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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION 
WASHINGTON, D.C. 20549 
FORM 10-Q 
 
(Mark One) 
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the quarterly period ended March 31, 2022
OR 
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the transition period from _______________ to _______________. 
  
COMMISSION FILE NUMBER: 000-19271 

idxx-20220331_g1.jpg
  IDEXX LABORATORIES, INC. 
(Exact name of registrant as specified in its charter) 
Delaware01-0393723
(State or other jurisdiction of incorporation 
or organization)
(IRS Employer Identification No.)
One IDEXX Drive WestbrookMaine04092
(Address of principal executive offices)(ZIP Code)
207-556-0300
(Registrant’s telephone number, including area code)

Securities Registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.10 par value per shareIDXXNASDAQ Global Select Market
    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 ý No ¨


    Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No  ¨

    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 
Large Accelerated Filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. The number of shares outstanding of the registrant’s Common Stock, $0.10 par value per share, was 84,007,233, on April 29, 2022.


GLOSSARY OF TERMS AND SELECTED ABBREVIATIONS

    In order to aid the reader, we have included certain terms and abbreviations used throughout this Quarterly Report on Form 10-Q below:
Term / Abbreviation
 
Definition
 
AOCIAccumulated other comprehensive income or loss
CAGCompanion Animal Group, a reporting segment that provides veterinarians diagnostic products and services and information management solutions that enhance the health and well-being of pets.
Credit FacilityOur $1 billion unsecured revolving credit facility, also referred to as line of credit.
Clinical visitsThe reason for the visit involves an interaction between a clinician and a pet.
FASBU.S. Financial Accounting Standards Board
LPDLivestock, Poultry and Dairy, a reporting segment that provides diagnostic products and services for livestock and poultry health and to ensure the quality and safety of milk and improve producer efficiency.
OPTI Medical
OPTI Medical Systems, Inc., a wholly-owned subsidiary of IDEXX Laboratories Inc., located in Roswell, Georgia. This business provides point-of-care and laboratory diagnostics (including electrolyte and blood gas analyzers and related consumable products) for the human medical diagnostics sector, as well as COVID-19 testing products and services. The Roswell facility also manufactures electrolytes slides (instrument consumables) to run Catalyst One®, Catalyst Dx®, and blood gas analyzers and consumables for the veterinary sector; also referred to as OPTI. OPTI Medical is reported in our Other operating segment.
Organic revenue growthA non-GAAP financial measure and represents the percentage change in revenue, 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.
PCRPolymerase chain reaction, a technique used to amplify small segments of DNA
R&DResearch and Development
Reported revenue growthRepresents the percentage change in revenue reported in accordance with U.S. GAAP, as compared to the same period in the prior year.
SaaSSoftware-as-a-service
SECU.S. Securities and Exchange Commission
Senior Note AgreementsNote purchase agreements for the private placement of senior notes, referred to as senior notes or long-term debt.
U.S. GAAPAccounting principles generally accepted in the United States of America
WaterWater, a reporting segment that provides water microbiology testing products.



IDEXX LABORATORIES, INC. 
Quarterly Report on Form 10-Q 
Table of Contents 

  
Item No. Page
  
PART I—FINANCIAL INFORMATION 
 
PART II—OTHER INFORMATION
 





PART I— FINANCIAL INFORMATION 
Item 1.  Financial Statements.  
IDEXX LABORATORIES, INC. AND SUBSIDIARIES 

CONDENSED CONSOLIDATED BALANCE SHEETS 
(in thousands, except per share amounts) 
(Unaudited)

March 31, 2022December 31, 2021
ASSETS  
Current Assets:  
Cash and cash equivalents$204,618 $144,454 
Accounts receivable, net402,235 368,348 
Inventories301,638 269,030 
Other current assets181,281 173,823 
Total current assets1,089,772 955,655 
Long-Term Assets:
Property and equipment, net593,457 587,667 
Operating lease right-of-use assets107,736 105,101 
Goodwill360,968 359,345 
Intangible assets, net105,188 99,035 
Other long-term assets335,568 330,400 
Total long-term assets1,502,917 1,481,548 
TOTAL ASSETS$2,592,689 $2,437,203 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable$120,881 $116,140 
Accrued liabilities409,555 458,909 
Line of credit400,000 73,500 
Current portion of long-term debt— 74,996 
Current portion of deferred revenue40,905 40,034 
Total current liabilities971,341 763,579 
Long-Term Liabilities:
Deferred income tax liabilities7,461 8,935 
Long-term debt, net of current portion773,381 775,205 
Long-term deferred revenue, net of current portion39,229 41,174 
Long-term operating lease liabilities 89,631 87,377 
Other long-term liabilities71,848 70,941 
Total long-term liabilities981,550 983,632 
Total liabilities1,952,891 1,747,211 
Commitments and Contingencies (Note 16)
Stockholders’ Equity:
Common stock, $0.10 par value: Authorized: 120,000 shares; Issued: 107,003 shares in 2022 and 106,878 shares in 2021; Outstanding: 84,164 shares in 2022 and 84,562 shares in 2021
10,700 10,688 
Additional paid-in capital1,400,025 1,377,320 
Deferred stock units: Outstanding: 90 units in 2022 and 90 units in 2021
5,765 5,719 
Retained earnings3,114,405 2,920,440 
Accumulated other comprehensive loss(47,348)(53,484)
Treasury stock, at cost: 22,839 shares in 2022 and 22,317 shares in 2021
(3,843,749)(3,570,691)
Total stockholders’ equity639,798 689,992 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$2,592,689 $2,437,203 
The accompanying notes are an integral part of these condensed consolidated financial statements.
3

IDEXX LABORATORIES, INC. AND SUBSIDIARIES 
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME 
(in thousands, except per share amounts) 
(Unaudited)  

