1. Basis of Presentation

        The condensed consolidated interim financial statements are unaudited, and certain information and footnote disclosures related thereto normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been omitted in accordance with Rule 10-01 of Regulation S-X. In the opinion of management, the accompanying unaudited condensed consolidated financial statements were prepared following the same policies and procedures used in the preparation of the audited financial statements and reflect all adjustments (consisting of normal recurring adjustments) considered necessary to state fairly the financial position and results of operations of Charles River Laboratories International, Inc. The results of operations for the interim periods are not necessarily indicative of th e results for the entire fiscal year. These condensed consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 26, 2009.

2. Restructuring and Contract Termination Costs

        We implemented headcount reductions to improve operating efficiency and profitability at various sites including Shrewsbury, Massachusetts in the first quarter of 2010 and Arkansas during 2009. As of June 26, 2010, $4,608 was included in accrued compensation and $946 in other long-term liabilities on our consolidated balance sheet related to these actions.

        During the first six months of 2010, we recorded severance charges of $4,815 related to the suspension of operations at our Preclinical Services facility in Shrewsbury, Massachusetts, of which $4,440 is included in cost of sales and $375 in selling, general and administrative expense. At this time we do not anticipate an asset impairment on the Shrewsbury facility. Additionally, we recorded an impairment related to our Arkansas facility by $986 in the first quarter of 2010.

3. Supplemental Balance Sheet Information

        The composition of trade receivables is as follows:

        The composition of inventories is as follows:

        The composition of other current assets is as follows:

        The composition of net property, plant and equipment is as follows:

        Depreciation is calculated using a straight-line method based on estimated useful lives of the assets. Computer hardware and software is depreciated over 3 to 8 years. Depreciation expense for the six months ended June 26, 2010 and June 27, 2009 was $34,643 and $31,503, respectively.

        The composition of other assets is as follows:

        The composition of other current liabilities is as follows:

        The composition of other long-term liabilities is as follows:

4. Marketable Securities

        The amortized cost, gross unrealized gains, gross unrealized losses and fair value for marketable securities by major security type were as follows:

        As of June 26, 2010, we held $16,545 in auction rate securities which are variable rate debt instruments, which bear interest rates that reset approximately every 7 or 35 days. The auction rate securities owned were rated AAA by a major credit rating agency and are either commercially insured or guaranteed by the Federal Family Education Loan Program (FFELP). The underlying securities have contractual maturities which are generally greater than ten years. The auction rate securities are classified as available for sale and are recorded at fair value. Typically, the carrying value of auction rate securities approximates fair value due to the frequent resetting of the interest rates. In June, we received notice of a full call redemption on one of our auction rate securities at par value to occur in July 2010 in the amount of $5,500. As a result, we classifie d this auction security as short term. We have classified the other auction rate securities investments as long-term consistent with the term of the underlying security which are structured with short term interest rate reset dates of 35 days, but with contractual maturities that are long-term.

        Maturities of debt securities were as follows:

5. Fair Value

        We hold cash equivalents, investments and certain other assets that are carried at fair value. We generally determine fair value using a market approach based on quoted prices of identical instruments when available. When market quotes of identical instruments are not readily accessible or available, we determine fair value based on quoted market prices of similar instruments.

        The valuation hierarchy for disclosure of the inputs used to measure fair value prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, including interest rates, yield curves and credit risks, or inputs that are derived principally from or corroborated by observable market data through correlation. Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. A financial asset or liability's classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

        Assets and liabilities measured at fair value on a recurring basis are summarized below: