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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
NOVEMBER 5, 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 (I.R.S. Employer
of Incorporation) Number) 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 November 5, 2007, Charles River Laboratories International, Inc. issued a
press release providing financial results for the quarter ended September 29,
2007.
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 November 5, 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: November 5, 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 November 5, 2007.
4
Exhibit 99.1
Charles River Laboratories Announces Third-Quarter 2007
Results from Continuing Operations
Sales Increase 18.6% to $314 Million
GAAP EPS Increase 34.0% to $0.63
Non-GAAP EPS Increase 21.1% to $0.69
Company Increases 2007 Sales and EPS Guidance
WILMINGTON, Mass.--(BUSINESS WIRE)--Nov. 5, 2007--Charles River
Laboratories International, Inc. (NYSE: CRL) today reported
third-quarter and year-to-date 2007 financial results. For the third
quarter, net sales from continuing operations increased 18.6% to
$314.0 million from $264.7 million in the third quarter of 2006. Both
the Research Models and Services (RMS) and Preclinical Services (PCS)
business segments reported strong net sales growth, as pharmaceutical
and biotechnology companies continued to invest in basic research and
increased their strategic use of outsourced drug development services.
Foreign exchange contributed 2.6% to the net sales growth.
On a GAAP basis, net income from continuing operations for the
third quarter of 2007 was $43.5 million, or $0.63 per diluted share,
compared to $32.1 million, or $0.47 per diluted share, for the third
quarter of 2006. The 34.0% increase in earnings per share resulted
primarily from higher sales.
On a non-GAAP basis, net income from continuing operations was
$47.3 million for the third quarter of 2007, compared to $38.8 million
for the same period in 2006. Third-quarter diluted earnings per share
on a non-GAAP basis were $0.69, an increase of 21.1% compared to $0.57
per share in the third quarter of 2006. Non-GAAP earnings per share in
the third quarter of 2007 excluded $8.4 million of amortization of
intangible assets and stock-based compensation related to acquisitions
and a charge of $0.8 million related to pre-acquisition Inveresk stock
compensation taxes, partially offset by a $2.0 million gain on the
sale of real estate in Scotland and a benefit of $0.9 million
resulting from a deferred tax revaluation. For the third quarter of
2006, non-GAAP results excluded $9.6 million of amortization of
intangible assets and stock-based compensation related to
acquisitions.
James C. Foster, Chairman, President and Chief Executive Officer,
said, "Our outstanding third-quarter performance reflects the results
of many of the strategic actions we undertook over the last several
years. During that time, we expanded our broad portfolio of essential
products and services, enhanced our managerial, scientific and
technical talent, and widened our global footprint at this critical
inflection point in the drug development industry, and as a result,
are extremely well positioned to support our clients' robust demand.
In the third quarter, strong performance from our RMS businesses and
our PCS toxicology facilities largely offset the effect of both the
transition costs to our new preclinical facility in Massachusetts and
the anticipated higher corporate costs. As a result of our
year-to-date sales and earnings growth, we are raising our guidance
for 2007. We now anticipate sales growth in a range of 14-16%, GAAP
earnings per share in a range of $2.22 to $2.25, and non-GAAP earnings
per share in a range of $2.56 to $2.59. We are looking forward to a
strong finish to this year and to capitalizing on the opportunities
which we see for 2008 and beyond."
The net loss from discontinued operations was $0.8 million in the
third quarter of 2007. Including discontinued operations, net income
for the third quarter of 2007 was $42.8 million, or $0.62 per diluted
share, compared to a net loss of $16.6 million, or $0.24 per diluted
share, in the third quarter of 2006. Discontinued operations in 2006
included both the Interventional and Surgical Services business, the
closure of which was finalized in the third quarter of 2007, and the
Phase II - IV clinical services business, which the Company sold in
the third quarter of 2006.
Research Models and Services (RMS)
Sales for the RMS segment were $145.2 million in the third quarter
of 2007, an increase of 13.8% from $127.6 million in the third quarter
of 2006. Sales growth was driven in particular by strong demand for
research models in the United States and Europe, worldwide Transgenic
Services, and In Vitro products.
In the third quarter of 2007, the RMS segment's GAAP operating
margin increased to 31.4% compared to 28.8% in the third quarter of
2006. On a non-GAAP basis, which excluded charges of $0.4 million for
acquisition-related amortization, the operating margin was 31.6%
compared to 28.8% for the same period in the prior year. The
improvement was due primarily to higher sales.
Preclinical Services (PCS)
Third-quarter net sales for the PCS segment were $168.8 million,
an increase of 23.1% from $137.1 million in the third quarter of 2006.
