– Second-Quarter Revenue of
– Second-Quarter GAAP Earnings per Share of
– Updates EPS Guidance for 2014 –
– Revises Financial Reporting into Three Segments –
On a GAAP basis, net income from continuing operations for the second quarter of 2014 was
On a non-GAAP basis, net income from continuing operations was
"We are continuing our focus on targeted sales efforts, which have been particularly successful with the mid-tier clients. And now that we have broadened our early-stage portfolio with the addition of early discovery capabilities, we are engaging in expanded discussions with existing clients and reaching potential clients who are interested in outsourcing entire drug discovery and development programs to a single provider. We believe these discussions will result in expanded and new strategic relationships across our global, mid-tier, and academic clients," Mr. Foster concluded.
Business Segment Revision
During the second quarter of 2014, following the acquisition of Argenta and BioFocus on
Management believes that the new business segments reflect results of operations and facilitate investors' understanding of the Company's business. The changes in segment presentation have no effect on consolidated revenue or net income. The business segment details discussed in this press release are based on the new business segments. Comparable prior periods have been recast based on the new business segments since the first quarter of 2012, and this quarterly financial information is provided in the schedules at the end of this press release.
The revised reportable segments are as follows:
|
Research Models |
Discovery and |
Manufacturing |
||||
| Research Models | Discovery Services (2) | Endotoxin and Microbial Detection | ||||
| Research Model Services (1) | Safety Assessment | Avian Vaccine Services | ||||
| Biologics Testing Solutions |
(1) The Research Models Services business currently includes Genetically Engineered Models and Services (GEMS), Research Animal Diagnostic Services (RADS), and Insourcing Solutions (IS).
(2) The Discovery Services business includes the legacy Discovery Research Services operations (formerly reported in the RMS segment), discovery services which were formerly reported in Preclinical Services, and Argenta and BioFocus.
Prior to recasting the reportable segments, the businesses were reported in two segments as follows:
|
Research Models |
Preclinical |
||
| Research Models | Discovery Services | ||
| (including Avian Vaccine Services) | Safety Assessment | ||
| Research Model Services (1) | Biologics Testing Solutions | ||
| Endotoxin and Microbial Detection |
(1) The Research Models Services business previously included Genetically Engineered Models and Services (GEMS), Research Animal Diagnostic Services (RADS), Insourcing Solutions (IS), and Discovery Research Services.
Second-Quarter Segment Results
Research Models and Services (RMS)
Revenue for the RMS segment was
In the second quarter of 2014, the RMS segment's GAAP operating margin was unchanged at 25.7% compared to the second quarter of 2013. On a non-GAAP basis, the operating margin increased to 29.0% from 27.5% in the second quarter of 2013. Benefits from the Company's global efficiency initiatives drove the operating margin improvement.
Discovery and Safety Assessment (DSA)
Second-quarter 2014 revenue from continuing operations for the DSA segment was
In the second quarter of 2014, the DSA segment's GAAP operating margin was 12.5% compared to 10.5% in the second quarter of 2013. On a non-GAAP basis, the operating margin increased to 17.1% from 13.5% in the second quarter of 2013. The non-GAAP operating margin improvement was due primarily to leverage from higher sales of safety assessment services. In addition, a foreign exchange benefit from a weaker Canadian dollar and the
Manufacturing Support (Manufacturing)
Revenue for the Manufacturing segment was
In the second quarter of 2014, the Manufacturing segment's GAAP operating margin was 31.3% compared to 28.7% for the second quarter of 2013. On a non-GAAP basis, the operating margin increased to 33.4% from 31.1% in the second quarter of 2013. The operating margin improvement was primarily driven by improved utilization for the Biologics business.