For the Three Months Ended March 31,
20222021
Revenue:
Product revenue$478,377 $454,348 
Service revenue358,172 323,359 
Total revenue836,549 777,707 
Cost of Revenue:
Cost of product revenue162,071 147,270 
Cost of service revenue175,725 159,655 
Total cost of revenue337,796 306,925 
Gross profit498,753 470,782 
Expenses:
Sales and marketing132,292 114,811 
General and administrative77,949 70,770 
Research and development40,168 37,579 
Income from operations248,344 247,622 
Interest expense(6,996)(7,584)
Interest income143 52 
Income before provision for income taxes241,491 240,090 
Provision for income taxes47,526 35,801 
Net income193,965 204,289 
Less: Net income attributable to noncontrolling interest— 32 
Net income attributable to IDEXX Laboratories, Inc. stockholders$193,965 $204,257 
Earnings per Share:
Basic$2.30 $2.39 
Diluted$2.27 $2.35 
Weighted Average Shares Outstanding:
Basic84,410 85,530 
Diluted85,564 86,917 
The accompanying notes are an integral part of these condensed consolidated financial statements.

4

IDEXX LABORATORIES, INC. AND SUBSIDIARIES 
 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 
(in thousands) 
(Unaudited) 
For the Three Months Ended March 31,
20222021
Net income$193,965 $204,289 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments3,277 (19,333)
Unrealized gain (loss) on Euro-denominated notes, net of tax expense (benefit) of $439 in 2022 and $1,150 in 2021
1,409 3,648 
Unrealized gain (loss) on investments, net of tax expense (benefit) of $(5) in 2022 and $46 in 2021
(17)147 
Unrealized gain (loss) on derivative instruments:
Unrealized gain on foreign currency exchange contracts, net of tax expense (benefit) of $1,436 in 2022 and $1,249 in 2021
2,097 4,415 
Unrealized gain on cross currency swaps, net of tax expense (benefit) of $311 in 2022 and $1,043 in 2021
996 3,308 
Reclassification adjustment for loss (gain) included in net income, net of tax benefit (expense) of $(610) in 2022 and $536 in 2021
(1,626)1,894 
Unrealized gain on derivative instruments1,467 9,617 
Other comprehensive gain (loss), net of tax6,136 (5,921)
Comprehensive income200,101 198,368 
Less: Comprehensive income attributable to noncontrolling interest— 32 
Comprehensive income attributable to IDEXX Laboratories, Inc.$200,101 $198,336 
The accompanying notes are an integral part of these condensed consolidated financial statements.

5

IDEXX LABORATORIES, INC.  AND SUBSIDIARIES 
 
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except per share amounts) 
(Unaudited)  
Common Stock
Number of Shares
$0.10 Par Value
Additional Paid-in CapitalDeferred Stock UnitsRetained EarningsAccumulated Other Comprehensive (Loss) IncomeTreasury StockNoncontrolling InterestTotal Stockholders’ Equity
Balance December 31, 2021106,878 $10,688 $1,377,320 $5,719 $2,920,440 $(53,484)$(3,570,691)$— $689,992 
Net income— — — — 193,965 — — — 193,965 
Other comprehensive income, net— — — — — 6,136 — — 6,136 
Repurchases of common stock, net— — — — — — (273,058)— (273,058)
Common stock issued under stock plans, including excess tax benefit125 12 11,583 (5)— — — — 11,590 
Share-based compensation cost— — 11,122 51 — — — — 11,173 
Balance March 31, 2022107,003 $10,700 $1,400,025 $5,765 $3,114,405 $(47,348)$(3,843,749)$— $639,798 
Balance December 31, 2020106,457 $10,646 $1,294,849 $4,503 $2,175,595 $(53,615)$(2,799,890)$707 $632,795 
Net income— — — — 204,257 — — 32 204,289 
Other comprehensive loss, net— — — — — (5,921)— — (5,921)
Repurchases of common stock, net— — — — — — (154,033)— (154,033)
Common stock issued under stock plans, including excess tax benefit219 22 17,408 — — — — — 17,430 
Share-based compensation cost— — 8,829 46 — — — — 8,875 
Balance March 31, 2021106,676 $10,668 $1,321,086 $4,549 $2,379,852 $(59,536)$(2,953,923)$739 $703,435 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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IDEXX LABORATORIES, INC.  AND SUBSIDIARIES 
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) 
(Unaudited) 

For the Three Months Ended
March 31,
20222021
  
Cash Flows from Operating Activities:  
Net income$193,965 $204,289 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization26,511 25,057 
Provision for credit losses2,092 186 
Deferred income taxes(5,028)5,244 
Share-based compensation expense11,173 8,875 
Other235 333 
Changes in assets and liabilities:
Accounts receivable(37,531)(54,735)
Inventories(18,854)(7,919)
Other assets and liabilities(52,904)(57,081)
Accounts payable(4,016)2,460 
Deferred revenue(937)(2,287)
Net cash provided by operating activities114,706 124,422 
Cash Flows from Investing Activities:
Purchases of property and equipment(31,838)(20,163)
Acquisition of intangible assets(10,000)— 
Acquisitions of a business, net of cash acquired— (4,424)
Net cash used by investing activities(41,838)(24,587)
Cash Flows from Financing Activities:
Borrowings under revolving credit facility, net326,500 — 
Payment of senior debt(75,000)— 
Repurchases of common stock, net(266,295)(132,262)
Proceeds from exercises of stock options and employee stock purchase plans11,653 17,594 
Shares withheld for statutory tax withholding payments on restricted stock(10,338)(14,983)
Net cash used by financing activities(13,480)(129,651)
Net effect of changes in exchange rates on cash776 (2,949)
Net increase (decrease) in cash and cash equivalents60,164 (32,765)
Cash and cash equivalents at beginning of period144,454 383,928 
Cash and cash equivalents at end of period$204,618 $351,163 
  
Supplemental Cash Flow Information:
Cash paid for income taxes$11,400 $12,171 
Unpaid property and equipment, reflected in accounts payable and accrued liabilities$11,016 $6,592 
The accompanying notes are an integral part of these condensed consolidated financial statements.

