Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [    ]

           Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

           As of March 31, 2002, 33,949,514 shares of the registrant's Common Stock, $.10 par value, were outstanding.

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           This Quarterly Report on Form 10-Q includes certain forward-looking statements about the business of IDEXX Laboratories, Inc. and its subsidiaries (the "Company"). Such forward-looking statements are subject to risks and uncertainties that could cause the Company's actual results to vary materially from those indicated in such forward-looking statements. These risks and uncertainties are discussed in more detail in the section captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 2 of Part I of this report.

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The accompanying notes are an integral part of these consolidated financial statements.

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The accompanying notes are an integral part of these consolidated financial statements.

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The accompanying notes are an integral part of these consolidated financial statements.

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           The accompanying unaudited, consolidated financial statements of IDEXX Laboratories, Inc. ("IDEXX" or the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the requirements of Form 10-Q.

           The accompanying interim consolidated financial statements reflect, in the opinion of the Company's management, all adjustments necessary for a fair presentation of the financial position and results of operations. The results of operations for the three months ended March 31, 2002 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the Company's 2001 Annual Report on Form 10-K filed with the Securities and Exchange Commission.

           The Company has reclassified prior year amounts to conform to current year presentation.

           In July 2001, the FASB issued SFAS No. 141, "Business Combinations" ("SFAS No. 141"), and SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142"). SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. SFAS No. 142 changes the accounting for purchased goodwill from an amortization method to an impairment-only approach. Therefore amortization of all purchased goodwill, including amortization of goodwill recorded in past business combinations will cease upon adoption of SFAS No. 142. SFAS No. 142 is effective for fiscal years beginning after December 15, 2001. Early adoption of the SFAS No. 142 was not permitted nor is retroactive application to prior period (interim or annual) financial statements. The Company has assessed the provisions of SFAS No. 142 effective January 1, 2002 and ceased amortizing goodwill. The Company will assess the impact of initial impairment in the second quarter of 2002.

           Net income and earnings per share for the quarter ended March 31, 2001 adjusted to exclude amortization expense of goodwill (net of taxes) is as follows:

           The Company currently does not expect to record an impairment charge upon completion of the initial impairment review. However, there can be no assurance that at the time the review is complete a material charge will not be recorded.

           In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets" ("SFAS No. 144"). Adoption of SFAS No. 144 is required for fiscal years beginning after December 15, 2001. The Company adopted the provisions of SFAS No. 144, effective January 2002. The adoption of SFAS No. 144 had no material impact on the consolidated financial statements.

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           Inventories include material, labor and overhead, and are stated at the lower of cost (first-in, first-out) or market. The components of inventories are as follows (in thousands):

4.        Comprehensive Income (in thousands):

           The following is a reconciliation of shares outstanding for basic and diluted earnings per share (in thousands):

           Options to purchase 1,568,000 and 787,000 shares for 2001 and 2002, respectively, and warrants to purchase 806,000 shares have been excluded from the calculation of shares outstanding for diluted earnings per share because they were anti-dilutive.

           From time to time, the Company has received notices alleging that the Company's products infringe third-party proprietary rights. In particular, the Company has received notices claiming that certain of the Company's immunoassay products infringe third-party patents, although the Company is 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 the Company will prevail in any infringement proceedings that have been or may be commenced against the Company.

           The Company conducts business principally in three major operating segments. The Company's operating segments include the Companion Animal Group ("CAG"), the Food and Environmental Group ("FEG") and other. The separate financial information of each segment is presented consistent with the way results are regularly evaluated by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

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           The CAG develops, designs, and distributes products and performs services for veterinarians. The CAG also manufactures certain biology-based test kits for veterinarians. The FEG develops, designs, manufactures and distributes products to detect disease and contaminants in food animals, food and water. Both the CAG and FEG distribute products and services worldwide. Other is primarily comprised of corporate research and development, CEO succession charge (See Note 9), and interest income.

           The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies in the Company's Annual Report on Form 10-K except that most interest income and expense are not allocated to individual operating segments and income taxes are provided on each segment using the overall effective tax rate.