Stock Repurchase Update
During the second quarter of 2014, the Company repurchased approximately 1.5 million shares of its common stock for
Six-Month Results
For the first six months of 2014, revenue increased by 9.7% to
On a GAAP basis, net income from continuing operations for the first half of 2014 was
On a non-GAAP basis, net income from continuing operations for the first half of 2014 was
Research Models and Services (RMS)
For the first six months of 2014, RMS revenue was
Discovery and Safety Assessment (DSA)
For the first six months of 2014, DSA revenue was
Manufacturing Support (Manufacturing)
For the first six months of 2014, Manufacturing revenue was
2014 Guidance
The Company is updating its 2014 forward-looking guidance based on continuing operations. Guidance for non-GAAP earnings per share has been increased to primarily reflect the strong second-quarter performance, including the gain from limited partnership investments. Primarily as a result of additional charges associated with the Company's global efficiency initiatives, GAAP earnings per share guidance has been reduced. The Company is maintaining its 2014 revenue guidance and continues to expect foreign currency translation to provide only a small benefit to reported revenue. The outlook for the remainder of the year assumes normal seasonality in the RMS segment.
| 2014 GUIDANCE (from continuing operations) | REVISED | PRIOR | ||
| Net revenue growth, reported | 9.0% – 11.0% | 9.0% – 11.0% | ||
| Impact of foreign exchange | N/M | N/M | ||
| Net revenue growth, constant currency | 9.0% - 11.0% | 9.0% - 11.0% | ||
| GAAP EPS estimate | $2.60 - $2.70 | $2.64 - $2.74 | ||
| Amortization of intangible assets | $0.36 | $0.33 | ||
| Operating losses and other items (1) | $0.06 | $0.04 | ||
| Charges related to global efficiency initiative (2) | $0.16-$0.18 | $0.08-$0.10 | ||
| Costs associated with evaluation and integration of acquisitions | $0.06 | $0.05 | ||
| Non-GAAP EPS estimate | $3.25 - $3.35 | $3.15 - $3.25 |
(1) These costs relate primarily to the Company's
(2) These charges relate primarily to the consolidation of research model production operations and other efficiency initiatives. Other projects in support of the global efficiency initiative are expected, but these charges reflect only the decisions that have already been finalized.
Webcast
Non-GAAP Reconciliations/Discontinued Operations
The Company reports non-GAAP results in this press release, which exclude certain items that are outside of normal operations. A reconciliation of GAAP to non-GAAP results is provided in the schedules at the end of this press release. In addition, the Company reports results from continuing operations, which exclude results of the Phase I clinical business that was divested in 2011. The Phase I business is reported as a discontinued operation.
Use of Non-GAAP Financial Measures
This press release contains non-GAAP financial measures, such as non-GAAP earnings per diluted share, which exclude the amortization of intangible assets and other charges related to our acquisitions; expenses associated with evaluating and integrating acquisitions; charges, gains and losses attributable to businesses or properties we plan to close, consolidate or divest; severance costs associated with our efficiency initiatives; accelerated depreciation charges related to the consolidation of research model production operations and Biologics Testing Solutions operations; a charge related to a dispute with a large model supplier; gains related to the sales of former research model facilities; an adjustment to prior-period accrued compensation expenses; and the additional interest recorded as a result of the adoption in 2009 of an accounting standard related to our convertible debt accounting which increased interest and depreciation expense. We exclude these items from the non-GAAP financial measures because they are outside our normal operations. This press release also refers to our revenue in both a GAAP and non-GAAP (constant currency) basis. 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 these often-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 (and in certain cases, the evaluation of such acquisitions, whether or not ultimately consummated) 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 on a regular basis. Presenting revenue on a constant currency basis allows investors to measure our revenue growth exclusive of foreign currency exchange fluctuations more clearly. 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 this press release, and can also be found on the Company's website at ir.criver.com.
