth by 0.1%.

Current wording

The increase in reference laboratory diagnostic and consulting services revenue was due to higher price realization and higher testing volumes, primarily in the U.S. and, to a lesser extent, Europe and Asia Pacific. Theoverall change in foreign currency exchange rates decreased revenue growth by 0.2%.

Previous wording

The increase in CAG Diagnostics services and accessories revenue was primarily a result of the 11% growth in our active installed base of instruments. Theoverall change in foreign currency exchange rates decreased revenue growth by 0.3%.

Current wording

The increase in CAG Diagnostics services and accessories revenue was primarily a result of the 11% growth in our active installed base of instruments. Theoverall change in foreign currency exchange rates decreased revenue growth by 0.7%.

Previous wording

Veterinary Software, Services and Diagnostic Imaging Systems Revenue. The increase in revenue was primarily due to higher recurring revenue from the expansion of our active installed base, resulting in higher subscription and support revenue, and higher realized prices. The decrease in our systems and hardware revenue was due to lower placements. Theoverall change in foreign currency exchange rates was not significant to revenue growth. The overall change of acquisitions increased revenue growth by 3.3%.

Current wording

Veterinary Software, Services and Diagnostic Imaging Systems Revenue. The increase in revenue was primarily due to higher realized prices and higher recurring revenue from the expansion of our active installed base, resulting in higher subscription and support revenue. The decrease in our systems and hardware revenue was due to lower hardware sales associated with new software placements, which are primarily cloud-based. Theoverall change in foreign currency exchange rates was not significant to revenue growth. Acquisitions increased revenue growth by 3.9%.

Previous wording

Gross Profit. Gross profit increased due to higher revenue and a 120 basis point increase in the gross profit margin. The increase in the gross profit margin was driven by sales mix, including the effects from higher CAG Diagnostic consumable growth, lower instrument costs, software services gross margin expansion, and to a lesser extent, gross margin expansion in our Livestock, Poultry and Dairy and Water lines of business. Higher realized prices related to CAG Diagnostic recurring revenues mitigated inflationary cost impacts. The overall change in foreign currency exchange rates on the gross profit margin was not significant.

Current wording

Gross Profit. Gross profit increased due to higher revenue and a 110 basis point increase in the gross profit margin. The increase in the gross profit margin reflected benefits from net price realization, offsetting inflationary cost impacts, lower instrument costs, software services gross margin gains, and favorable business mix. The overall change in foreign currency exchange rates on the gross profit margin was not significant.

Previous wording

Operating Expenses. Sales and marketing expense increased primarily due to higher travel and personnel-related costs. General and administrative expense increased primarily due to the comparison to the prior year benefit of a $16 million customer contract resolution gain and higher third-party costs. Research and development expense increased primarily due to project costs, including software development, and higher personnel-related costs. The overall change in foreign currency exchange rates was not significant to operating expense growth.

Current wording

Operating Expenses. Sales and marketing expense increased primarily due to higher travel costs. General and administrative expense increased primarily due to a $61.5 million expense related to an ongoing litigation matter, the comparison to the prior year benefit of a $16 million customer contract resolution gain, and higher outside service costs. Research and development expense increased primarily due to project costs and higher personnel-related costs. The overall change in foreign currency exchange rates was not significant to operating expense growth.

Previous wording

Revenue. The increase in revenue was due to higher realized pricesand higher volumes. The increase in volumes in U.S. and Europe was primarily from our Colilert test products and related accessories used in coliform and E. coli testing, which included a benefit in the current period from order timing delayed from the prior quarter, as well as higher Tecta instrument placements. Theoverall change in foreign currency exchange rates increased revenue growth by 0.2%.

Current wording

Revenue. The increase in revenue was due to higher realized pricesand higher volumes. The increase in volumes in U.S. and Europe was primarily from our Colilert test products and related accessories used in coliform and E. coli testing, which included a benefit in the first quarter from order timing delayed from the prior year, as well as higher Tecta instrument placements. Theoverall change in foreign currency exchange rates decreased revenue growth by 0.4%.

Previous wording

Operating Expenses. Sales and marketing expense increased primarily due to higher personnel-related costs. General and administrative expense increased primarily due to higher personnel-related costs and an increase in bad debt expense. Research and development expense increased primarily due to higher third-party costs. The overall change in foreign currency exchange rates was not significant to operating expense growth.

Current wording

Operating Expenses. Sales and marketing expense increased primarily due to higher personnel-related costs. General and administrative expense increased primarily due to an increase in bad debt expense and higher personnel-related costs. Research and development expense increased primarily due to higher outside service costs. The overall change in foreign currency exchange rates was not significant to operating expense growth.