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IDEXX LABORATORIES, INC. AND SUBSIDIARIES 
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
(Unaudited)

NOTE 1. BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION 

The accompanying unaudited condensed consolidated financial statements of IDEXX Laboratories, Inc. and its subsidiaries have been prepared in accordance with U.S. GAAP for interim financial information and with the requirements of Regulation S-X, Rule 10-01 for financial statements required to be filed as a part of this Quarterly Report on Form 10-Q. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “IDEXX,” the “Company,” “we,” “our,” or “us” refer to IDEXX Laboratories, Inc. and its subsidiaries.

The accompanying unaudited condensed consolidated financial statements include the accounts of IDEXX Laboratories, Inc. and our wholly-owned and majority-owned subsidiaries. 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.

The accompanying unaudited condensed consolidated financial statements reflect, in the opinion of our management, all adjustments necessary for a fair statement of our financial position and results of operations. All such adjustments are of a recurring nature. The condensed consolidated balance sheet data as of December 31, 2021, was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The results of operations for the three months ended March 31, 2022, are not necessarily indicative of the results to be expected for the full year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with this Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, and our Annual Report on Form 10-K for the year ended December 31, 2021, (the “2021 Annual Report”) filed with the SEC.

The preparation of our condensed consolidated financial statements requires us to make estimates, judgments, and assumptions that may affect the reported amounts of assets, liabilities, equity, revenues, and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis we evaluate our estimates, judgments, and methodologies. We base our estimates on historical experience and on various other assumptions that we believe are reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities and equity, and the amount of revenues and expenses.

We have included certain terms and abbreviations used throughout this Quarterly Report on Form 10-Q in the “Glossary of Terms and Selected Abbreviations.”

NOTE 2. ACCOUNTING POLICIES  

Significant Accounting Policies

The significant accounting policies used in preparation of these unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2022, are consistent with those discussed in Note 2. Summary of Significant Accounting Policies to the consolidated financial statements in our 2021 Annual Report, except as noted below.

New Accounting Pronouncements Adopted

None

New Accounting Pronouncements Not Yet Adopted

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Acquired Contract Assets and Contract Liabilities.” ASU 2021-08 is intended to improve comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination by providing consistent recognition guidance. This standard is effective for fiscal years beginning after December 15, 2022. Adoption of the ASU 2021-08 should be applied prospectively. Early adoption is permitted, including in an interim period, for any period for which financial statements have not yet been issued. We are currently evaluating the impact, if any, of ASU 2021-08 on our consolidated financial statements.

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In March 2020, the FASB issued ASU 2020-04,“Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU 2020-04 is intended to provide optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The FASB also issued ASU 2021-01, "Reference Rate Reform (Topic 848): Scope," in January 2021. It clarifies that certain optional expedients and exceptions apply to derivatives that are affected by the discounting transition. The amendments in this ASU affect the guidance in ASU No. 2020-04 and are effective in the same timeframe as ASU 2020-04. The relief offered by this guidance, if adopted, is available to companies for the period March 12, 2020 through December 31, 2022. Our Credit Facility includes a provision for the determination of a benchmark replacement rate as a successor to the LIBOR rate, therefore; we do not expect the discontinuation of LIBOR to have an impact on our consolidated financial statements.
NOTE 3. REVENUE RECOGNITION

Our revenue is recognized when, or as, performance obligations under the terms of a contract are satisfied, which occurs when control of the promised products or services is transferred to a customer. We exclude sales, use, value-added, and other taxes we collect on behalf of third parties from revenue. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products or services to a customer. To accurately present the consideration received in exchange for promised products or services, we apply the five-step model outlined below:

1.Identification of a contract or agreement with a customer
2.Identification of our performance obligations in the contract or agreement
3.Determination of the transaction price
4.Allocation of the transaction price to the performance obligations
5.Recognition of revenue when, or as, we satisfy a performance obligation        

We enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. The timing of revenue recognition, billings, and cash collections results in accounts receivable, lease receivables, and contract assets as a result of revenue recognized in advance of billings (included within other assets), and contract liabilities or deferred revenue as a result of receiving consideration in advance of revenue recognition within our unaudited condensed consolidated balance sheet. Our payment terms generally range from 30 to 60 days, with exceptions for certain individual customers and geographies. Below is a listing of our major categories of revenue for our products and services:

Diagnostic Products and Accessories. Diagnostic products and accessories revenues, including IDEXX VetLab® consumables and accessories, rapid assay, LPD, Water, and OPTI testing products, are predominantly recognized and invoiced at the time of shipment, which is when the customer obtains control of the product based on legal title transfer and we have the right to payment. We also provide customers with certain consumables that are recognized upon utilization by the customer, which is when we have the right to payment and the risks and rewards of ownership transfer. Shipping costs reimbursed by the customer are included in revenue and cost of sales. As a practical expedient, we do not account for shipping activities as a separate performance obligation.

Laboratory Diagnostic and Consulting Services. Laboratory diagnostic and consulting services revenues are recognized and invoiced when performed.

Instruments, Software and Systems. CAG Diagnostics capital instruments, veterinary software, and diagnostic imaging systems revenues are recognized and invoiced when the customer obtains control of the products based on legal title transfer and we have the right to payment, which generally occurs at the time of installation and customer acceptance. Our instruments, software, and systems are often included in one of our significant customer programs, as further described below. For veterinary software systems that include multiple performance obligations, such as perpetual software licenses and computer hardware, we allocate revenue to each performance obligation based on estimates of the price that we would charge the customer for each promised product or service if it were sold on a standalone basis.

