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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15 (d) of the
Securities Exchange Act of 1934
February 12, 2007
Date of Report (Date of earliest event reported)
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
(Exact Name of Registrant as specified in its Charter)
---------------------
Delaware 333-92383 06-1397316
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
---------------------
251 Ballardvale Street
Wilmington, Massachusetts 01887
(Address of Principal Executive Offices) (Zip Code)
978-658-6000
(Registrant's Telephone Number, including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02. Results of Operations and Financial Condition
The following information shall not be deemed "filed" for purposes of Section 18
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
incorporated by reference in any filing under the Securities Act of 1933, as
amended, or the Exchange Act, except as shall be expressly set forth by specific
reference in such a filing.
On February 12, 2007, Charles River Laboratories International, Inc. issued a
press release providing financial results for the quarter and fiscal year ended
December 30, 2006.
The press release, attached as an exhibit to this report, includes "safe harbor"
language pursuant to the Private Securities Litigation Reform Act of 1995, as
amended, indicating that certain statements contained in the press release are
"forward-looking" rather than historic. The press release also states that these
and other risks relating to Charles River are set forth in the documents filed
by Charles River with the Securities and Exchange Commission.
ITEM 9.01. Financial Statements and Exhibits
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
99.1 Press release dated February 12, 2007.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
we have duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
CHARLES RIVER LABORATORIES
INTERNATIONAL, INC.
Dated: February 12, 2007
By: /s/ Joanne P. Acford
- -------------------------------------------
Joanne P. Acford, Corporate Senior Vice
President, General Counsel and
Corporate Secretary
3
Exhibit Index
Exhibit No. Description
- ----------- -----------
99.1 Press release dated February 12, 2007.
4
Exhibit 99.1
Charles River Laboratories Announces Fourth-Quarter and
Full-Year 2006 Results from Continuing Operations
Fourth-Quarter Sales of $272 Million and Full-Year Sales of $1.06
Billion
Fourth-Quarter GAAP EPS of $0.47 and Non-GAAP EPS of $0.58
2006 GAAP EPS of $1.79 and Non-GAAP EPS of $2.20
Reaffirms Guidance for 2007
WILMINGTON, Mass.--(BUSINESS WIRE)--Feb. 12, 2007--Charles River
Laboratories International, Inc. (NYSE: CRL) today reported
fourth-quarter and full-year 2006 financial results. For the fourth
quarter, net sales from continuing operations increased 5.2% to $271.7
million from $258.2 million in the fourth quarter of 2005. The
increase was due primarily to growth in the Preclinical Services
segment, which benefited from continuing demand for outsourced
preclinical services and the October 2006 acquisition of Northwest
Kinetics, as well as increased sales of Research Model Services and In
Vitro products. Foreign exchange contributed 2.4% to the net sales
growth.
Charles River's results are reported on a fiscal-year basis which
is the twelve-month period ending on the last Saturday in December. As
a result, the Company periodically reports a 53-week year, with the
additional week reported in the fourth quarter. This was the case in
2005, when the fourth quarter of the year included 14 weeks. The
fourth quarter of 2006 was a standard 13-week period, so in comparison
to the same period in the prior year, the sales growth rate in the
fourth quarter of 2006 was reduced by approximately 3-5%.
On a GAAP basis, net income from continuing operations for the
fourth quarter of 2006 was $31.8 million, or $0.47 per diluted share,
compared to $56.5 million, or $0.77 per diluted share, for the fourth
quarter of 2005. Results for the fourth quarter of 2006 include $2.5
million, or $0.02 per share, of stock option expense as a result of
the Company's adoption on January 1, 2006, of Statement of Financial
Accounting Standards No. 123R (SFAS 123R), "Share-Based Payment."
On a non-GAAP basis, net income from continuing operations was
$39.0 million for the fourth quarter of 2006, compared to $40.5
million for the same period in 2005. Fourth-quarter diluted earnings
per share on a non-GAAP basis were $0.58, compared to $0.55 per share
in the fourth quarter of 2005, with the increase in earnings per share
due primarily to the lower number of shares outstanding. A
reconciliation of GAAP to non-GAAP earnings per share for the fourth
quarters of both years is as follows:
RECONCILIATION OF GAAP TO NON-GAAP EPS 4Q06 4Q05
- ----------------------------------------------------------------------
EPS from continuing operations (GAAP) $0.47 $0.77
Amortization related to acquisitions $0.10 $0.12
Stock-based compensation related to Inveresk acquisition $0.00 $0.02
Cost savings initiatives $0.01 ---
Deferred financing cost --- $0.02
Repatriation and related deferred tax reversal --- ($0.38)
-------------
EPS from continuing operations (Non-GAAP) $0.58 $0.55
- ----------------------------------------------------------------------
For 2006, net sales from continuing operations increased by 6.5%
to $1.06 billion, compared to $993.3 million in 2005. On a GAAP basis,
net income from continuing operations for 2006 was $125.2 million, or
$1.79 per diluted share, compared to $145.8 million, or $2.02 per
diluted share, for the prior year. In accordance with SFAS 123R,
results for 2006 included $11.7 million, or $0.10 per share, of stock
option expense. On a non-GAAP basis, net income from continuing
operations for 2006 was $154.2 million, or $2.20 per diluted share,
compared to $157.6 million, or $2.18 per diluted share, for 2005, with
the increase in earnings per share due primarily to the lower number
of shares outstanding. Non-GAAP net income from continuing operations
in both periods excluded the following charges:
RECONCILIATION OF GAAP TO NON-GAAP EPS 2006 2005
- ----------------------------------------------------------------------
EPS from continuing operations (GAAP) $1.79 $2.02
Amortization related to acquisitions $0.34 $0.45
Stock-based compensation related to Inveresk acquisition $0.01 $0.07
Cost savings initiatives $0.06 ---
Deferred financing cost --- $0.02
Repatriation and related deferred tax reversal --- ($0.38)
-------------
EPS from continuing operations (Non-GAAP) $2.20 $2.18
- ----------------------------------------------------------------------
James C. Foster, Chairman, President and Chief Executive Officer,
said, "The fourth quarter closed an eventful year for Charles River, a
year in which we refocused and rededicated ourselves to our core
competencies of laboratory animal medicine and science and regulatory
compliant preclinical services. We sold or closed non-core businesses,
invested heavily in expanding our Preclinical Services and RMS
footprints, acquired a first-class Phase I business in Northwest
Kinetics, and repurchased 6.0 million shares of our common stock. Our
goal was to position ourselves to better support our clients and to
take advantage of opportunities in both the research models and
services and preclinical markets. We believe we have achieved that
goal, and are enthusiastic about our growth prospects in 2007 and
beyond."
The Company reports results from continuing operations, which
exclude results of the Clinical Phase II - IV business (sold on August
16, 2006) and closure of the Interventional and Surgical Services
(ISS) business (announced on May 9, 2006). Those businesses are now
reported as discontinued operations, and the Company has reclassified
historical comparisons accordingly. The income from discontinued
operations was $3.4 million in the fourth quarter of 2006. Including
discontinued operations, net income for the fourth quarter of 2006 was
$35.2 million, or $0.52 per diluted share, compared to consolidated
net income of $50.4 million, or $0.69 per diluted share, in the fourth
quarter of 2005. For the full year, the loss from discontinued
operations was $181.0 million, due primarily to a goodwill impairment
and income tax expense related to the sale of the Clinical Services
Phase II - IV business, and asset impairments and operating losses
incurred by the Interventional and Surgical Services business.
Including discontinued operations, the net loss for 2006 was $55.8
million, or $0.80 per diluted share, compared to consolidated net
income of $142.0 million, or $1.96 per diluted share, in 2005.
Research Models and Services (RMS)
Sales for the RMS segment were $127.7 million in the fourth
quarter of 2006, an increase of 1.6% from $125.6 million in the fourth
quarter of 2005. The quarter-over-quarter growth rate was negatively
impacted by approximately 3-5% due to the extra week included in the
results for the fourth quarter of 2005. Research Model Services sales
increased, as did In Vitro sales which benefited from sales of core
products and the PTS. As expected, fourth-quarter sales of large
research models were below the fourth quarter of the prior year due to
an extended quarantine, which was completed in mid-December.