The primary factors which contributed to the sales growth were
continuing strong demand for general and specialty toxicology services
from pharmaceutical and biotechnology customers, and the addition on
October 30, 2006, of the Northwest Kinetics Phase I clinical services
business.
The PCS segment's GAAP operating margin improved to 17.8% from
16.8%. On a non-GAAP basis, which excludes $8.0 million of
acquisition-related amortization and the $0.8 million charge for the
pre-acquisition Inveresk stock compensation taxes, as well as the $2.0
million gain on the sale of real estate in Scotland, the third-quarter
operating margin declined to 21.8% from 23.6% in the third quarter of
2006. Improved profitability at many of the Company's preclinical
toxicology facilities provided a significant offset to the expected
decline in profitability of the new Massachusetts facility, which
experienced higher operating costs associated with the transition from
the old to the new facility.
Nine-Month Results
For the first nine months of 2007, net sales from continuing
operations increased by 16.0% to $912.6 million, from $786.7 million
in the same period in 2006. Foreign exchange contributed approximately
2.5% to the sales growth rate.
On a GAAP basis, net income from continuing operations was $118.6
million, or $1.74 per diluted share, for the first nine months of
2007, compared to $93.4 million, or $1.32 per diluted share, for the
same period in 2006.
On a non-GAAP basis, net income from continuing operations for the
first nine months of 2007 was $134.3 million, or $1.97 per diluted
share, compared to $115.2 million, or $1.63 per diluted share, for the
same period in 2006. For the first nine months of 2007, non-GAAP net
income excluded $24.5 million of amortization and stock-based
compensation costs associated with acquisitions, a charge of $1.7
million related to the decision to accelerate the exit of the
Company's Preclinical Services facility in Worcester, Massachusetts,
and a charge of $0.8 million related to pre-acquisition Inveresk stock
compensation taxes. Non-GAAP results also excluded a $2.0 million gain
on the sale of real estate in Scotland and a benefit of $0.9 million
resulting from a deferred tax revaluation. Non-GAAP net income for the
same period in 2006 excluded acquisition-related charges of $28.4
million and charges of $5.3 million related to cost-savings
initiatives.
Including a loss of $1.1 million from discontinued operations, net
income for the first nine months of 2007 was $117.5 million, or $1.72
per diluted share, compared to a net loss of $91.0 million, or $1.28
per diluted share, for the same period in 2006. The loss in the prior
year was due in part to a $129.2 million goodwill impairment recorded
in the first quarter of 2006 related to the sale of the Clinical Phase
II - IV business.
Research Models and Services (RMS)
For the first nine months of 2007, RMS net sales were $432.1
million, an increase of 11.5% from net sales of $387.3 million in the
same period in 2006. The RMS segment's GAAP operating margin was 31.9%
in the first nine months of 2007, compared to 29.7% for the year-ago
period. On a non-GAAP basis, the operating margin was 32.2% compared
to 30.4% in the first nine months of 2006.
Preclinical Services (PCS)
For the first nine months of 2007, PCS net sales were $480.5
million, an increase of 20.3% over the $399.3 million reported in the
same period in 2006. On a GAAP basis, the PCS segment operating margin
was 16.8% in the first nine months of 2007, compared to 14.8% in the
year-ago period. On a non-GAAP basis, the operating margin was 21.8%
in the first nine months of 2007 compared to 22.5% for the same period
in 2006.
2007 Guidance
Based on the strong demand for its products and services, the
Company is increasing its sales and GAAP and non-GAAP earnings per
share guidance. The revised forward-looking guidance, shown in the
table below, is based on current foreign exchange rates.
2007 GUIDANCE (from continuing
operations) REVISED PRIOR
- ------------------------------------- --------------- ---------------
Net sales growth (in %) 14% - 16% 12% - 14%
Sales ($ in millions) $1,205 - $1,225 $1,185 - $1,205
GAAP EPS estimate $2.22 - $2.25 $2.15 - $2.21
Acquisition-related amortization $0.32 $0.32
Charge to exit Worcester facility,
gain on sale of real estate and
other items, net $0.01 - $0.03 $0.01 - $0.03
--------------- ---------------
Non-GAAP EPS estimate $2.56 - $2.59 $2.47 - $2.53
- ------------------------------------- --------------- ---------------
Webcast
Charles River Laboratories has scheduled a live webcast on
Tuesday, November 6, 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.