Caution Concerning Forward-Looking Statements
This press 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 future financial performance including revenue, operating margins, earnings per share, and the expected impact of foreign exchange rates; the future demand for drug discovery and development products and services, including our expectations for future revenue trends; the integration of Argenta and BioFocus, and our expectations with respect to their impact on the Company, our service offerings, strategic relationships, revenue, revenue growth rates, and earnings; the development and performance of our services and products, including the impact this can have on our clients' drug development models; market and industry conditions including the outsourcing of these services and spending trends by our clients; the potential outcome of and impact to our business and financial operations due to litigation and legal proceedings, including with respect to our ongoing investigation of inaccurate billing with respect to certain government contracts; and Charles River's future performance as delineated in our forward-looking guidance, and particularly our expectations with respect to revenue, the impact of foreign exchange, and enhanced efficiency initiatives. 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: the ability to successfully integrate businesses we acquire; the ability to execute our efficiency initiatives on an effective and timely basis (including divestitures and site closures); the timing and magnitude of our share repurchases; negative trends in research and development spending, negative trends in the level of outsourced services, or other cost reduction actions by our clients; the ability to convert backlog to revenue; special interest groups; contaminations; industry trends; new displacement technologies; USDA and
About Charles River
Charles River provides essential products and services to help pharmaceutical and biotechnology companies, government agencies and leading academic institutions around the globe accelerate their research and drug development efforts. Our dedicated employees are focused on providing clients with exactly what they need to improve and expedite the discovery, early-stage development and safe manufacture of new therapies for the patients who need them. To learn more about our unique portfolio and breadth of services, visit www.criver.com.
| CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | ||||||||||||||||
| (dollars in thousands, except for share and per share data) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
|
June 28, |
June 29, |
June 28, |
June 29, |
|||||||||||||
| Total revenue | $ | 341,179 | $ | 292,933 | $ | 640,547 | $ | 584,171 | ||||||||
| Cost of products sold and services provided | 215,545 | 190,363 | 406,100 | 377,390 | ||||||||||||
| Gross margin | 125,634 | 102,570 | 234,447 | 206,781 | ||||||||||||
| Selling, general and administrative | 67,756 | 54,919 | 132,523 | 112,118 | ||||||||||||
| Amortization of intangibles | 6,853 | 4,463 | 11,193 | 8,712 | ||||||||||||
| Operating income | 51,025 | 43,188 | 90,731 | 85,951 | ||||||||||||
| Interest income (expense) | (3,151 | ) | (7,308 | ) | (5,747 | ) | (15,491 | ) | ||||||||
| Other income (expense) | 2,667 | 967 | 8,543 | 2,035 | ||||||||||||
| Income from continuing operations before income taxes | 50,541 | 36,847 | 93,527 | 72,495 | ||||||||||||
| Provision for income taxes | 14,081 | 8,219 | 24,439 | 17,941 | ||||||||||||
| Income from continuing operations, net of tax | 36,460 | 28,628 | 69,088 | 54,554 | ||||||||||||