Previous wording

Revenue. Revenue decreased primarily due to lower herd health screening levels in Asia Pacific, partially offset by higher realized prices and volume increases in the U.S. and Europe. Theoverall change in foreign currency exchange rates decreased revenue growth by 0.1%.

Current wording

Revenue. Revenue decreased primarily due to lower testing and herd health screening levels in Asia Pacific, partially offset by higher realized prices and volume increases in the U.S. and Europe. Theoverall change in foreign currency exchange rates decreased revenue growth by 0.8%.

Previous wording

Gross Profit. The increase in gross profit was primarily due to a 250 basis point increase in the gross profit margin. The increase in the gross profit margin was primarily due to lower product costs and higher realized prices, partially offset by unfavorable sales mix. Theoverall change in foreign currency exchange rates increased the gross profit margin by approximately 50 basis points, including the impact of hedge gains in the current year compared to hedge losses in the prior year.

Current wording

Gross Profit. The decrease in gross profit was primarily due to lower revenues and, to a lesser extent, a 10 basis point decrease in the gross profit margin. Theoverall change in foreign currency exchange rates increased the gross profit margin by approximately 60 basis points, including the impact of hedge gains during the current period compared to hedge losses during the prior period. Excluding the impact of foreign currency exchange rates, the decrease in the gross profit margin was primarily due to higher product costs and unfavorable sales mix, partially offset by higher realized prices.

Previous wording

Gross Profit. Gross profit decreased due to lower sales volume and an 800 basis point decrease in the gross profit margin. The decrease in the gross profit margin was primarily due to higher product and service costs, partially offset by higher realized prices. The overall change in foreign currency exchange rates did not have a significant impact on the gross profit margin.

Current wording

Gross Profit. Gross profit increased due to a 1,600 basis point increase in the gross profit margin, which offset lower revenue. The increase in the gross profit margin was primarily due to lower product costs, including a favorable comparison to prior-year costs associated with the discontinuation of OPTI COVID-19 PCR testing products, lower service costs, and higher realized prices. The overall change in foreign currency exchange rates did not have a significant impact on the gross profit margin.

Previous wording

Provision for Income Taxes. Our effective income tax rate was 20.3% for the three months ended March 31, 2024, compared to 20.0% for the three months ended March 31, 2023. The increase in our effective tax rate was primarily driven by geographical income mix, partially offset by an increase in the tax rate benefit related to share-based compensation.

Current wording

Provision for Income Taxes. Our effective income tax rate was 20.9% for the six months ended June 30, 2024, compared to 20.8% for the six months ended June 30, 2023. The increase in our effective tax rate was primarily driven by geographical income mix, partially offset by tax rate benefits related to research and development tax credits.

Previous wording

We fund the capital needs of our business through cash on hand, funds generated from operations, proceeds from long-term senior note financings, and amounts available under our Credit Facility. We generate cash primarily through the payments made by customers for our companion animal veterinary, livestock, poultry, dairy, and water products and services, consulting services, and other various systems and services. Our cash disbursements are primarily related to compensation and benefits for our employees, inventory and supplies, taxes, research and development, capital expenditures, rents, occupancy-related charges, interest expense, and business acquisitions. As of March 31, 2024, we had $397.4 million of cash and cash equivalents, compared to $453.9 million as of December 31, 2023. Working capital totaled $545.1 million as of March 31, 2024, compared to $543.7 million as of December 31, 2023. As of March 31, 2024, we had a remaining borrowing availability of $998.5 million under our $1.25 billion Credit Facility, with $250.0 million in outstanding borrowings under the Credit Facility. The general availability of funds under our Credit Facility is reduced by $1.5 million for outstanding letters of credit. We believe that, if necessary, we could obtain additional borrowings to fund our growth objectives. We further believe that current cash and cash equivalents, funds generated from operations, and committed borrowing availability will be sufficient to fund our operations, capital purchase requirements, and anticipated growth needs for the next twelve months. We believe that these resources, coupled with our ability, as needed, to obtain additional financing, will also be sufficient to fund our business as currently conducted for the foreseeable future. We may enter into new financing arrangements or refinance or retire existing debt in the future depending on market conditions. Should we require more capital in the U.S. than is generated by our operations, for example, to fund significant discretionary activities, we could elect to raise capital in the U.S. through the incurrence of debt or equity issuances, which we may not be able to complete on favorable terms or at all. In addition, these alternatives could result in increased interest expense or other dilution of our earnings.

Current wording

We fund the capital needs of our business through cash on hand, funds generated from operations, proceeds from long-term senior note financings, and amounts available under our Credit Facility. We generate cash primarily through the payments made by customers for our companion animal veterinary, livestock, poultry, dairy, and water products and services, consulting services, and other various systems and services. Our cash disbursements are primarily related to compensation and benefits for our employees, inventory and supplies, taxes, research and development, capital expenditures, rents, occupancy-related charges, interest expense, and business acquisitions. As of June 30, 2024, we had $401.6 million of cash and cash equivalents, compared to $453.9 million as of December 31, 2023. Working capital totaled $411.9 million as of June 30, 2024, compared to $543.7 million as of December 31, 2023. As of June 30, 2024, we had a remaining borrowing availability of $998.5 million under our $1.25 billion Credit Facility, with $250.0 million in outstanding borrowings under the Credit Facility. The general availability of funds under our Credit Facility is reduced by $1.5 million for outstanding letters of credit. We believe that, if necessary, we could obtain additional borrowings to fund our growth objectives. We further believe that current cash and cash equivalents, funds generated from operations, and committed borrowing availability will be sufficient to fund our operations, capital purchase requirements, and anticipated growth needs for the next twelve months. We believe that these resources, coupled with our ability, as needed, to obtain additional financing, will also be sufficient to fund our business as currently conducted for the foreseeable future. We may enter into new financing arrangements or refinance or retire existing debt in the future depending on market conditions. Should we require more capital in the U.S. than is generated by our operations, for example, to fund significant discretionary activities, we could elect to raise capital in the U.S. through the incurrence of debt or equity issuances, which we may not be able to complete on favorable terms or at all. In addition, these alternatives could result in increased interest expense or other dilution of our earnings.

Previous wording

Of the $397.4 million of cash and cash equivalents held as of March 31, 2024, approximately $145.7 million washeld as bank deposits at a diversified group of institutions, primarily systemically important banks, and $251.7 million was held in a U.S. government money market fund. As of December 31, 2023, of the $453.9 million of cash and cash equivalents held, $163.1 million was held as bank deposits at a diversified group of institutions, primarily systemically important banks, and $290.8 million was held in a U.S. government money market fund. Cash and cash equivalents as of March 31, 2024, included approximately USD $1.0 million in cash denominated in non-U.S. currencies held in a country with currency control restrictions, which limit our ability to transfer funds outside of the country in which they are held. The currency control restricted cash is generally available for use within the country where it is held.

Current wording

Of the $401.6 million of cash and cash equivalents held as of June 30, 2024, approximately $151.7 million washeld as bank deposits at a diversified group of institutions, primarily systemically important banks, and $249.8 million was held in a U.S. government money market fund. As of December 31, 2023, of the $453.9 million of cash and cash equivalents held, $163.1 million was held as bank deposits at a diversified group of institutions, primarily systemically important banks, and $290.8 million was held in a U.S. government money market fund. Cash and cash equivalents as of June 30, 2024, included approximately USD $1.0 million in cash denominated in non-U.S. currencies held in a country with currency control restrictions, which limit our ability to transfer funds outside of the country in which they are held. The currency control restricted cash is generally available for use within the country where it is held.

Previous wording

(2) Inventory turns represent inventory-related cost of product revenue for the 12 months preceding each quarter-end divided by the average inventory balances at the beginning and end of each quarter.

Current wording

(2) Inventory turns are calculated as the ratio of four times our inventory-related cost of revenue for the quarter, divided by the average inventory balances at the beginning and end of each quarter.

Previous wording

Operating Activities. Cash provided by operating activities during the three months ended March 31, 2024, increased $14.7 million, compared to the same period in the prior year, primarily due to an increase in net income and less cash used for inventory, partially offset by an increase in cash used for other assets and liabilities and for accounts receivable. The following table presents cash flow impacts from changes in operating assets and liabilities:

Current wording

Operating Activities. Cash provided by operating activities during the six months ended June 30, 2024, increased $62.7 million, compared to the same period during the prior year, primarily due to the non-cash operating expense recorded as an accrued liability related to an ongoing litigation matter during the second quarter of 2024, as well as less cash used for inventory, partially offset by higher accounts receivables. The following table presents cash flow impacts from changes in operating assets and liabilities:

Previous wording

Cash used due to changes in operating assets and liabilities during the three months ended March 31, 2024, compared to the same period in the prior year, increased $10.8 million. The decrease in cash used by inventories was primarily due to planned inventory growth in the prior year to mitigate supply chain risks and support demand. The increase in cash used for other assets and liabilities was primarily due to higher annual employee incentive program payments in the current period, as compared to the same period in the prior year, and higher income taxes paid in the current year, compared to the same period in the prior year. These increases in cash used were partially offset by the $15.0 million milestone payment to license intellectual property made in the prior year. The increase in cash used by accounts receivable was primarily due to higher revenue growth during the current period and, to a lesser extent, to extended payment terms negotiated by certain large customers.