In the fourth quarter of 2006, the RMS segment's operating margin
was lower than in the fourth quarter of 2005, primarily reflecting
lower operating income in Japan compared to the prior year which
included a one-time insurance settlement, lower sales of large
research models, and $1.1 million of stock compensation expense
associated with the adoption of SFAS 123R. The GAAP operating margin
was 25.6%, compared to 30.0% for the same period in 2005. On a
non-GAAP basis, which excluded charges of $0.8 million for cost
savings initiatives and $0.2 million for acquisition-related
amortization, the operating margin was 26.3%, compared to 30.4% for
the same period in the prior year. Costs of SFAS 123R reduced the
fourth-quarter 2006 GAAP and non-GAAP operating margins by 0.9%.
For 2006, RMS net sales were $515.0 million, a 2.4% increase over
$503.2 million for 2005. Growth was driven primarily by sales of North
America Research Models and by In Vitro products. The GAAP operating
margin was 28.7% compared to 31.8% in 2005. On a non-GAAP basis, which
excluded $3.1 million for cost-saving initiatives and $0.5 million for
acquisition-related amortization, the operating margin was 29.4%,
compared to 31.9% in 2005. Costs of $4.7 million related to SFAS 123R
reduced the GAAP and non-GAAP operating margins for 2006 by
approximately 0.9%.
Preclinical Services
Results for the Preclinical Services segment now include the Phase
I Clinical business, and historical results have been restated
accordingly.
Fourth-quarter net sales for the Preclinical Services segment were
$144.1 million, an increase of 8.7% from the $132.6 million in the
fourth quarter of 2005. The quarter-over-quarter growth rate was
negatively impacted by approximately 3-5% due to the extra week
included in the results for the fourth quarter of 2005. Sales were
driven by continuing strong demand for general and specialty
toxicology services by pharmaceutical and biotechnology customers, and
the addition of the Northwest Kinetics Phase I clinical services
business.
The GAAP operating margin improved to 16.0% from 12.2%, as higher
sales and improved operating efficiencies and lower amortization
offset the $1.9 million, or a 1.3% operating margin reduction, of
stock compensation costs associated with the adoption of SFAS 123R. On
a non-GAAP basis, which excludes $9.6 million of acquisition-related
amortization and $0.1 million for cost saving initiatives, the
fourth-quarter operating margin improved to 22.7% compared to 21.4%
for the fourth quarter of 2005. On a non-GAAP basis, stock
compensation costs in the fourth quarter were $1.8 million, or an
operating margin reduction of 1.2%. The difference between GAAP and
non-GAAP stock compensation expense was related to the Inveresk
acquisition.
Preclinical Services net sales in 2006 were $543.4 million, an
increase of 10.9% from $490.2 million for the prior year, due to
continuing strong demand for drug discovery and development services
by pharmaceutical and biotechnology customers and to moderate capacity
expansion at certain of the Company's Preclinical Services sites. The
GAAP operating margin was 15.2% compared to 13.9%, with stock
compensation costs accounting for $7.4 million, or a 1.4% reduction in
the operating margin. On a non-GAAP basis, the operating margin was
22.6% in 2006, compared to 23.3% in the year-ago period. For 2006, the
cost of SFAS 123R was $7.2 million on a non-GAAP basis, which reduced
the non-GAAP operating margin by 1.3%.
Stock Repurchase Program
Charles River presently has a stock repurchase authorization in
place from its Board of Directors which provides for the purchase of
up to $300.0 million of its common stock. In the fourth quarter of
2006, under a Rule 10b5-1 purchase plan, the Company repurchased
approximately 77,000 shares of common stock for $3.3 million. In 2006,
the Company repurchased a total of 6.0 million shares for $247.2
million. Combined with previous purchases made in 2005, the Company
has repurchased a total of approximately 6.4 million shares at a cost
of $264.7 million. There is currently a balance of approximately $35.3
million available for repurchases under the current authorization.
As of December 30, 2006, Charles River had approximately 66.9
million shares of common stock outstanding.
2007 Guidance
The Company reaffirms its forward-looking guidance based on
continuing operations for 2007, which was originally provided on
December 13, 2006.