Lease Revenue. Revenues from instrument rental agreements and reagent rental programs are recognized either as operating leases on a ratable basis over the term of the agreement or as sales-type leases at the time of installation and customer acceptance. Customers typically pay for the right to use instruments under rental agreements in equal monthly amounts over the term of the rental agreement. Our reagent rental programs provide our customers the right to use our instruments upon entering into agreements to purchase specified amounts of consumables, which are considered embedded leases. For some agreements, the customers are provided with the right to purchase the instrument at the end of the lease term. Lease revenues from these
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agreements are presented in product revenue on our unaudited condensed consolidated income statement. Lease revenue was approximately $5.0 million for the three months ended March 31, 2022, as compared to $4.8 million for the three months ended March 31, 2021, including both operating leases and sales-type leases under ASC 842, Leases, for leases entered into after January 1, 2019, and ASC 840, Leases, for leases entered into prior to 2019. Refer to below for revenue recognition under our reagent rental programs.

Extended Warranties and Post-Contract Support. CAG Diagnostics capital instruments and diagnostic imaging systems extended warranties typically provide customers with continued coverage for a period of one to five years beyond the first-year standard warranty. Customers can either pay in full for the extended warranty at the time of instrument or system purchase or can be billed on a quarterly basis over the term of the contract. We recognize revenue associated with extended warranties over time on a ratable basis using a time elapsed measure of performance over the contract term, which approximates the expected timing in which applicable services are performed.

Veterinary software post-contract support provides customers with access to technical support when and as needed through access to call centers and online customer assistance. Post-contract support contracts typically have a term of 12 months and customers are billed for post-contract support in equal quarterly amounts over the term. We recognize revenue for post-contract support services over time on a ratable basis using a time elapsed measure of performance over the contract term, which approximates the expected timing in which applicable services are performed.

On December 31, 2021, our deferred revenue related to extended warranties and post-contract support was $30.0 million, of which approximately $14.7 million was recognized during the three months ended March 31, 2022. Furthermore, as a result of new agreements, our deferred revenue related to extended warranties and post-contract support was $28.9 million as of March 31, 2022. We do not disclose information about remaining performance obligations that are part of contracts with an original expected duration of one year or less and do not adjust for the effect of the financing components when the period between customer payment and revenue recognition is one year or less. Deferred revenue related to extended warranties and post-contract support with an original duration of more than one year was $14.4 million as of March 31, 2022, of which approximately 38%, 34%, 17%, 6%, and 5% are expected to be recognized during the remainder of 2022, the full years 2023, 2024, 2025, and thereafter, respectively. Additionally, we have determined these agreements do not include a significant financing component.

SaaS Subscriptions. We offer a variety of veterinary software and diagnostic imaging SaaS subscriptions including ezyVet®, Animana®, Neo®, Cornerstone® Cloud, Pet Health Network® Pro, Petly® Plans, Web PACS, rVetLink®, and Smart Flow™. We recognize revenue for our SaaS subscriptions over time on a ratable basis over the contract term, beginning on the date our service is made available to the customer. Our subscription contracts vary in term from monthly to two years. Customers typically pay for our subscription contracts in equal monthly amounts over the term of the agreement. Deferred revenue related to our SaaS subscriptions is not material.

Contracts with Multiple Performance Obligations. We enter into contracts with multiple performance obligations where customers purchase a combination of IDEXX products and services. Determining whether products and services are considered distinct performance obligations that should be accounted for separately requires significant judgment. We determine the transaction price for a contract based on the total consideration we expect to receive in exchange for the transferred goods or services. To the extent the transaction price includes variable consideration, such as volume rebates or expected price adjustments, we apply judgment in constraining the estimated variable consideration due to factors that may cause reversal of revenue recognized. We evaluate constraints based on our historical and projected experience with similar customer contracts.

We allocate revenue to each performance obligation in proportion to the relative standalone selling prices, and recognize revenue when transfer of the related goods or services has occurred for each obligation. We utilize the observable standalone selling price when available, which represents the price charged for the performance obligation when sold separately. When standalone selling prices for our products or services are not directly observable, we determine the standalone selling prices using relevant information available and apply suitable estimation methods including, but not limited to, the cost plus a margin approach. We recognize revenue as each performance obligation is satisfied, either at a point in time or over time, as described in the revenue categories above. We do not disclose information about remaining performance obligations that are part of contracts with an original expected duration of one year or less.


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The following customer programs represent our most significant customer contracts which contain multiple performance obligations:

Customer Commitment Programs. We offer customer incentives upon entering into multi-year agreements to purchase annual minimum amounts of products and services.

Up-Front Customer Loyalty Programs. Our up-front loyalty programs provide customers with incentives in the form of cash payments or IDEXX Points upon entering into multi-year agreements to purchase annual minimum amounts of future products or services. If a customer breaches their agreement, they are required to refund all or a portion of the up-front cash or IDEXX Points, or make other repayments, remedial actions, or both. Up-front incentives to customers in the form of cash or IDEXX Points are not made in exchange for distinct goods or services and are capitalized as customer acquisition costs within other current and long-term assets, which 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 instruments, we allocate total consideration, including future committed purchases less up-front incentives and estimates of expected price adjustments, based on relative standalone selling prices to identified performance obligations and recognize instrument revenue and cost at the time of installation and customer acceptance. To the extent invoiced instrument revenue exceeds recognized instrument revenue, we record deferred revenue as a contract liability, which is subsequently recognized upon the purchase of products and services over the term of the contract. We have determined these agreements do not include a significant financing component. Differences between estimated and actual customer purchases may impact the timing and amount of revenue recognition.

