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WILMINGTON, Mass., May 1, 2002 (BW HealthWire) -- Charles River Laboratories International, Inc. (NYSE: CRL) achieved strong growth in sales and earnings for the first quarter of 2002. The Company's first quarter sales increased 35% over the prior year, driven by strong growth in customer demand for the Company's products and services that support drug discovery and development. Sales for the first quarter were $133.8 million, a $34.8 million increase over first quarter 2001 sales of $99.0 million. The Company's operating income margin for the quarter was 21.2%, compared to 19.6% in the prior year quarter. Net income for the quarter, before an extraordinary loss of $16.8 million related to early retirement of debt, was $14.5 million, or $0.31 per fully diluted share. The Company's EPS in the first quarter exceeded by $0.04 both its guidance and the First Call consensus estimate of $0.27.
The Company experienced strong sales and earnings growth in the first quarter from both its biomedical products and services and research models segments. While strategic acquisitions completed a year ago contributed significantly to results, the Company also experienced solid organic growth across virtually all product lines and service offerings, and throughout North America, Europe and Japan. Adjusted to give effect for strategic acquisitions completed in early 2001, Charles River's sales increased 19% in the first quarter compared to the first quarter of last year (22% before unfavorable currency effects).
Effective for the first quarter 2002, the Company adopted Statement of Accounting Financial Standards No. 142, "Goodwill and Other Intangible Assets," the effect of which was to cease amortization of goodwill and certain indefinite-lived intangible assets, which amounted to $0.02 per fully diluted share in the first quarter. Had the adoption been made as of the beginning of 2001, prior year first quarter earnings would have increased by $0.02 per fully diluted share.
Commenting on these results, James C. Foster, Chairman and CEO, said: "We're very pleased to once again fully deliver on our commitments to our many customers around the world, and in turn, our investors. In a period in which some have cited weakness in customer demand within the pharmaceutical and biotech R&D sector, we continued to see very strong demand by this customer base across the board for our products and services. We think the strength of our financial performance reflects both the uniqueness of our products and services, and their importance as vital components to a successful drug discovery and development program. Our research models experienced record demand in the quarter, particularly in the US, as well as in Europe and Japan, and in turn, record profitability. Our biomedical services segment continued to demonstrate the dynamic growth trend that complements the steady and consistent performance of our research models business. We see continued strength in demand for our existing portfolio of products and services for the balance of the year, and beyond. In each of the seven quarters since our IPO, we've met or exceeded our projections for sales and earnings, by making substantial progress toward our strategic commitment to being the world's leading provider of pre-clinical products and services to the drug discovery and development industry."
Mr. Foster went on to say: "We also reached some significant milestones in the quarter, from a capital structure standpoint. We retired the remaining balance of our LBO-related 13.5% high-yield bonds, and replaced it with 3.5% convertible debt. Our credit ratings have been upgraded. We also saw our private equity sponsor further distribute or sell a substantial amount of its remaining shares in the Company, and our former parent company sell all of its shares, resulting in a more widely-held stock."
The following forward looking guidance is subject to the qualifications set forth below, and is based on current exchange rates. For the second quarter 2002, Charles River estimates sales in the range of $132 million to $135 million, which amounts to 13% to 16% reported sales growth over the second quarter of 2001. Fully diluted EPS for the second quarter of 2002 is estimated to be in the range of $0.31 to $0.33. For the full year, management estimates fully diluted EPS (before any extraordinary items) in the range of $1.28 to $1.31, an increase of more than 40% over 2001 EPS of $0.92, and nearly 10% higher than management's February guidance.
Charles River Laboratories, based in Wilmington, Massachusetts, in a leading provider of critical research tools and integrated support services that enable innovative and efficient drug discovery and development. The Company is the global leader in providing the animal research models required in research and development for new drugs, devices and therapies. The Company also offers a broad and growing portfolio of biomedical products and services that enable customers to reduce cost, increase speed, and enhance productivity and effectiveness in drug discovery and development. Charles River's customer base spans over 50 countries, and includes all of the major pharmaceutical and biotechnology companies, as well as many leading hospitals and academic institutions. The Company operates 76 facilities in 15 countries worldwide. For more information, visit the Company's web site as http://www.criver.com.