Current wording

Cash provided by changes in operating assets and liabilities during the six months ended June 30, 2024, compared to the same period during the prior year, increased $63.2 million. The change in other assets and liabilities was primarily due to higher non-cash operating expenses recorded as accrued liabilities, including a $61.5 million accrual charge related to an ongoing litigation matter recorded in the second quarter of 2024. This charge in other assets and liabilities was partially offset by higher annual employee incentive program payments during the current period, compared to the same period during the prior year and by an increase in consideration paid to customers. These increases in cash provided during the current period, compared to the prior year, also included a comparative benefit from the use of cash during the prior year for a $15.0 million milestone payment to license intellectual property. The decrease in cash used by inventories was primarily due to planned inventory growth during the prior year to mitigate supply chain risks and support demand. The increase in cash used by accounts receivable was primarily due to higher revenue during the current period and an increase in days sales outstanding, in part due to extended payment terms negotiated by certain large customers.

Previous wording

Investing Activities. Cash used by investing activities was $106.9 million during the three months ended March 31, 2024, compared to $39.5 million for the same period in the prior year. The increase in cash used by investing activities was primarily due to the acquisition of a software business in the current year.

Current wording

Investing Activities. Cash used by investing activities was $139.9 million during the six months ended June 30, 2024, compared to $67.0 million for the same period during the prior year. The increase in cash used by investing activities was primarily due to the acquisition of a software business during the current year.

Previous wording

Financing Activities. Cash used by financing activities was $144.1 million during the three months ended March 31, 2024, compared to $146.1 million of cash used for the same period in the prior year. The decrease in cash used by financing activities was primarily due to no net borrowings or repayments under our Credit Facility in the current year, compared to repayments of $147.5 million under our Credit Facility in the prior year, as well as higher proceeds from exercises of stock options in the current year. These comparative increases in cash were partially offset by $154.8 million of repurchases of our common stock in the current year, compared to no repurchases in the prior year.

Current wording

Financing Activities. Cash used by financing activities was $354.3 million during the six months ended June 30, 2024, compared to $297.1 million of cash used for the same period during the prior year. The increase in cash used was primarily due to $370.3 million of repurchases of our common stock during the current year, compared to no repurchases during the prior year. This increase was partially offset by no net borrowings or repayments under our Credit Facility during the current year, compared to repayments of $315.0 million under our Credit Facility during the prior year.

Previous wording

During the three months ended March 31, 2024, we purchased $154.8 million of shares of our common stock. During the three months ended March 31, 2023, we purchased no shares of our common stock. We believe that the repurchase of our common stock is a favorable means of returning value to our stockholders, and we also repurchase our stock 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 and deployment activities, as well as share price and prevailing interest rates. Refer to Note 12 to the unaudited condensed consolidated financial statements in “Part I. Item 1. Financial Statements” of this Quarterly Report on Form 10-Q for additional information about our share repurchases.

Current wording

We believe that the repurchase of our common stock is a favorable means of returning value to our stockholders, and we also repurchase our stock 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 and deployment activities, as well as share price and prevailing interest rates. Refer to Note 12 to the unaudited condensed consolidated financial statements in “Part I. Item 1. Financial Statements” of this Quarterly Report on Form 10-Q for additional information about our share repurchases.

Previous wording

Under our Credit Facility, the net activity during the three months ended March 31, 2024, as compared to the same period in the prior year, increased cash $147.5 million. As of March 31, 2024, we had $250.0 million in outstanding borrowings under the Credit Facility. The obligations under our 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 (“ERISA”), 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 financial covenant is a consolidated leverage ratio test.

Current wording

As of June 30, 2024, we had $250.0 million in outstanding borrowings under the Credit Facility. The obligations under our 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 (“ERISA”), 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 financial covenant is a consolidated leverage ratio test.

Previous wording

The aggregate principal amounts of our 2024 Series B Notes will become due and payable on July 21, 2024, and we anticipate paying off our 2024 Series B Notes for $75.0 million when due in July 2024 with available cash on hand.

Current wording

On July 22, 2024, we paid off the aggregate principal amount of our $75 million 2024 Series B Notes with cash on hand. We anticipate paying off the aggregate principal amounts of our €88.9 million 2025 Series C Notes, which will become due and payable on June 18, 2025, with available cash on hand at time of payment.