| Loss from discontinued operations, net of tax | (644 | ) | (915 | ) | (914 | ) | (1,070 | ) | ||||||||
| Net income | 35,816 | 27,713 | 68,174 | 53,484 | ||||||||||||
| Income from noncontrolling interests | (552 | ) | (429 | ) | (678 | ) | (622 | ) | ||||||||
| Net income attributable to common shareowners | $ | 35,264 | $ | 27,284 | $ | 67,496 | $ | 52,862 | ||||||||
| Earnings per common share | ||||||||||||||||
| Basic: | ||||||||||||||||
| Continuing operations | $ | 0.76 | $ | 0.58 | $ | 1.46 | $ | 1.12 | ||||||||
| Discontinued operations | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.02 | ) | ||||
| Net | $ | 0.75 | $ | 0.57 | $ | 1.44 | $ | 1.10 | ||||||||
| Diluted: | ||||||||||||||||
| Continuing operations | $ | 0.75 | $ | 0.58 | $ | 1.43 | $ | 1.11 | ||||||||
| Discontinued operations | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.02 | ) | ||||
| Net | $ | 0.74 | $ | 0.56 | $ | 1.41 | $ | 1.09 | ||||||||
| Weighted average number of common shares outstanding | ||||||||||||||||
| Basic | 46,941,612 | 48,280,371 | 47,016,221 | 47,969,683 | ||||||||||||
| Diluted | 47,684,096 | 48,835,453 | 47,909,233 | 48,647,942 | ||||||||||||
| CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | ||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | ||||||
| (dollars in thousands) | ||||||
|
June 28, |
December 28, |
|||||
| Assets | ||||||
| Current assets | ||||||
| Cash and cash equivalents | $ | 117,012 | $ | 155,927 | ||
| Trade receivables, net | 274,504 | 220,630 | ||||
| Inventories | 92,621 | 89,396 | ||||
| Other current assets | 107,709 | 85,847 | ||||
| Current assets of discontinued businesses | 856 | 750 | ||||
| Total current assets | 592,702 | 552,550 | ||||
| Property, plant and equipment, net | 687,664 | 676,182 | ||||
| Goodwill, net | 297,005 | 230,701 | ||||
| Other intangibles, net | 181,269 | 84,537 | ||||
| Deferred tax asset | 19,746 | 23,671 | ||||
| Other assets | 81,815 | 61,964 | ||||
| Long-term assets of discontinued businesses | 3,261 | 3,151 | ||||
| Total assets | $ | 1,863,462 | $ | 1,632,756 | ||
| Liabilities and Equity | ||||||
| Current liabilities | ||||||
| Current portion of long-term debt and capital leases | $ | 31,932 | $ | 21,437 | ||
| Accounts payable | 35,218 | 31,770 | ||||
| Accrued compensation | 59,224 | 58,461 | ||||
| Deferred revenue | 61,870 | 54,177 | ||||
| Accrued liabilities | 67,462 | 56,712 | ||||
| Other current liabilities | 13,761 | 22,546 | ||||
| Current liabilities of discontinued businesses | 2,181 | 1,931 | ||||
| Total current liabilities | 271,648 | 247,034 | ||||
| Long-term debt & capital leases | 781,617 | 642,352 | ||||
| Other long-term liabilities | 103,305 | 70,632 | ||||
| Long-term liabilities of discontinued businesses | 8,271 | 8,080 | ||||
| Total liabilities | 1,164,841 | 968,098 | ||||
| Redeemable non-controlling interest | 23,483 | 20,581 | ||||
| Total shareholders' equity | 671,815 | 640,984 | ||||
| Non-controlling interest | 3,323 | 3,093 | ||||
| Total liabilities and equity | $ | 1,863,462 | $ | 1,632,756 | ||
| CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | |||||||||||||||||
| SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED) | |||||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||
|
June 28, |
June 29, |
June 28, |
June 29, |
||||||||||||||
| Research Models and Services | |||||||||||||||||
| Revenue | $ | 133,120 | $ | 129,759 | $ | 265,615 | $ | 264,632 | |||||||||
| Gross margin | 52,450 | 49,020 | 104,097 | 104,476 | |||||||||||||
| Gross margin as a % of revenue | 39.4 | % | 37.8 | % | 39.2 | % | 39.5 | % | |||||||||