Caution Concerning Forward-Looking Statements: This document includes certain "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations, and involve a number of risks and uncertainties that could cause actual results to differ materially from those stated or implied by the forward looking statements, including acquisition integration risks, special interest groups, contaminations, industry trends, new displacement technologies, outsourcing trends, USDA and FDA regulation, changes in law, special interests groups, continued availability of products and supplies, personnel and control, and others that are described in more detail in the Risk Factors contained in the Company's Annual Report for 2001 filed on Form 10K on March 27, 2002, as well as its other periodic SEC filings. The Company disclaims any intent or obligation to update forward looking statements, and otherwise claims the safe harbor protections for forward looking statements afforded under The Private Securities Litigation Reform Act of 1995.
As previously announced, investors can access a live webcast of the first quarter earnings conference call through a link that will be posted on the investor page of the Charles River Laboratories website, http://www.criver.com. The conference call begins on Thursday, May 2, 2002, at 8:30 a.m. Eastern Standard Time and will be available thereafter for one week for replay.
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (dollars in thousands except for per share data) Three Months Ended March 30, March 31, 2002 2001 Total Net Sales $133,820 $99,031 Cost of products sold and services provided 83,861 62,369 Gross margin 49,959 36,662 Selling, general and administrative 20,919 15,460 Amortization of goodwill and intangibles 630 1,828 Operating income 28,410 19,374 Interest income (expense) (3,392) (6,705) Other income (expense) (83) 555 Income before taxes, minority interests, earnings from equity investments and extraordinary item 24,935 13,224 Provision for income taxes 9,725 5,555 Income before minority interests, earnings from equity investments and extraordinary item 15,210 7,669 Minority interests (762) (564) Earnings from equity investments 82 83 Net income before extraordinary item 14,530 7,188 Extraordinary loss, net of tax benefit (16,762) (237) Net income (loss) ($2,232) $6,951 Earnings per common share before extraordinary item Basic $0.33 $0.20 Diluted $0.31 $0.18 Earnings (loss) per common share after extraordinary item Basic ($0.05) $0.19 Diluted ($0.03) $0.17 CHARLES RIVER LABORATORIES INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands) March 30 December 29, 2002 2001 Assets (Unaudited) Current assets Cash and cash equivalents $135,398 $ 58,271 Trade receivables 105,127 98,478 Inventories 39,125 39,056 Other current assets 14,487 14,349 Total current assets 294,137 210,154 Property, plant and equipment, net 153,901 155,919 Goodwill and other intangibles 90,674 90,374 Deferred tax asset 95,421 87,781 Other assets 30,059 27,134 Total assets $664,192 $571,362 Liabilities and Shareholders' Equity Current liabilities Current portion of long-term debt $2,967 $759 Accounts payable 11,777 13,868 Accrued compensation 19,342 25,736 Other current liabilities 55,609 58,169 Total current liabilities 89,695 98,532 Long-term debt 259,207 155,506 Other long-term liabilities 14,943 14,826 Total liabilities 363,845 268,864 Minority interests 11,941 12,988 Total shareholders' equity 288,406 289,510 Total liabilities and shareholders' equity $664,192 $571,362 CHARLES RIVER LABORATORIES INTERNATIONAL, INC. SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED) (dollars in thousands) Three Months Ended March 30, March 31, 2002 2001 Research Models Net sales $56,899 $49,474 Gross margin 26,060 20,549 Gross margin as a % of sales 45.8% 41.5% Operating income 19,532 13,271 Operating income as a % of sales 34.3% 26.8% Depreciation and amortization 2,215 2,405 Capital expenditures 1,455 1,913 Biomedical Products and Services Net sales $76,921 $49,557 Gross margin 23,899 16,113 Gross margin as a % of sales 31.1% 32.5% Operating income 14,121 8,480 Operating income as a % of sales 18.4% 17.1% Depreciation and amortization 3,219 3,034 Capital expenditures 3,080 2,340 Unallocated Corporate Overhead ($5,243) ($2,377) Total Net sales $133,820 $99,031 Gross margin 49,959 36,662 Gross margin as a % of sales 37.3% 37.0% Operating income 28,410 19,374 Operating income as a % of sales 21.2% 19.6% Depreciation and amortization 5,434 5,439 Capital expenditures 4,535 4,253
CONTACT: Charles River Laboratories Dennis Shaughnessy Marcia Gookin Ir@criver.com 1-978-658-6000 ext. 1329