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 amortization of intangible assets and other charges related to
our acquisitions, impairments due to our accelerated exit from our
Worcester Preclinical Services facility, charges related to
pre-acquisition Inveresk stock compensation charges, a deferred tax
revaluation, and the gain on the sale of real estate in Scotland. 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; 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 February 27, 2007, 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 8,300 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
------------------------------
September 29, September 30,
2007 2006
Total net sales $ 313,964 $ 264,660
Cost of products sold and services
provided 190,065 162,398
-------------- ---------------
Gross margin 123,899 102,262
Selling, general and
administrative 51,847 41,211
Amortization of intangibles 8,421 9,430
-------------- ---------------
Operating income 63,631 51,621
Interest income (expense) (2,328) (3,604)
Other income (expense) (861) 45
-------------- ---------------
Income before income taxes and minority
interests 60,442 48,062
Provision for income taxes 16,808 15,489
-------------- ---------------
Income before minority interests 43,634 32,573
Minority interests (98) (440)
-------------- ---------------
Income from continuing operations 43,536 32,133
Loss from discontinued businesses, net
of tax (759) (48,739)
-------------- ---------------
Net income (loss) $ 42,777 $ (16,606)
============== ===============
Earnings (loss) per common share
Basic:
Continuing operations $ 0.65 $ 0.48
Discontinued operations $ (0.01) $ (0.73)
Net income $ 0.64 $ (0.25)
Diluted:
Continuing operations $ 0.63 $ 0.47
Discontinued operations $ (0.01) $ (0.72)
Net income $ 0.62 $ (0.24)
Weighted average number of common shares outstanding
Basic 67,192,236 67,171,270
Diluted 69,077,747 68,053,872
Nine Months Ended
-----------------------------
September 29, September 30,
2007 2006
Total net sales $ 912,598 $ 786,660
Cost of products sold and services
provided 552,170 481,783
-------------- --------------
Gross margin 360,428 304,877
Selling, general and
administrative 160,956 133,976
Amortization of intangibles 24,415 27,882
-------------- --------------
Operating income 175,057 143,019
Interest income (expense) (6,982) (10,281)
Other income (expense) (1,781) (643)
-------------- --------------
Income before income taxes and minority
interests 166,294 132,095
Provision for income taxes 47,219 37,170
-------------- --------------
Income before minority interests 119,075 94,925
Minority interests (471) (1,496)
-------------- --------------
Income from continuing operations 118,604 93,429
Loss from discontinued businesses, net
of tax (1,108) (184,401)
-------------- --------------
Net income (loss) $ 117,496 $ (90,972)
============== ==============
Earnings (loss) per common share
Basic:
Continuing operations $ 1.78 $ 1.34
Discontinued operations $ (0.02) $ (2.64)
Net income $ 1.76 $ (1.30)
Diluted:
Continuing operations $ 1.74 $ 1.32
Discontinued operations $ (0.02) $ (2.60)
Net income $ 1.72 $ (1.28)
Weighted average number of common
shares outstanding
Basic 66,813,724 69,841,647
Diluted 68,158,843 70,829,692
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(dollars in thousands)
September 29, December 30,
2007 2006
Assets
Current assets
Cash and cash equivalents $ 183,497 $ 175,380
Trade receivables, net 232,041 202,658
Inventories 80,234 72,362
Other current assets 58,159 44,363
Current assets of discontinued
businesses 1,414 6,330
-------------- -------------
Total current assets 555,345 501,093
Property, plant and equipment, net 688,150 534,745
Goodwill, net 1,120,292 1,119,309
Other intangibles, net 156,397 160,204
Deferred tax asset 92,453 107,498
Other assets 118,950 133,944
Long-term assets of discontinued
businesses 4,187 751
-------------- -------------
Total assets $2,735,774 $2,557,544
============== =============
Liabilities and Shareholders' Equity
Current liabilities
Current portion of long-term debt $ 24,133 $ 24,977
Accounts payable 36,013 28,223
Accrued compensation 44,011 41,651
Deferred revenue 88,447 93,197
Accrued liabilities 64,798 41,991
Other current liabilities 32,714 25,625
Current liabilities of discontinued
businesses 250 3,667
-------------- -------------
Total current liabilities 290,366 259,331
Long-term debt 493,697 547,084
Other long-term liabilities 146,148 146,695