| Operating income | 34,234 | 33,296 | 69,678 | 73,773 | |||||||||||||
| Operating income as a % of revenue | 25.7 | % | 25.7 | % | 26.2 | % | 27.9 | % | |||||||||
| Depreciation and amortization | 7,165 | 7,192 | 14,364 | 14,094 | |||||||||||||
| Capital expenditures | 2,478 | 3,991 | 7,711 | 6,209 | |||||||||||||
| Discovery and Safety Assessment | |||||||||||||||||
| Revenue | $ | 142,614 | $ | 107,490 | $ | 247,752 | $ | 209,281 | |||||||||
| Gross margin | 39,457 | 25,534 | 65,116 | 48,051 | |||||||||||||
| Gross margin as a % of revenue | 27.7 | % | 23.8 | % | 26.3 | % | 23.0 | % | |||||||||
| Operating income | 17,798 | 11,261 | 29,511 | 19,704 | |||||||||||||
| Operating income as a % of revenue | 12.5 | % | 10.5 | % | 11.9 | % | 9.4 | % | |||||||||
| Depreciation and amortization | 13,241 | 9,369 | 22,012 | 18,783 | |||||||||||||
| Capital expenditures | 4,340 | 3,064 | 8,051 | 4,856 | |||||||||||||
| Manufacturing Support | |||||||||||||||||
| Revenue | $ | 65,445 | $ | 55,684 | $ | 127,180 | $ | 110,258 | |||||||||
| Gross margin | 33,727 | 28,016 | 65,234 | 54,254 | |||||||||||||
| Gross margin as a % of revenue | 51.5 | % | 50.3 | % | 51.3 | % | 49.2 | % | |||||||||
| Operating income | 20,455 | 16,008 | 38,871 | 30,451 | |||||||||||||
| Operating income as a % of revenue | 31.3 | % | 28.7 | % | 30.6 | % | 27.6 | % | |||||||||
| Depreciation and amortization | 3,894 | 3,849 | 7,975 | 7,543 | |||||||||||||
| Capital expenditures | 2,497 | 2,740 | 4,743 | 5,158 | |||||||||||||
| Unallocated Corporate Overhead | $ | (21,462 | ) | $ | (17,377 | ) | $ | (47,329 | ) | $ | (37,977 | ) | |||||
| Total | |||||||||||||||||
| Revenue | $ | 341,179 | $ | 292,933 | $ | 640,547 | $ | 584,171 | |||||||||
| Gross margin | 125,634 | 102,570 | 234,447 | 206,781 | |||||||||||||
| Gross margin as a % of revenue | 36.8 | % | 35.0 | % | 36.6 | % | 35.4 | % | |||||||||
| Operating income | 51,025 | 43,188 | 90,731 | 85,951 | |||||||||||||
| Operating income as a % of revenue | 15.0 | % | 14.7 | % | 14.2 | % | 14.7 | % | |||||||||
| Depreciation and amortization | 24,300 | 20,410 | 44,351 | 40,420 | |||||||||||||
| Capital expenditures | 9,315 | 9,795 | 20,505 | 16,223 | |||||||||||||
| CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | ||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP | ||||||||||||||||
| SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED) (1) | ||||||||||||||||
| (dollars in thousands) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
|
June 28, |
June 29, |
June 28, |
June 29, |
|||||||||||||
| Research Models and Services | ||||||||||||||||
| Revenue | $ | 133,120 | $ | 129,759 | $ | 265,615 | $ | 264,632 | ||||||||
| Add back government billing adjustment | - | 1,495 | - | 1,495 | ||||||||||||
| Non-GAAP revenue | $ | 133,120 | $ | 131,254 | $ | 265,615 | $ | 266,127 | ||||||||
| Operating income | 34,234 | 33,296 | 69,678 | 73,773 | ||||||||||||
| Operating income as a % of revenue | 25.7 | % | 25.7 | % | 26.2 | % | 27.9 | % | ||||||||
| Add back: | ||||||||||||||||
| Amortization of intangible assets related to acquisitions | 608 | 754 | 1,545 | 1,245 | ||||||||||||
| Severance related to cost-savings actions | 2,011 | 183 | 3,595 | 269 | ||||||||||||
| Government billing adjustment and related expenses | 13 | 1,855 | 80 | 1,855 | ||||||||||||
|
Impairment and other items (2) |
1,725 | - | 2,705 | - | ||||||||||||
|
Operating losses (3) |
15 | 51 | 27 | 209 | ||||||||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 38,606 | $ | 36,139 | $ | 77,630 | $ | 77,351 | ||||||||
| Non-GAAP operating income as a % of revenue | 29.0 | % | 27.5 | % | 29.2 | % | 29.1 | % | ||||||||
| Discovery and Safety Assessment | ||||||||||||||||
| Revenue | $ | 142,614 | $ | 107,490 | $ | 247,752 | $ | 209,281 | ||||||||
| Operating income | 17,798 | 11,261 | 29,511 | 19,704 | ||||||||||||
| Operating income as a % of revenue | 12.5 | % | 10.5 | % | 11.9 | % | 9.4 | % | ||||||||
| Add back: | ||||||||||||||||
| Amortization of intangible assets related to acquisitions | 4,891 | 2,393 | 6,863 | 4,809 | ||||||||||||
| Severance related to cost-savings actions | 854 | 102 | 1,049 | 313 | ||||||||||||
|
Operating losses (3) |
704 | 787 | 1,375 | 1,735 | ||||||||||||
| Costs associated with the evaluation and integration of acquisitions | 203 | - | 203 | - | ||||||||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 24,450 | $ | 14,543 | $ | 39,001 | $ | 26,561 | ||||||||
| Non-GAAP operating income as a % of revenue | 17.1 | % | 13.5 | % | 15.7 | % | 12.7 | % | ||||||||
| Manufacturing Support | ||||||||||||||||
| Revenue | $ | 65,445 | $ | 55,684 | $ | 127,180 | $ | 110,258 | ||||||||
| Operating income | 20,455 | 16,008 | 38,871 | 30,451 | ||||||||||||
| Operating income as a % of revenue | 31.3 | % | 28.7 | % | 30.6 | % | 27.6 | % | ||||||||
| Add back: | ||||||||||||||||
| Amortization of intangible assets related to acquisitions | 1,355 | 1,317 | 2,785 | 2,658 | ||||||||||||
| Severance related to cost-savings actions | 24 | - | 24 | - | ||||||||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 21,834 | $ | 17,325 | $ | 41,680 | $ | 33,109 | ||||||||
| Non-GAAP operating income as a % of revenue | 33.4 | % | 31.1 | % | 32.8 | % | 30.0 | % | ||||||||
| Unallocated Corporate Overhead | $ | (21,462 | ) | $ | (17,377 | ) | $ | (47,329 | ) | $ | (37,977 | ) | ||||
| Add back: | ||||||||||||||||
| Severance related to cost-savings actions | - | - | 121 | - | ||||||||||||
| Costs associated with the evaluation and integration of acquisitions | 1,371 | 194 | 4,676 | 680 | ||||||||||||
| Convertible debt accounting | - | 54 | - | 107 | ||||||||||||
| Unallocated corporate overhead, excluding specified charges (Non-GAAP) | $ | (20,091 | ) | $ | (17,129 | ) | $ | (42,532 | ) | $ | (37,190 | ) | ||||
| Total | ||||||||||||||||
| Revenue | $ | 341,179 | $ | 292,933 | $ | 640,547 | $ | 584,171 | ||||||||
| Add back government billing adjustment | - | 1,495 | - | 1,495 | ||||||||||||
| Non-GAAP revenue | $ | 341,179 | $ | 294,428 | $ | 640,547 | $ | 585,666 | ||||||||
| Operating income | 51,025 | 43,188 | 90,731 | 85,951 | ||||||||||||
| Operating income as a % of revenue | 15.0 | % | 14.7 | % | 14.2 | % | 14.7 | % | ||||||||
| Add back: | ||||||||||||||||
| Amortization of intangible assets related to acquisitions | 6,854 | 4,464 | 11,193 | 8,712 | ||||||||||||
| Severance related to cost-savings actions | 2,889 | 285 | 4,789 | 582 | ||||||||||||
| Government billing adjustment and related expenses | 13 | 1,855 | 80 | 1,855 | ||||||||||||
|
Impairment and other items (2) |
1,725 | - | 2,705 | - | ||||||||||||
|
Operating losses (3) |
719 | 838 | 1,402 | 1,944 | ||||||||||||
| Costs associated with the evaluation and integration of acquisitions | 1,574 | 194 | 4,879 | 680 | ||||||||||||
| Convertible debt accounting | - | 54 | - | 107 | ||||||||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 64,799 | $ | 50,878 | $ | 115,779 | $ | 99,831 | ||||||||
| Non-GAAP operating income as a % of revenue | 19.0 | % | 17.3 | % | 18.1 | % | 17.0 | % | ||||||||
(1) 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 and other items which are outside our normal operations, 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, regulations and guidance.