           The following is the segment information (in thousands):

           The Company's Board of Directors has approved the repurchase of up to ten million shares of the Company's Common Stock. The Company may make such purchases in the open market or in negotiated transactions. During the three months ended March 31, 2002, the Company did not repurchase any shares. From the inception of the program to March 31, 2002, the Company had purchased 7,614,000 shares for $147.5 million.

           In January 2002, the Company's Founder, Chairman and Chief Executive Officer was succeeded by its current Chairman and Chief Executive Officer. Under an employment agreement, the Company is required to make certain payments to its former Chief Executive Officer and provide certain benefits to him following this succession. During the three months ending March 31, 2002, the Company incurred a pre-tax charge of $2.9 million, $1.8 million of which was non-cash, related to this agreement.

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           We operate primarily through two business segments: the Companion Animal Group ("CAG") and the Food and Environmental Group ("FEG"). CAG comprises our veterinary diagnostic products and services, veterinary pharmaceuticals business, and veterinary information products and services. FEG comprises our services and products for water and dairy testing and our production animal services business.

           The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. 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. On an on-going basis, we evaluate our estimates, including those related to customer programs and incentives, product returns, bad debts, inventories, investments, intangible assets, income taxes, warranty obligations, restructuring and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed 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 under different assumptions or conditions.

           We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

           Our inventories include material, labor and overhead, and are stated at the lower of cost (first-in, first-out) or market. We write down inventory for estimated obsolescence based upon assumptions about future demand and market conditions, which may negatively affect our ability to dispose of inventory. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required, which would have a negative effect on our results of operations.

           Our inventories as of March 31, 2002 included $8.5 million of raw materials associated with our nitazoxanide product in registration with the FDA, of which $8.4 million will expire and become unusable in 2004 and the remainder has no expiration date. We have completed manufacturing and efficacy components of our submission to the FDA. We have completed additional safety studies requested by the FDA with respect to this product and have submitted the results of these studies to the FDA. We believe that the product is approvable by the FDA and that this inventory will be saleable upon such approval. If this product is not approved by the FDA, we believe we have the ability to recoup a substantial portion of our costs through alternative future uses of the material or other means. We have provided reserves to cover estimated potential losses in this scenario. However, we cannot provide assurance that the FDA will approve this product or, if approval is not obtained, that our current estimates of recovery of our investment in this inventory will not change.

           Our inventories include $33.0 million of slides used in our chemistry instruments, which represents approximately 1.3 turns based on recent historical usage. These slides have a shelf life of 24 months at the date of manufacture. The average remaining shelf life at March 31, 2002 was 16.5 months. In addition, we are required to purchase $276.3 million of slides over the remaining nine years of our contract with Ortho-Clinical Diagnostics, Inc. We believe the demand for these slides is at a level sufficient to ensure that we will not incur a loss on the inventory or the contract. However, a reduction in the demand for slides could cause us to incur a loss related to our slide inventory or purchase commitments at a future date.

           As of March 31, 2002, our inventories included $6.9 million of component parts associated with our LaserCyte hematology instrument, which is in the final stages of development. In addition, we have placed $0.8 million in deposits with vendors to secure additional critical components and we have firm purchase commitments of an additional $5.5 million. We expect to launch this product in the second half of 2002 and to fully realize our investment and purchase commitments. However, if we are unable to introduce this product, or if we alter the final design, we may be required to write off a certain amount of the associated inventory.

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           The nitazoxanide, chemistry slides and LaserCyte products are included in our CAG segment.

           We assess the impairment of identifiable intangibles, long-lived assets and goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors we consider important that could trigger an impairment review include but are not limited to the following:

           When we determine that the carrying value of intangibles, long-lived assets and goodwill may not be recoverable based on a change in events and circumstances discussed above, we measure any impairment based on factors such as projected cash flows. Net intangible assets and goodwill amounted to $55.0 million as of March 31, 2002, consisting of $24.5 million related to veterinary laboratories (of which $24.1 million represents goodwill), $14.6 million related to water test products (of which $12.0 represents goodwill), $14.6 million related to veterinary pharmaceutical products (of which $13.7 million represents goodwill) and $1.3 million of other (of which $0.9 million represents goodwill).