On December 31, 2021, our capitalized customer acquisition costs were $158.3 million, of which approximately $12.7 million was recognized as a reduction of revenue during the three months ended March 31, 2022. Furthermore, as a result of new up-front customer loyalty payments, net of subsequent recognition, our capitalized customer acquisition costs were $157.0 million as of March 31, 2022. We monitor customer purchases over the term of their agreement to assess the realizability of our capitalized customer acquisition costs and review estimates of variable consideration. Impairments, revenue adjustments that relate to performance obligations satisfied in prior periods, and contract modifications during the three months ended March 31, 2022, were not material.

Volume Commitment Programs. Our volume commitment programs, such as our IDEXX 360 program, provide customers with a free or discounted instrument or system upon entering into multi-year agreements to purchase annual minimum amounts of products and services. We allocate total consideration, including future committed purchases and expected price adjustments, based on relative standalone selling prices to identified performance obligations and recognize instrument revenue and cost at the time of installation and customer acceptance in advance of billing the customer, which is also when the customer obtains control of the instrument based on legal title transfer. Our right to future consideration related to instrument revenue is recorded as a contract asset within other current and long-term assets. The contract asset is transferred to accounts receivable when customers are billed for future products and services over the term of the contract. We have determined these agreements do not include a significant financing component. Differences between estimated and actual customer purchases may impact the timing and amount of revenue recognition.

On December 31, 2021, our volume commitment contract assets were $159.9 million, of which approximately $9.2 million was reclassified to accounts receivable when customers were billed for related products and services during the three months ended March 31, 2022. Furthermore, as a result of new placements under volume commitment programs, net of subsequent amounts reclassified to accounts receivable, and allowances established for credit losses, our contract assets were $172.6 million as of March 31, 2022. We monitor customer purchases over the term of their agreement to assess the realizability of our contract assets and review estimates of variable consideration. Impairments, revenue adjustments that relate to performance obligations satisfied in prior periods, and contract modifications during the three months ended March 31, 2022, were not material.

For our up-front customer loyalty and volume commitment programs, we estimate future revenues related to multi-year agreements to be approximately $3.0 billion, of which approximately 20%, 25%, 21%, 16%, and 18% are expected to be recognized during the remainder of 2022, the full years 2023, 2024, 2025, and thereafter, respectively. These future revenues relate to performance obligations not yet satisfied, for which customers have committed to
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purchase goods and services, net of the expected revenue reductions from customer acquisition costs and expected price adjustments, and as a result, are lower than stated contractual commitments by our customers.

Instrument Rebate Programs. Our instrument rebate programs require an instrument purchase and provide customers the opportunity to earn future rebates based on the volume of products and services they purchase over the term of the program. We account for the customer’s right to earn rebates on future purchases as a separate performance obligation and determine the standalone selling price based on an estimate of rebates the customer will earn over the term of the program. Total consideration allocated to identified performance obligations is limited to goods and services that the customer is presently obligated to purchase and does not include estimates of future purchases that are optional. We allocate total consideration to identified performance obligations, including the customer’s right to earn rebates on future purchases, which is deferred and recognized upon the purchase of future products and services, partially offsetting future rebates as they are earned.

On December 31, 2021, our deferred revenue related to instrument rebate programs was $33.0 million, of which approximately $3.4 million was recognized when customers purchased eligible products and services and earned rebates during the three months ended March 31, 2022. Furthermore, as a result of new instrument purchases under rebate programs, net of subsequent recognition, our deferred revenue was $31.1 million as of March 31, 2022, of which approximately 28%, 28%, 19%, 13%, and 12% are expected to be recognized during the remainder of 2022, the full years 2023, 2024, 2025, and thereafter, respectively.

Reagent Rental Programs. Our reagent rental programs provide our customers the right to use our instruments upon entering into multi-year agreements to purchase annual minimum amounts of consumables. These types of agreements include an embedded lease for the right to use our instrument, and we determine the amount of lease revenue allocated to the instrument based on relative standalone selling prices. We evaluate the terms of these embedded leases to determine classification as either a sales-type lease or an operating lease.

Sales-type Reagent Rental Programs. Our reagent rental programs that effectively transfer control of instruments to our customers are classified as sales-type leases, and we recognize instrument revenue and cost in advance of billing the customer, at the time of installation and customer acceptance. Our right to future consideration related to instrument revenue is recorded as a lease receivable within other current and long-term assets, and is transferred to accounts receivable when customers are billed for future products and services over the term of the contract. On December 31, 2021, our lease receivable assets were $15.3 million, of which approximately $0.8 million was reclassified to accounts receivable when customers were billed for related products and services during the three months ended March 31, 2022. Furthermore, as a result of new placements under sales-type reagent rental programs, net of subsequent amounts reclassified to accounts receivable, and allowances established for credit losses, our lease receivable assets were $16.1 million as of March 31, 2022. The impacts of discounting and unearned income as of March 31, 2022 were not material. Profit and loss recognized at the commencement date and interest income during the three months ended March 31, 2022, were not material. We monitor customer purchases over the term of their agreement to assess the realizability of our lease receivable assets. Impairments during the three months ended March 31, 2022 were not material.

Operating-type Reagent Rental Programs. Our reagent rental programs that do not effectively transfer control of instruments to our customers are classified as operating leases, and we recognize instrument revenue and costs ratably over the term of the agreement. The cost of the instrument is capitalized within property and equipment. During the three months ended March 31, 2022, we transferred instruments of $3.0 million, as compared to $2.5 million for the three months ended March 31, 2021, from inventory to property and equipment.

We estimate future revenue to be recognized related to our reagent rental programs of approximately $37.2 million, of which approximately 25%, 28%, 22%, 15%, and 10% are expected to be recognized during the remainder of 2022, the full years 2023, 2024, 2025, and thereafter, respectively. These future revenues relate to performance obligations not yet satisfied for which customers have committed to future purchases, net of any expected price adjustments, and as a result, may be lower than stated contractual commitments by our customers.