(2) For the three and six months ended
(3) This item includes operating losses related primarily to the Company's
| CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | ||||||||||||||||
| RECONCILIATION OF GAAP EARNINGS TO NON-GAAP EARNINGS (1) | ||||||||||||||||
| (dollars in thousands, except for share and per share data) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
|
June 28, |
June 29, |
June 28, |
June 29, |
|||||||||||||
| Net income attributable to common shareholders | $ | 35,264 | $ | 27,284 | $ | 67,496 | $ | 52,862 | ||||||||
| Less: Discontinued operations | 644 | 915 | 914 | 1,070 | ||||||||||||
| Net income from continuing operations | 35,908 | 28,199 | 68,410 | 53,932 | ||||||||||||
| Add back: | ||||||||||||||||
| Amortization of intangible assets related to acquisitions | 6,854 | 4,464 | 11,193 | 8,712 | ||||||||||||
| Severance related to cost-savings actions | 2,889 | 285 | 4,789 | 582 | ||||||||||||
| Impairment and other items (2) | 1,725 | - | 2,705 | - | ||||||||||||
| Operating losses (3) | 719 | 838 | 1,402 | 1,944 | ||||||||||||
| Costs associated with the evaluation and integration of acquisitions | 1,574 | 194 | 4,879 | 680 | ||||||||||||
| Government billing adjustment and related expenses | 13 | 1,855 | 80 | 1,855 | ||||||||||||
| Write-off of deferred financing costs and fees related to debt refinancing | - | 645 | - | 645 | ||||||||||||
| Convertible debt accounting, net (4) | - | 2,897 | - | 6,710 | ||||||||||||
| Tax effect of items above | (3,426 | ) | (3,709 | ) | (7,928 | ) | (6,166 | ) | ||||||||
| Net income from continuing operations, excluding specified charges (Non-GAAP) | $ | 46,256 | $ | 35,668 | $ | 85,530 | $ | 68,894 | ||||||||
| Weighted average shares outstanding - Basic | 46,941,612 | 48,280,371 | 47,016,221 | 47,969,683 | ||||||||||||
| Effect of dilutive securities: | ||||||||||||||||
| Stock options and contingently issued restricted stock | 742,484 | 555,082 | 893,012 | 678,259 | ||||||||||||
| Weighted average shares outstanding - Diluted | 47,684,096 | 48,835,453 | 47,909,233 | 48,647,942 | ||||||||||||
| Basic earnings per share from continuing operations | $ | 0.76 | $ | 0.58 | $ | 1.46 | $ | 1.12 | ||||||||
| Diluted earnings per share from continuing operations | $ | 0.75 | $ | 0.58 | $ | 1.43 | $ | 1.11 | ||||||||
| Basic earnings per share from continuing operations, excluding specified charges (Non-GAAP) | $ | 0.99 | $ | 0.74 | $ | 1.82 | $ | 1.44 | ||||||||
| Diluted earnings per share from continuing operations, excluding specified charges (Non-GAAP) | $ | 0.97 | $ | 0.73 | $ | 1.79 | $ | 1.42 | ||||||||
(1) 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 and other items which are outside our normal operations, 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, regulations and guidance.