2007 GUIDANCE (from continuing operations)
- ----------------------------------------------------------------------
Net sales growth (in %) 9% - 12%
Sales ($ in millions) $1,160 - $1,190
GAAP EPS estimate $2.11 - $2.21
Acquisition-related amortization $0.32
----------------
Non-GAAP EPS estimate $2.43 - $2.53
- ----------------------------------------------------------------------
Webcast
Charles River Laboratories has scheduled a live webcast on
Tuesday, February 13, at 8:30 a.m. ET to discuss matters relating to
this press release. To participate, please go to ir.criver.com and
select the webcast link. You can also find the associated slide
presentation and reconciliations to comparable GAAP measures on the
website. The webcast will be available until 5:00 p.m. ET on February
27, 2007.
Use of Non-GAAP Financial Measures
This press release contains non-GAAP financial measures, such as
non-GAAP earnings per diluted share from continuing operations, which
exclude cost savings initiatives, costs associated with repatriation
of accumulated income under the American Jobs Creation Act of 2004,
amortization of intangible assets and other charges related to our
acquisitions. We exclude these items from the non-GAAP financial
measures because they are outside our normal operations. There are
limitations in using non-GAAP financial measures, as they are not
prepared in accordance with generally accepted accounting principles,
and may be different than non-GAAP financial measures used by other
companies. In particular, we believe that the inclusion of
supplementary non-GAAP financial measures in this press release helps
investors to gain a meaningful understanding of our core operating
results and future prospects without the effect of one-time charges,
and is consistent with how management measures and forecasts the
Company's performance, especially when comparing such results to prior
periods or forecasts. We believe that the financial impact of our
acquisitions is often large relative to our overall financial
performance, which can adversely affect the comparability of our
results on a period-to-period basis. In addition, certain activities,
such as business acquisitions, happen infrequently and the underlying
costs associated with such activities do not recur. Non-GAAP results
also allow investors to compare the Company's operations against the
financial results of other companies in the industry who similarly
provide non-GAAP results. The non-GAAP financial measures included in
this press release are not meant to be considered superior to or a
substitute for results of operations prepared in accordance with GAAP.
The Company intends to continue to assess the potential value of
reporting non-GAAP results consistent with applicable rules and
regulations. Reconciliations of the non-GAAP financial measures used
in this press release to the most directly comparable GAAP financial
measures are set forth in the text of this press release, and can also
be found on the Company's website at ir.criver.com.
Caution Concerning Forward-Looking Statements
This news release includes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements may be identified by the use of words such
as "anticipate," "believe," "expect," "will," "may," "estimate,"
"plan," "outlook," and "project" and other similar expressions that
predict or indicate future events or trends or that are not statements
of historical matters. These statements also include statements
regarding our projected 2007 earnings; the future demand for drug
discovery and development products and services, including the
outsourcing of these services; the impact of specific actions intended
to improve overall operating efficiencies and profitability;
expectations regarding stock repurchases; the timing of the opening of
new and expanded facilities; future cost reduction activities by our
customers; and Charles River's future performance as delineated in our
forward-looking guidance, and particularly our expectations with
respect to sales growth. Forward-looking statements are based on
Charles River's current expectations and beliefs, and involve a number
of risks and uncertainties that are difficult to predict and that
could cause actual results to differ materially from those stated or
implied by the forward-looking statements. Those risks and
uncertainties include, but are not limited to: a decrease in research
and development spending, a decrease in the level of outsourced
services, or other cost reduction actions by our customers; the
ability to convert backlog to sales; special interest groups;
contaminations; industry trends; new displacement technologies; USDA
and FDA regulations; changes in law; continued availability of
products and supplies; loss of key personnel; interest rate and
foreign currency exchange rate fluctuations; changes in tax regulation
and laws; changes in generally accepted accounting principles; and any
changes in business, political, or economic conditions due to the
threat of future terrorist activity in the U.S. and other parts of the
world, and related U.S. military action overseas. A further
description of these risks, uncertainties, and other matters can be
found in the Risk Factors detailed in Charles River's Annual Report on
Form 10-K as filed on March 14, 2006, as well as other filings we make
with the Securities and Exchange Commission. Because forward-looking
statements involve risks and uncertainties, actual results and events
may differ materially from results and events currently expected by
Charles River, and Charles River assumes no obligation and expressly
disclaims any duty to update information contained in this news
release except as required by law.