Other Customer Incentive Programs. Certain agreements with customers include discounts or rebates on the sale of products and services applied retrospectively, such as volume rebates achieved by purchasing a specified purchase threshold of goods and services. We account for these discounts as variable consideration and estimate the likelihood of a customer meeting the threshold in order to determine the transaction price using the most predictive
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approach. We typically use the most-likely-amount method for incentives that are offered to individual customers and the expected-value method for programs that are offered to a broad group of customers. Revenue adjustments that relate to performance obligations satisfied in prior periods during the three months ended March 31, 2022, were not material. Refund obligations related to customer incentive programs are recorded in accrued liabilities for the actual issuance of incentives, incentives earned but not yet issued and estimates of incentives to be earned in the future.

Program Combinations. At times, we combine elements of our significant customer programs within a single customer contract. We separate each significant program element and include the contract assets, customer acquisition costs, deferred revenues and estimated future revenues within the most relevant program disclosures above. Each customer contract is presented as a net contract asset or net contract liability on our unaudited condensed consolidated balance sheet.

IDEXX Points. IDEXX Points may be applied to trade receivables due to us, converted to cash, or applied against the purchase price of IDEXX products and services. We consider IDEXX Points equivalent to cash. IDEXX Points that have not yet been used by customers are included in accrued liabilities until utilized or expired. Breakage is not material because customers can apply IDEXX Points to trade receivables at any time.

Accounts Receivable. We recognize revenue when it is probable that we will collect substantially all of the consideration to which we will be entitled, based on the customer’s intent and ability to pay the promised consideration. We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer. We have no significant customers that accounted for greater than 10% of our consolidated revenues, and we have no concentration of credit risk as of March 31, 2022.

Disaggregated Revenues. We present disaggregated revenue for our CAG segment based on major product and service categories. Our Water segment is comprised of a single major product category. Although our LPD segment does not meet the quantitative requirements to be reported as a separate segment, we believe it is important to disaggregate these revenues as a major product and service category separately from our Other reportable segment given its distinct markets, and therefore we have elected to report LPD as a reportable segment.

The following table presents disaggregated revenue by major product and service categories:
(in thousands)For the Three Months Ended
March 31,
20222021
CAG segment revenue:  
CAG Diagnostics recurring revenue:$664,810 $617,280 
IDEXX VetLab consumables267,173 246,092 
Rapid assay products74,519 69,611 
Reference laboratory diagnostic and consulting services295,075 275,781 
CAG Diagnostics services and accessories28,043 25,796 
CAG Diagnostics capital - instruments36,997 31,190 
Veterinary software, services and diagnostic imaging systems59,377 44,297 
CAG segment revenue761,184 692,767 
Water segment revenue36,371 34,040 
LPD segment revenue30,870 39,270 
Other segment revenue8,124 11,630 
Total revenue$836,549 $777,707 

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Revenue by principal geographic area, based on customers’ domiciles, was as follows:
(in thousands)For the Three Months Ended
March 31,
20222021
United States$525,906 $472,638 
Europe, the Middle East and Africa173,808 171,250 
Asia Pacific Region83,861 84,782 
Canada35,232 33,458 
Latin America & Caribbean17,742 15,579 
Total revenue$836,549 $777,707 

Costs to Obtain a Contract. We capitalize sales commissions and the related fringe benefits earned by our sales force when considered incremental and recoverable costs of obtaining a contract. Our contracts include performance obligations related to various goods and services, some of which are satisfied at a point in time and others over time. Commission costs related to performance obligations satisfied at a point in time are expensed at the time of sale, which is when revenue is recognized. Commission costs related to long-term service contracts and performance obligations satisfied over time, including extended warranties and SaaS subscriptions, are deferred and recognized on a systematic basis that is consistent with the transfer of the goods or services to which the asset relates. We apply judgment in estimating the amortization period, which ranges from 3 to 7 years, by taking into consideration our customer contract terms, history of renewals, expected length of customer relationship, and the useful life of the underlying technology and products. Amortization expense is included in sales and marketing expenses in the accompanying unaudited condensed consolidated statements of income. Deferred commission costs are periodically reviewed for impairment.

On December 31, 2021, our deferred commission costs, included within other assets, were $19.5 million, of which approximately $1.7 million of commission expense was recognized during the three months ended March 31, 2022. Furthermore, as a result of commissions related to new extended warranties and SaaS subscriptions, net of subsequent recognition, our deferred commission costs were $19.4 million as of March 31, 2022. Impairments of deferred commission costs during the three months ended March 31, 2022, were not material.

NOTE 4. ACQUISITIONS AND INVESTMENTS

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. From time to time we may acquire small reference laboratory or radiology practices that we account for as either asset purchases or business combinations.

During the first quarter we made a $10 million payment for a fully paid-up, perpetual intellectual property license, which will be amortized over 10 years. This amortization will be included in our CAG segment.

During the fourth quarter of 2021, we acquired the shares of a reference laboratory located in Finland for approximately $13.4 million in cash, including a holdback of approximately $1.4 million. This acquisition expands our international reference laboratory presence and was accounted for as a business combination. The fair values of the assets acquired consist of customer relationship intangibles of approximately $7.4 million, with a life of 10 years; a non-compete agreement of approximately $0.8 million, with a life of 3 years; approximately $6.9 million of goodwill, representing synergies within our broader CAG portfolio; and approximately $1.7 million in net tangible liabilities, including deferred taxes associated with the acquired intangible assets. Goodwill related to this acquisition is not expected to be deductible for tax purposes. Pro forma information has not been presented for this acquisition because such information is not material to the financial statements. The results of operations have been included in our CAG segment since the acquisition date. The acquisition expenses were not material.