           In 2002, Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets", became effective and as a result, we ceased to amortize approximately $50.9 million of goodwill. We had recorded approximately $1.3 million of amortization on these amounts during the quarter ended March 31, 2001 and would have recorded approximately $1.1 million of amortization during the same period in 2002, if the existing standards had been continued. In lieu of amortization, we are required to perform an initial impairment review of our goodwill in 2002 and an annual impairment review thereafter. We expect to complete our initial review during the second quarter of 2002.

           Net income and earnings per share for the quarter ended March 31, 2001 adjusted to exclude amortization expense of goodwill (net of taxes) is as follows:

           We currently do not expect to record an impairment charge upon completion of the initial impairment review. However, there can be no assurance that at the time the review is completed a material impairment charge will not be recorded.

           We recognize product revenue at the time of shipment (including to distributors) for substantially all products except software licenses and hardware systems. We recognize revenue from non-cancelable software licenses and hardware systems upon installation and customer acceptance of the software because at this time collection is probable and we have no significant further obligations after installation. Our distributors do not have the right to return products. Service revenue is recognized at the time the service is performed. Maintenance revenue is billed in advance and recognized over the life of the contracts, usually one year or less. Certain instrument systems are sold to a third-party finance company that leases these systems to its customers with a right-of-return privilege. We allow the third-party finance company to return these instruments to us for a partial refund based on the time from product return to end of lease term. Therefore we recognize revenue under these contracts over the term of the underlying customer lease contract. We lease certain instruments directly to customers and recognize revenues from those leases over the terms of those leases. We record estimated reductions to revenue in connection with customer programs and incentive offerings, which may give customers future rights such as free or discounted goods or services or trade-in rights.

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           We account for income taxes under SFAS No. 109, "Accounting for Income Taxes". This statement requires that we recognize a current tax liability or asset for current taxes payable or refundable and a deferred tax liability or asset for the estimated future tax effects of temporary differences 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 have considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the 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, an adjustment to the deferred tax asset 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, an adjustment to the deferred tax asset would be charged to income in the period such determination was made.

           We do not provide for U.S. income taxes on earnings of our subsidiaries outside of the U.S. Our intention is to reinvest these earnings permanently or to repatriate the earnings only when tax-effective to do so. It is not practical to estimate the amount of additional taxes that might be payable upon repatriation of foreign earnings; however, we believe that U.S. foreign tax credits would largely eliminate any U.S. taxes or offset any foreign withholding taxes.

           We provide for the estimated cost of product warranties at the time revenue is recognized. Although we engage in extensive product quality programs and processes, our warranty obligation is affected by product failure rates and service delivery costs incurred in correcting a product failure. Should actual product failure rates or service delivery costs differ from our estimates, which are based on historical data and engineering estimates, where applicable, revisions to the estimated warranty liability would be required.

           In the second half of 2002, we expect to introduce the LaserCyte system. We expect that sales of this system will cause warranty expense to increase significantly in 2002. We will charge warranty expense to the cost of LaserCyte sales based upon our experience with instrument sales and engineering information about the system. Should actual warranty expense exceed our estimates, our cost of sales of LaserCyte systems would increase.

           As of March 31, 2002 our U.S. veterinary diagnostic product distributors were holding $18.3 million of inventory, or approximately six weeks based on projected future sales. These distributors were carrying $21.8 million, or approximately eight weeks, of inventory as of March 31, 2001 and $22.5 million, or approximately eight weeks, of inventory as of December 31, 2001.

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           Gross profit as a percent of CAG's revenue decreased to 41% from 46% in 2001. The decrease was attributable primarily to unfavorable variances and to the unfavorable product mix associated with the reduction in distributor inventory. The unfavorable variances were a result of a charge for VetTest and QBCâ VetAutoreadä instruments and related parts due to a continuing review of realizability. These are not expected to recur in future reporting periods. The unfavorable product mix occurred because the reduction in distributor inventories had a disproportionate impact on sales of higher gross margin canine and feline test kits.

           Operating expenses relating to CAG decreased $3.0 million, or 11% to $23.7 million from $26.7 million in 2001. The decrease was attributable primarily to the discontinuation of goodwill amortization in accordance with SFAS No. 142 and a decrease in marketing expenses from the first quarter of 2001, which included expenses associated with the launch of ACAREXX.