About Charles River Laboratories
Charles River Laboratories based in Wilmington, Massachusetts,
partners with global pharmaceutical and biotechnology companies,
government agencies and leading academic institutions to advance the
drug discovery and development process, bringing drugs to market
faster and more efficiently. Charles River's 8,000 employees serve
clients worldwide. For more information on Charles River, visit our
website at www.criver.com.
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(dollars in thousands, except for per share data)
Three Months Ended Twelve Months Ended
----------------------- -----------------------
December December December December
30, 2006 31, 2005 30, 2006 31, 2005
Total net sales $271,725 $258,199 $1,058,385 $993,328
Cost of products sold
and services provided 169,995 162,244 651,778 603,624
----------- ----------- ----------- -----------
Gross margin 101,730 95,955 406,607 389,704
Selling, general and
administrative 46,819 40,485 180,795 157,999
Amortization of
intangibles 9,757 12,428 37,639 47,011
----------- ----------- ----------- -----------
Operating income 45,154 43,042 188,173 184,694
Interest income
(expense) (2,309) (5,665) (12,590) (20,629)
Other income (expense) 1,624 597 981 (177)
----------- ----------- ----------- -----------
Income before income
taxes and minority
interests 44,469 37,974 176,564 163,888
Provision for income
taxes 12,568 (18,965) 49,738 16,261
----------- ----------- ----------- -----------
Income before minority
interests 31,901 56,939 126,826 147,627
Minority interests (109) (392) (1,605) (1,838)
----------- ----------- ----------- -----------
Income from continuing
operations 31,792 56,547 125,221 145,789
Income (loss) from
discontinued
businesses, net of tax 3,397 (6,129) (181,004) (3,790)
----------- ----------- ----------- -----------
Net income (loss) $35,189 $50,418 $(55,783) $141,999
=========== =========== =========== ===========
Earnings (loss) per
common share
Basic:
Continuing operations $0.48 $0.79 $1.82 $2.09
Discontinued operations $0.05 $(0.09) $(2.63) $(0.05)
Net income $0.53 $0.70 $(0.81) $2.04
Diluted:
Continuing operations $0.47 $0.77 $1.79 $2.02
Discontinued operations $0.05 $(0.08) $(2.59) $(0.05)
Net income $0.52 $0.69 $(0.80) $1.96
Weighted average number of common
shares outstanding
Basic 66,257,695 71,775,081 68,945,622 69,730,056
Diluted 67,450,735 73,161,997 69,948,032 72,902,385
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(dollars in thousands)
December December
30, 2006 31, 2005
Assets
Current assets
Cash and cash equivalents $175,380 $114,821
Trade receivables, net 202,658 171,259
Inventories 72,362 65,128
Other current assets 44,363 26,858
Current assets of discontinued businesses 6,330 41,256
----------- -----------
Total current assets 501,093 419,322
Property, plant and equipment, net 534,745 387,501
Goodwill, net 1,119,309 1,097,590
Other intangibles, net 160,204 175,021
Deferred tax asset 107,498 68,046
Other assets 133,944 34,709
Long-term assets of discontinued businesses 751 356,020
----------- -----------
Total assets $2,557,544 $2,538,209
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities
Current portion of long-term debt $24,143 $36,263
Accounts payable 28,223 28,727
Accrued compensation 41,651 38,238
Deferred income 93,197 95,564
Accrued liabilities 41,991 38,625
Other current liabilities 25,625 43,581
Current liabilities of discontinued
businesses 3,667 30,414
----------- -----------
Total current liabilities 258,497 311,412
Long-term debt 547,918 259,902
Other long-term liabilities 146,695 116,503
Long-term liabilities of discontinued
businesses - 13,661
----------- -----------
Total liabilities 953,110 701,478
----------- -----------
Minority interests 9,223 9,718
Total shareholders' equity 1,595,211 1,827,013
----------- -----------
Total liabilities and shareholders' equity $2,557,544 $2,538,209
=========== ===========
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED)
(dollars in thousands)
Three Months Ended Twelve Months Ended
------------------- ---------------------
December December December December
30, 2006 31, 2005 30, 2006 31, 2005