During the first quarter of 2021, we acquired the shares of a reference laboratory located in Switzerland for approximately $5.5 million in cash, including holdback and contingent payments of approximately $1.1 million. This acquisition expands our international reference laboratory presence and was accounted for as a business combination. The fair value of the assets acquired consists of approximately $4.3 million in intangible assets, primarily for customer relationships, which will be amortized over 9 years, approximately $1.8 million for goodwill, representing synergies within our broader CAG portfolio, and approximately $0.6 million of liabilities, including deferred taxes associated with the acquired intangible assets. Goodwill related to this acquisition is not deductible for tax purposes. Pro forma information has not been presented for this acquisition because such information is not material to the financial statements. The results of operations have been included in our CAG segment since the acquisition date. The acquisition expenses were not material.
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NOTE 5. SHARE-BASED COMPENSATION 

The fair value of options, restricted stock units, deferred stock units, and employee stock purchase rights awarded during the three months ended March 31, 2022, totaled $51.0 million as compared to $44.3 million for the three months ended March 31, 2021. The total unrecognized compensation expense, net of estimated forfeitures, for unvested share-based compensation awards outstanding as of March 31, 2022, was $98.7 million, which will be recognized over a weighted average period of approximately 1.9 years. During the three months ended March 31, 2022, we recognized expenses of $11.2 million, as compared to $8.9 million for the three months ended March 31, 2021, related to share-based compensation.

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 each grant date. As such, we may use different assumptions for options granted throughout the year. Option awards are granted with an exercise price equal to or greater than the closing market price of our common stock at the date of grant. We have never paid any cash dividends on our common stock, and we have no intention to pay such a dividend at this time; therefore, we assume that no dividends will be paid over the expected terms of option awards.

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 Three Months Ended
March 31,
20222021
  
Share price at grant$505.53 $544.08 
Share price at exercise$509.95 $548.15 
Expected stock price volatility30 %31 %
Expected term, in years6.46.2
Risk-free interest rate2.0 %0.7 %
Weighted average fair value of options granted$170.22 $168.35 

NOTE 6. CREDIT LOSSES  

We are exposed to credit losses primarily through our sales of products and services to our customers. We maintain allowances for credit losses 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. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current economic conditions.

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. dollar-denominated purchases. We monitor our ongoing credit exposure through active review of counterparty balances against contract terms and due dates. Our activities include timely account reconciliations, dispute resolution and payment confirmations. We may employ collection agencies and legal counsel to pursue recovery of defaulted receivables.

Account balances are charged off against the allowance when we believe it is probable the receivable will not be recovered. We may require collateralized asset support or a prepayment to mitigate credit risk. We do not have any off-balance sheet credit exposure related to our customers.

Accounts Receivable

The allowance for credit losses associated with accounts receivable was $7.3 million and $5.7 million as of March 31, 2022 and December 31, 2021, respectively. Accounts receivable reflected on the balance sheet is net of this reserve. Based on an aging analysis, as of March 31, 2022, approximately 94% of our accounts receivable had not yet reached the invoice due date and approximately 6% was considered past due, of which approximately 0.4% was greater than 60 days past due. As of December 31, 2021, approximately 90% of our accounts receivable had not yet reached the invoice due date and approximately 10% was considered past due, of which approximately 1.8% was greater than 60 days past due.
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Contract assets and lease receivables

The allowance for credit losses associated with the contract assets and lease receivables was $4.8 million and $4.4 million as of March 31, 2022 and December 31, 2021, respectively. The assets reflected on the balance sheet are net of these reserves. Historically, we have experienced low credit loss rates on our customer commitment programs and lease receivables. We apply judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.
NOTE 7. INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out) or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The components of inventories were as follows:
(in thousands)March 31, 2022December 31, 2021
  
Raw materials$73,599 $60,427 
Work-in-process27,297 26,397 
Finished goods200,742 182,206 
Inventories$301,638 $269,030 

NOTE 8. LEASES

Maturities of operating lease liabilities were as follows:
(in thousands, except lease term and discount rate)March 31, 2022
 
2022 (remainder of year)$17,074 
202322,510 
202418,028 
202514,136 
20266,140 
Thereafter45,978 
Total lease payments123,866 
Less imputed interest(13,671)
Total$110,195 

Total minimum future lease payments for leases that have not commenced as of March 31, 2022, are approximately $8.1 million, and will commence between 2022 and 2024.

Supplemental cash flow information for leases was as follows:
(in thousands)For the Three Months Ended
March 31, 2022		For the Three Months Ended
March 31, 2021
 
Cash paid for amounts included in the measurement of operating leases liabilities$6,186 $5,434 
Right-of-use assets obtained in exchange for operating lease obligations, net of early
lease terminations		$7,169 $8,180 
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NOTE 9. OTHER CURRENT AND LONG-TERM ASSETS

Other current assets consisted of the following:
(in thousands)March 31, 2022December 31, 2021
  
Customer acquisition costs$48,631 $48,942 
Contract assets, net (1)
41,632 37,772 
Prepaid expenses40,935 41,997 
Taxes receivable21,751 19,464 
Deferred sales commissions6,515 6,475 
Other assets21,817 19,173 
Other current assets$181,281 $173,823 
(1) Contract assets, net, are net of allowances for credit loss. Refer to "Note 6. Credit Losses."