-------------- -------------
Total liabilities 930,211 953,110
-------------- -------------
Minority interests 3,467 9,223
Total shareholders' equity 1,802,096 1,595,211
-------------- -------------
Total liabilities and shareholders'
equity $2,735,774 $2,557,544
============== =============
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED)
(dollars in thousands)
Three Months Ended
-----------------------------
September 29, September 30,
2007 2006
Research Models and Services
Net sales $ 145,207 $127,560
Gross margin 63,408 52,423
Gross margin as a % of net sales 43.7% 41.1%
Operating income 45,574 36,691
Operating income as a % of net
sales 31.4% 28.8%
Depreciation and amortization 5,780 5,185
Capital expenditures 12,643 3,932
Preclinical Services
Net sales $ 168,757 $137,100
Gross margin 60,491 49,839
Gross margin as a % of net sales 35.8% 36.4%
Operating income 29,993 22,971
Operating income as a % of net
sales 17.8% 16.8%
Depreciation and amortization 16,180 15,389
Capital expenditures 37,692 39,038
Unallocated Corporate Overhead $(11,936) $(8,041)
Total
Net sales $ 313,964 $264,660
Gross margin 123,899 102,262
Gross margin as a % of net sales 39.5% 38.6%
Operating income (loss) 63,631 51,621
Operating income as a % of net
sales 20.3% 19.5%
Depreciation and amortization 21,960 20,574
Capital expenditures 50,335 42,970
Nine Months Ended
-----------------------------
September 29, September 30,
2007 2006
Research Models and Services
Net sales $ 432,078 $ 387,348
Gross margin 190,171 163,767
Gross margin as a % of net sales 44.0% 42.3%
Operating income 137,863 115,170
Operating income as a % of net
sales 31.9% 29.7%
Depreciation and amortization 17,012 15,457
Capital expenditures 30,415 12,281
Preclinical Services
Net sales $ 480,520 $ 399,312
Gross margin 170,257 141,110
Gross margin as a % of net sales 35.4% 35.3%
Operating income 80,863 59,289
Operating income as a % of net
sales 16.8% 14.8%
Depreciation and amortization 46,093 45,302
Capital expenditures 107,256 87,479
Unallocated Corporate Overhead $(43,669) $(31,440)
Total
Net sales $ 912,598 $ 786,660
Gross margin 360,428 304,877
Gross margin as a % of net sales 39.5% 38.8%
Operating income (loss) 175,057 143,019
Operating income as a % of net
sales 19.2% 18.2%
Depreciation and amortization 63,105 60,759
Capital expenditures 137,671 99,760
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
RECONCILIATION OF GAAP TO NON-GAAP
SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED)
(dollars in thousands)
Three Months Ended
-----------------------------
September 29, September 30,
2007 2006
Research Models and Services
Net sales $ 145,207 $127,560
Operating income 45,574 36,691
Operating income as a % of net sales 31.4% 28.8%
Add back:
Amortization related to acquisitions 380 91
Impairment and other charges - -
-------------- --------------
Operating income, excluding specified
charges (Non-GAAP) $ 45,954 $ 36,782
Non-GAAP operating income as a % of net
sales 31.6% 28.8%
Preclinical Services
Net sales $ 168,757 $137,100
Operating income 29,993 22,971
Operating income as a % of net sales 17.8% 16.8%
Add back:
Amortization related to acquisitions 8,041 9,339
Impairment and other charges - -
Gain on sale of UK real estate (2,047) -
Pre-acquisition Inveresk stock
compensation taxes 845 -
-------------- --------------
Operating income, excluding specified
charges (Non-GAAP) $ 36,832 $ 32,310
Non-GAAP operating income as a % of net
sales 21.8% 23.6%
Unallocated Corporate Overhead $(11,936) $(8,041)
Add back:
Stock-based compensation related to
Inveresk acquisition 6 163
-------------- --------------
Unallocated corporate overhead,
excluding specified charges (Non-GAAP) $(11,930) $(7,878)
Total
Net sales $ 313,964 $264,660
Operating income 63,631 51,621
Operating income as a % of net sales 20.3% 19.5%
Add back:
Amortization related to acquisition 8,421 9,430
Stock-based compensation related to
Inveresk acquisition 6 163
Impairment and other charges - -
Gain on sale of UK real estate (2,047) -
Pre-acquisition Inveresk stock
compensation taxes 845 -
-------------- --------------
Operating income, excluding specified
charges (Non-GAAP) $ 70,856 $ 61,214
Non-GAAP operating income as a % of net
sales 22.6% 23.1%
Nine Months Ended
-----------------------------
September 29, September 30,
2007 2006
Research Models and Services
Net sales $ 432,078 $ 387,348
Operating income 137,863 115,170
Operating income as a % of net sales 31.9% 29.7%
Add back:
Amortization related to acquisitions 1,125 270
Impairment and other charges - 2,334
-------------- --------------
Operating income, excluding specified
charges (Non-GAAP) $ 138,988 $ 117,774
Non-GAAP operating income as a % of net
sales 32.2% 30.4%
Preclinical Services
Net sales $ 480,520 $ 399,312
Operating income 80,863 59,289
Operating income as a % of net sales 16.8% 14.8%
Add back:
Amortization related to acquisitions 23,290 27,612
Impairment and other charges 1,682 2,966
Gain on sale of UK real estate (2,047) -
Pre-acquisition Inveresk stock
compensation taxes 845 -
-------------- --------------
Operating income, excluding specified
charges (Non-GAAP) $ 104,633 $ 89,867
Non-GAAP operating income as a % of net
sales 21.8% 22.5%
Unallocated Corporate Overhead $(43,669) $(31,440)
Add back:
Stock-based compensation related to
Inveresk acquisition 94 565
-------------- --------------
Unallocated corporate overhead,
excluding specified charges (Non-GAAP) $(43,575) $(30,875)
Total
Net sales $ 912,598 $ 786,660
Operating income 175,057 143,019
Operating income as a % of net sales 19.2% 18.2%
Add back:
Amortization related to acquisition 24,415 27,882
Stock-based compensation related to
Inveresk acquisition 94 565
Impairment and other charges 1,682 5,300
Gain on sale of UK real estate (2,047) -
Pre-acquisition Inveresk stock
compensation taxes 845 -
-------------- --------------
Operating income, excluding specified
charges (Non-GAAP) $ 200,046 $ 176,766
Non-GAAP operating income as a % of net
sales 21.9% 22.5%
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
-----------------------------
September 29, September 30,
2007 2006
Net income (loss) $42,777 $(16,606)
Less: Discontinued operations 759 48,739
-------------- --------------
Net income from continuing operations 43,536 32,133
Add back:
Amortization related to acquisitions 8,421 9,430
Stock-based compensation related to
Inveresk acquisition 6 163
Impairment and other charges - -
Gain on sale of UK real estate (2,047) -
Pre-acquisition Inveresk stock
compensation taxes 845 -
Deferred tax revaluation (907) -
Tax effect (2,517) (2,957)
-------------- --------------
Net income from continuing operations,
excluding specified charges (Non-GAAP) $47,337 $38,769
============== ==============
Weighted average shares outstanding -
Basic 67,192,236 67,171,270
Effect of dilutive securities:
2.25% senior convertible debentures 526,591 -
Stock options and contingently issued
restricted stock 1,226,004 752,838
Warrants 132,916 129,764
-------------- --------------
Weighted average shares outstanding -
Diluted 69,077,747 68,053,872
============== ==============
Basic earnings (loss) per share $0.64 $(0.25)
Diluted earnings (loss) per share $0.62 $(0.24)
Basic earnings per share, excluding
specified charges (Non-GAAP) $0.70 $0.58
Diluted earnings per share, excluding
specified charges (Non-GAAP) $0.69 $0.57
Nine Months Ended
-----------------------------
September 29, September 30,
2007 2006
Net income (loss) $117,496 $(90,972)
Less: Discontinued operations 1,108 184,401
-------------- --------------
Net income from continuing operations 118,604 93,429
Add back:
Amortization related to acquisitions 24,415 27,882
Stock-based compensation related to
Inveresk acquisition 94 565
Impairment and other charges 1,682 5,300
Gain on sale of UK real estate (2,047) -
Pre-acquisition Inveresk stock
compensation taxes 845 -
Deferred tax revaluation (907) -
Tax effect (8,362) (12,018)
-------------- --------------
Net income from continuing operations,
excluding specified charges (Non-GAAP) $134,324 $115,158
============== ==============
Weighted average shares outstanding -
Basic 66,813,724 69,841,647
Effect of dilutive securities:
2.25% senior convertible debentures 85,190 -
Stock options and contingently issued
restricted stock 1,126,481 851,755
Warrants 133,448 136,290
-------------- --------------
Weighted average shares outstanding -
Diluted 68,158,843 70,829,692
============== ==============
Basic earnings (loss) per share $1.76 $(1.30)
Diluted earnings (loss) per share $1.72 $(1.28)
Basic earnings per share, excluding
specified charges (Non-GAAP) $2.01 $1.65
Diluted earnings per share, excluding
specified charges (Non-GAAP) $1.97 $1.63
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: Charles River Laboratories
Investor Contact:
Susan E. Hardy, 781-222-6190
Corporate Vice President, Investor Relations
or
Media Contact:
Amy Cianciaruso, 781-222-6168
Associate Director, Public Relations