Research Models and Services
Net sales $127,651 $125,602 $514,999 $503,167
Gross margin 50,358 51,254 214,125 215,534
Gross margin as a % of net
sales 39.4% 40.8% 41.6% 42.8%
Operating income 32,619 37,685 147,789 159,756
Operating income as a % of
net sales 25.6% 30.0% 28.7% 31.8%
Depreciation and
amortization 5,345 5,215 20,802 20,015
Capital expenditures 14,737 7,183 27,018 24,558
Preclinical Services
Net sales $144,074 $132,597 $543,386 $490,161
Gross margin 51,372 44,701 192,482 174,170
Gross margin as a % of net
sales 35.7% 33.7% 35.4% 35.5%
Operating income 23,034 16,205 82,323 67,918
Operating income as a % of
net sales 16.0% 12.2% 15.2% 13.9%
Depreciation and
amortization 16,482 17,689 61,784 67,920
Capital expenditures 67,249 18,087 154,728 69,885
Unallocated Corporate
Overhead $(10,499) $(10,848) $(41,939) $(42,980)
Total
Net sales $271,725 $258,199 $1,058,385 $993,328
Gross margin 101,730 95,955 406,607 389,704
Gross margin as a % of net
sales 37.4% 37.2% 38.4% 39.2%
Operating income (loss) 45,154 43,042 188,173 184,694
Operating income as a % of
net sales 16.6% 16.7% 17.8% 18.6%
Depreciation and
amortization 21,827 22,904 82,586 87,935
Capital expenditures 81,986 25,270 181,746 94,443
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
RECONCILIATION OF GAAP TO NON-GAAP
SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED)
(dollars in thousands)
Three Months Ended Twelve Months Ended
------------------- ---------------------
December December December December
30, 2006 31, 2005 30, 2006 31, 2005
Research Models and Services
Net sales $127,651 $125,602 $514,999 $503,167
Operating income 32,619 37,685 147,789 159,756
Operating income as a % of
net sales 25.6% 30.0% 28.7% 31.8%
Add back:
Amortization related to
acquisitions 191 110 461 285
Cost-saving initiatives 781 365 3,115 365
--------- --------- ----------- ---------
Operating income, excluding
specified charges (Non-
GAAP) $33,591 $38,160 $151,365 $160,406
Non-GAAP operating income as
a % of net sales 26.3% 30.4% 29.4% 31.9%
Preclinical Services
Net sales $144,074 $132,597 $543,386 $490,161
Operating income 23,034 16,205 82,323 67,918
Operating income as a % of
net sales 16.0% 12.2% 15.2% 13.9%
Add back:
Amortization related to
acquisitions 9,566 12,162 37,178 46,136
Cost-saving initiatives 124 - 3,090 -
--------- --------- ----------- ---------
Operating income, excluding
specified charges (Non-
GAAP) $32,724 $28,367 $122,591 $114,054
Non-GAAP operating income as
a % of net sales 22.7% 21.4% 22.6% 23.3%
Unallocated Corporate
Overhead $(10,499) $(10,848) $(41,939) $(42,980)
Add back:
Amortization related to
acquisitions - 156 - 591
Repatriation - 1,305 - 1,305
Stock-based compensation
related to Inveresk
acquisition 70 2,164 634 7,925
--------- --------- ----------- ---------
Unallocated corporate
overhead, excluding
specified charges (Non-
GAAP) $(10,429) $(7,223) $(41,305) $(33,159)
Total
Net sales $271,725 $258,199 $1,058,385 $993,328
Operating income 45,154 43,042 188,173 184,694
Operating income as a % of
net sales 16.6% 16.7% 17.8% 18.6%
Add back:
Amortization related to
acquisition 9,757 12,428 37,639 47,012
Cost-saving initiatives 905 365 6,205 365
Stock-based compensation
related to Inveresk
acquisition 70 2,164 634 7,925
Repatriation - 1,305 - 1,305
--------- --------- ----------- ---------
Operating income, excluding
specified charges (Non-
GAAP) $55,886 $59,304 $232,651 $241,301
Non-GAAP operating income as
a % of net sales 20.6% 23.0% 22.0% 24.3%
Charles River management believes that supplementary non-GAAP
financial measures provide useful information to allow investors to
gain a meaningful understanding of our core operating results and
future prospects, without the effect of one-time charges, consistent
with the manner in which management measures and forecasts the
Company's performance. The supplementary non-GAAP financial measures
included are not meant to be considered superior to, or a substitute
for results of operations prepared in accordance with GAAP. The
Company intends to continue to assess the potential value of
reporting non-GAAP results consistent with applicable rules and
regulations.