Other long-term assets consisted of the following:
(in thousands)March 31, 2022December 31, 2021
Contract assets, net (1)
$131,006 $122,160 
Customer acquisition costs108,367 109,392 
Deferred income taxes23,091 24,784 
Deferred sales commissions12,884 13,019 
Investment in long-term product supply arrangements12,014 13,348 
Taxes receivable2,359 1,806 
Other assets45,847 45,891 
Other long-term assets$335,568 $330,400 
(1) Contract assets, net, are net of allowances for credit loss. Refer to "Note 6. Credit Losses."
NOTE 10. ACCRUED LIABILITIES

Accrued liabilities consisted of the following:
(in thousands)March 31, 2022December 31, 2021
  
Accrued expenses$124,630 $133,978 
Accrued employee compensation and related expenses105,917 182,926 
Accrued taxes84,152 42,605 
Accrued customer incentives and refund obligations74,292 79,469 
Current lease liabilities20,564 19,931 
Accrued liabilities$409,555 $458,909 

Other long-term liabilities consisted of the following:
(in thousands)March 31, 2022December 31, 2021
Accrued taxes$57,262 $56,466 
Other accrued long-term expenses14,586 14,475 
Other long-term liabilities$71,848 $70,941 

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NOTE 11. DEBT

Credit Facility

As of March 31, 2022, we had $400.0 million outstanding borrowings under our Credit Facility with a weighted average effective interest rate of 1.2%. As of December 31, 2021, we had $73.5 million outstanding borrowings under our Credit Facility with a weighted average effective interest rate of 1.1%. As of March 31, 2022, we had a remaining borrowing availability of $598.6 million under our $1 billion Credit Facility. The funds available under the Credit Facility reflect a further reduction due to the issuance of letters of credit, which were issued in connection with our workers’ compensation policy, for $1.4 million.

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. As of March 31, 2022, and December 31, 2021, we were in compliance with the covenants of the Credit Facility.

Senior Notes

The following describes all of our currently outstanding unsecured senior notes issued and sold in private placements (collectively, the “Senior Notes”) as of March 31, 2022:
(Principal Amount in thousands)
Issue DateDue DateSeriesPrincipal AmountCoupon RateSenior Note Agreement
12/11/201312/11/20232023 Series A Notes$75,000 3.94 %NY Life 2013 Note Agreement
12/11/201312/11/20252025 Series B Notes$75,000 4.04 %NY Life 2013 Note Agreement
9/4/20149/4/20262026 Senior Notes$75,000 3.72 %NY Life 2014 Note Agreement
7/21/20147/21/20242024 Series B Notes$75,000 3.76 %Prudential 2015 Amended Agreement
6/18/20156/18/20252025 Series C Notes€88,857 1.785 %Prudential 2015 Amended Agreement
2/12/20152/12/20272027 Series B Notes$75,000 3.72 %MetLife 2014 Note Agreement
3/14/201903/14/20292029 Series C Notes$100,000 4.19 %MetLife 2014 Note Agreement
4/2/202004/02/2030MetLife 2030 Series D Notes$125,000 2.50 %MetLife 2014 Note Agreement
4/14/202004/14/2030Prudential 2030 Series D Notes$75,000 2.50 %Prudential 2015 Amended Agreement

On February 2022, we paid off our $75.0 million 2022 Series A Notes with cash provided by operations and financing activities.

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. As of March 31, 2022, we were in compliance with the covenants of the Senior Note Agreements.

NOTE 12. REPURCHASES OF COMMON STOCK
We primarily acquire shares by repurchases in the open market. However, we also acquire shares that are surrendered by employees in payment for the minimum required statutory withholding taxes due on the vesting of restricted stock units and the settlement of deferred stock units, otherwise referred to herein as employee surrenders. We issue shares of treasury stock upon the vesting of certain restricted stock units and upon the exercise of certain stock options. The number of shares of treasury stock issued during the three months ended March 31, 2022 and 2021 was not material.

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The following is a summary of our open market common stock repurchases, reported on a trade date basis, and shares acquired through employee surrender:
(in thousands, except per share amounts)
For the Three Months Ended
March 31,
20222021
  
Shares repurchased in the open market502 277 
Shares acquired through employee surrender for statutory tax withholding21 28 
Total shares repurchased523 305 
Cost of shares repurchased in the open market$262,783 $139,213 
Cost of shares for employee surrenders10,338 14,983 
Total cost of shares$273,121 $154,196 
Average cost per share - open market repurchases$523.04 $501.62 
Average cost per share - employee surrenders$505.53 $544.08 
Average cost per share - total$522.36 $505.45 

NOTE 13. INCOME TAXES 

Our effective income tax rate was 19.7% for the three months ended March 31, 2022, as compared to 14.9% for the three months ended March 31, 2021. The increase in our effective tax rate for the three months ended March 31, 2022, as compared to the same period in the prior year, was primarily driven by a decrease in the tax benefits from share-based compensation.

The effective tax rate for the three months ended March 31, 2022, differed from the U.S. statutory tax rate of 21% primarily due to tax benefits from share-based compensation.
NOTE 14. ACCUMULATED OTHER COMPREHENSIVE INCOME

The changes in AOCI, net of tax, consisted of the following:
For the Three Months Ended March 31, 2022
Unrealized Gain (Loss) on Cash Flow Hedges, Net of TaxUnrealized Gain (Loss) on
Net Investment Hedges, Net of Tax
(in thousands)Unrealized Gain (Loss) on Investments,
Net of Tax		Foreign Currency Exchange ContractsEuro-Denominated NotesCross Currency SwapsCumulative Translation
Adjustment		Total
     
Balance as of December 31, 2021$(126)$4,979 $422 $3,240 $(61,999)$(53,484)
Other comprehensive income (loss) before reclassifications(17)2,097 1,409 996 3,277 7,762 
Loss reclassified from accumulated other comprehensive income— (1,626)— — — (1,626)
Balance as of March 31, 2022$(143)$5,450 $1,831 $4,236 $(58,722)$(47,348)

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For the Three Months Ended March 31, 2021
Unrealized Gain (Loss) on Cash Flow Hedges,
Net of Tax		Unrealized Gain (Loss) on
Net Investment Hedges, Net of Tax
(in thousands)Unrealized (Loss) Gain on Investments,
Net of Tax		Foreign Currency Exchange ContractsEuro-Denominated NotesCross Currency SwapsCumulative Translation
Adjustment		Total