           Gross profit as a percent of FEG's revenue remained unchanged at 57%. Increased margin percentage attributable to water testing products was offset by decreased margins on livestock testing products.

           Operating expenses relating to FEG decreased $0.1 million, or 2% to $5.4 million from $5.5 million in 2001. The decrease was attributable primarily to lower marketing expenses in Production Animal Services.

           In January 2002, our Founder, Chairman and Chief Executive Officer, was succeeded by our current Chairman and Chief Executive Officer. Under an employment agreement, we are required to make certain payments to our former Chief Executive Officer and provide certain benefits to him following this succession. During the three months ended March 31, 2002, we incurred a pre-tax charge of $2.9 million, $1.8 million of which was non-cash, related to this agreement.

           Net interest income was $0.6 million for the quarter ended March 31, 2002 compared with $0.7 million for the same period in the prior year. The decrease in interest income was due to lower effective interest rates, partially offset by higher invested cash balances.

           Our effective tax rate was 34% for the three month period ended March 31, 2002 compared with 36% for the three month period ended March 31, 2001. The reduction in the effective tax rate was due to the elimination of non-deductible goodwill associated with the adoption of SFAS No. 142 and, to a lesser extent, the continued realization of tax benefits resulting from business operations in jurisdictions with lower effective income tax rates.

           In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141, "Business Combinations" ("SFAS No. 141"). SFAS No. 141 requires all business combinations initiated after June 30, 2001 to be accounted for using the purchase method.

           In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142"). We adopted the requirements of SFAS No. 142 effective January 1, 2002. SFAS No. 142 requires companies to test all goodwill for impairment and to cease amortization of this asset. The provisions of SFAS No. 142 apply to all goodwill regardless of when it was acquired. The impact of adoption of this standard is disclosed in "Critical Accounting Policies" above.

           In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets" ("SFAS No. 144"). Adoption of the standard was required no later than the first quarter of 2002. We adopted SFAS No. 144 effective January 2002.

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           At March 31, 2002, we had $96.9 million of cash, cash equivalents and short-term investments (of which $7.0 million was restricted) and working capital of $172.0 million. As of March 31, 2002, we had long-term investments of $25.9 million.

           We have entered into a $20.0 million uncommitted line of credit with a large multi-national bank. Under the terms of this agreement the bank retains the right to approve all borrowings and all borrowings are due on demand. Any borrowings under this line will bear interest at the bank's prime rate. There were no loans outstanding under this agreement at March 31, 2002.

           We purchased approximately $3.8 million in fixed assets during the quarter ended March 31, 2002, principally related to the CAG segment. Our total capital budget for 2002 is approximately $17.0 million. Cash provided by operating activities was $24.5 million during the quarter ended March 31, 2002. Cash of $12.3 million was provided by accounts payable for contractual supply agreements related to instrument consumables. In the first quarter of 2001, net income was $7.6 million and cash used by operating activities was $7.0 million, compared to net income of $7.2 million and cash provided by operating activities of $24.5 million for the current year. The differences in operating cash flow represents changes in current assets and liabilities.

           In April 2002 the Company paid $7.5 million in notes payable, of which $7.0 was paid from restricted cash.

           During 1999 and 2000, the Board of Directors authorized the purchase of up to ten million shares of our Common Stock in the open market or in negotiated transactions. As of March 31, 2002, approximately 7,614,000 cumulative shares had been repurchased under this program.

           We believe that current cash, short-term investments, long-term investments, debt facilities and funds generated from operations will be sufficient to fund our operations for the foreseeable future.

           The future operating results of IDEXX involve a number of risks and uncertainties. Actual events or results may differ materially from those discussed in this report. Factors that could cause or contribute to such differences include, but are not limited to, the factors discussed below as well as those discussed elsewhere in this report.

           The rate of growth of sales of certain of our products has declined over the past several years. To increase our growth rate, we will need to successfully implement strategies, including:

           However, we may not be able to successfully implement some or all of these strategies and increase our growth rate.

           We face intense competition within the markets that we sell our products and services. We expect that future competition will become even more intense, and that we will have to compete with changing and improving technologies.