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
RECONCILIATION OF GAAP EARNINGS TO NON-GAAP EARNINGS
(dollars in thousands, except for per share data)
Three Months Ended Twelve Months Ended
----------------------- -----------------------
December December December December
30, 2006 31, 2005 30, 2006 31, 2005
Net income (loss) $35,189 $50,418 $(55,783) $141,999
Less: Discontinued
operations (3,397) 6,129 181,004 3,790
----------- ----------- ----------- -----------
Net income from
continuing operations 31,792 56,547 125,221 145,789
Add back:
Amortization related to
acquisitions 9,757 12,428 37,639 47,012
Stock-based
compensation related
to Inveresk
acquisition 70 2,164 634 7,925
Cost-saving
initiatives :
Severance - 365 2,556 365
Impairment 124 - 2,768 -
Other 781 - 881 -
Repatriation - 1,305 - 1,305
Deferred financing cost - 2,155 - 2,155
Deferred tax reversal - (28,271) - (28,271)
Tax effect (3,496) (6,180) (15,514) (18,687)
----------- ----------- ----------- -----------
Net income from
continuing operations,
excluding specified
charges (Non-GAAP) $39,028 $40,513 $154,185 $157,593
=========== =========== =========== ===========
Calculation of earnings
per common share,
excluding specified
charges (Non-GAAP):
Net income for purposes
of calculating
earnings per share,
excluding specified
charges (Non-GAAP) $39,028 $40,513 $154,185 $157,593
After-tax equivalent
interest expense on
3.5% senior
convertible debentures - - - 1,208
----------- ----------- ----------- -----------
Income for purposes of
calculating diluted
earnings per share,
excluding specified
charges (Non-GAAP) $39,028 $40,513 $154,185 $158,801
=========== =========== =========== ===========
Weighted average shares
outstanding - Basic 66,257,695 71,775,081 68,945,622 69,730,056
Effect of dilutive
securities:
3.5% senior convertible
debentures - - - 1,462,474
Stock options and
contingently issued
restricted stock 1,061,094 1,241,411 867,204 1,424,740
Warrants 131,946 145,505 135,206 285,115
----------- ----------- ----------- -----------
Weighted average shares
outstanding - Diluted 67,450,735 73,161,997 69,948,032 72,902,385
=========== =========== =========== ===========
Basic earnings (loss)
per share $0.53 $0.70 $(0.81) $2.04
Diluted earnings (loss)
per share $0.52 $0.69 $(0.80) $1.96
Basic earnings per
share, excluding
specified charges
(Non-GAAP) $0.59 $0.56 $2.24 $2.26
Diluted earnings per
share, excluding
specified charges
(Non-GAAP) $0.58 $0.55 $2.20 $2.18
Charles River management believes that supplementary non-GAAP
financial measures provide useful information to allow investors to
gain a meaningful understanding of our core operating results and
future prospects, without the effect of one-time charges, consistent
with the manner in which management measures and forecasts the
Company's performance. The supplementary non-GAAP financial measures
included are not meant to be considered superior to, or a substitute
for results of operations prepared in accordance with GAAP. The
Company intends to continue to assess the potential value of
reporting non-GAAP results consistent with applicable rules and
regulations.
CONTACT: Investor Contact:
Charles River Laboratories International, Inc.
Susan E. Hardy, 781.262.7616
Corporate Vice President, Investor Relations