           Some of our competitors and potential competitors, including large pharmaceutical companies, have substantially greater capital, manufacturing, marketing and research and development resources than us.

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           In the U.S., the manufacture and sale of our products are regulated by agencies such as the USDA, FDA and EPA. Compliance with regulations of such government agencies can be cumbersome and expensive. For example, commercialization of animal health pharmaceuticals requires submission of substantial clinical, manufacturing and other data to the FDA. Regulatory approval for products submitted to the FDA may take several years and following approval, the FDA continues to regulate all aspects of the manufacture, labeling, storage, record keeping and promotion of pharmaceutical products.

           Foreign regulatory bodies often establish product standards different from those in the United States, and designing products in compliance with such foreign standards may be difficult or expensive.

           Delays in obtaining, or the failure to obtain, any necessary regulatory approvals could have a material adverse effect on our results of operations. Further, any failure to comply with regulatory requirements relating to the manufacture and sale of our products could result in fines and sanctions against us and also could have a negative effect on the sale of our products and services.

           Factors such as the introduction and market acceptance of new products and services, the mix of products and services sold and the mix of domestic versus international revenue could negatively impact our future operating results.

           Since we sell many of our products through distributors, changes in distributors' purchasing patterns could result in lower revenue for us because our revenue for each quarter is usually generated from orders received during that quarter. Our financial performance, therefore, is subject to an unexpected downturn in product demand and may be unpredictable.

           Our expense levels are based in part on expectations of future revenue levels. Therefore, a loss in expected revenue could result in a disproportionate decrease in our net income.

           We rely on a combination of patent, trade secret, trademark and copyright law to protect our proprietary rights. If we do not have adequate protection of our proprietary rights, our business may be affected by competitors who develop substantially equivalent technologies that compete with us.

           We cannot assure that we will obtain issued patents, that any patents issued or licensed to us will remain valid, or that any patents owned or licensed by us will provide protection against competitors with similar technologies. We also cannot assure that our non-disclosure agreements will provide protection for our trade secrets and other proprietary information.

           Moreover, in the past we have received notices claiming that our products infringe third-party patents and we may receive such notices in the future. Patent litigation is complex and expensive and the outcome of patent litigation can be difficult to predict. We cannot assure that we will win a patent litigation case. If we lose, we may be stopped from selling certain products and/or we may be required to pay damages as a result of the lawsuit.

           We currently purchase certain products and materials from single sources or a limited number of sources. Some of the products that we purchase from these sources are proprietary, and therefore may not be available from other sources. These products include our chemistry and hematology analyzers and related consumables, active ingredients for pharmaceutical products and certain components of our SNAPâ devices. If we are unable to obtain adequate quantities of these products in the future, then we could face cost increases or reductions or delays in product shipments, which could have a material adverse effect on our results of operations.

           Various risks associated with foreign operations may impact our international sales. Possible risks include disruptions in transportation of our products, the differing product and service needs of foreign customers, difficulties in building and managing foreign operations, fluctuations in the value of foreign currencies, import/export duties and quotas, and unexpected regulatory, economic or political changes in foreign markets.

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           The Company's financial market risk consists primarily of foreign currency exchange risk. The Company operates subsidiaries in 13 foreign countries and transacts business in local currencies. The Company attempts to hedge its cash flow on intercompany sales to minimize foreign currency exposure.

           The primary purpose of the Company's foreign currency hedging activities is to protect against the volatility associated with foreign currency transactions. Corporate policy prescribes the range of allowable hedging activity. The Company primarily utilizes forward exchange contracts and options with a duration of less than 12 months. Gains and losses related to qualifying hedges of foreign currency from commitments or anticipated transactions are deferred in prepaid expenses or accruals and are included in the basis of the underlying transaction.

           Based on the Company's overall currency rate exposure at March 31, 2002, including derivative and other foreign currency sensitive instruments, a 5% change in exchange rate balances denominated in foreign currencies which are not the functional currency would not have a material impact on the results of operation. However, the effects of a 5% change in exchange rates, if not offset by hedge contracts or related price adjustments would have a material impact on the results of operations.

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           Pursuant to the requirements 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.

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