(2) For the three and six months ended
(3) This item includes operating losses related primarily to the Company's
(4) The three and six months ended
| CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | ||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP REVENUE GROWTH (YEAR-OVER-YEAR) | ||||||||||||
| EXCLUDING THE IMPACT OF FOREIGN EXCHANGE AND A GOVERNMENT BILLING ADJUSTMENT | ||||||||||||
| For the Three and Six Months Ended June 28, 2014 | ||||||||||||
| For the three months ended June 28, 2014: |
Total CRL |
RMS Segment |
DSA Segment |
MS Segment |
||||||||
| Revenue growth, reported | 16.5 | % | 2.6 | % | 32.7 | % | 17.5 | % | ||||
| Impact of foreign exchange | 1.4 | % | 1.1 | % | 1.3 | % | 2.3 | % | ||||
| Impact of government billing adjustment | 0.6 | % | 1.2 | % | 0.0 | % | 0.0 | % | ||||
| Non-GAAP revenue growth, constant currency | 14.5 | % | 0.3 | % | 31.4 | % | 15.2 | % | ||||
| For the six months ended June 28, 2014: |
Total CRL |
RMS Segment |
DSA Segment |
MS Segment |
||||||||
| Revenue growth, reported | 9.7 | % | 0.4 | % | 18.4 | % | 15.3 | % | ||||
| Impact of foreign exchange | 1.0 | % | 0.6 | % | 0.9 | % | 1.9 | % | ||||
| Impact of government billing adjustment | 0.3 | % | 0.6 | % | 0.0 | % | 0.0 | % | ||||
| Non-GAAP revenue growth, constant currency | 8.4 | % | (0.8 | %) | 17.5 | % | 13.4 | % | ||||
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. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | ||||||||
| (dollars in thousands) | ||||||||
|
Six Months Ended |
||||||||
|
June 28, |
June 29, |
|||||||
| Cash flows relating to operating activities: | ||||||||
| Net income | $ | 68,174 | $ | 53,484 | ||||
| Less: Loss from discontinued operations | (914 | ) | (1,070 | ) | ||||
| Income from continuing operations | 69,088 | 54,554 | ||||||
| Summary of non-cash adjustments | 59,081 | 66,386 | ||||||
| Changes in assets and liabilities | (42,731 | ) | (41,997 | ) | ||||
| Net cash provided by operating activities | 85,438 | 78,943 | ||||||
| Cash flows relating to investing activities: | ||||||||
| Acquisition of businesses, net of cash acquired | (183,151 | ) | (24,218 | ) | ||||
| Capital expenditures | (20,505 | ) | (16,223 | ) | ||||
| Other | 1,158 | 454 | ||||||
| Net cash used in investing activities | (202,498 | ) | (39,987 | ) | ||||
| Cash flow relating to financing activities: | ||||||||
| Net cash used in financing activities | 78,212 | (29,417 | ) | |||||
| Cash flows used in discontinued operations | (689 | ) | (946 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | 622 | (4,757 | ) | |||||
| Net change in cash and cash equivalents | (38,915 | ) | 3,836 | |||||
| Cash and cash equivalents, beginning of period | 155,927 | 109,685 | ||||||
| Cash and cash equivalents, end of period | $ | 117,012 | $ | 113,521 | ||||
| CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | |||||||||||||||||||||||||
| SUPPLEMENTAL SCHEDULE: PRIOR PERIODS RECAST FOR BUSINESS SEGMENT REVISION | |||||||||||||||||||||||||
| SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED) | |||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||
| Three Months Ended |
Twelve Months |
Three Months |
|||||||||||||||||||||||
|
March 30, |
June 29, |
September 28, |
December 28, |
December 28, |
March 29, |
||||||||||||||||||||
| Research Models and Services | |||||||||||||||||||||||||
| Revenue | $ | 134,873 | $ | 129,759 | $ | 124,236 | $ | 122,482 | $ | 511,350 | $ | 132,495 | |||||||||||||
| Gross margin | 55,456 | 49,020 | 39,127 | 35,889 | 179,492 | 51,647 | |||||||||||||||||||
| Gross margin as a % of revenue | 41.1 | % | 37.8 | % | 31.5 | % | 29.3 | % | 35.1 | % | 39.0 | % | |||||||||||||
| Operating income | 40,477 | 33,296 | 23,803 | 19,161 | 116,737 | 35,444 | |||||||||||||||||||
| Operating income as a % of revenue | 30.0 | % | 25.7 | % | 19.2 | % | 15.6 | % | 22.8 | % | 26.8 | % | |||||||||||||
| Depreciation and amortization | 6,902 | 7,192 | 13,548 | 14,195 | 41,837 | 7,199 | |||||||||||||||||||
| Capital expenditures | 2,218 | 3,991 | 4,208 | 6,300 | 16,717 | 5,233 | |||||||||||||||||||
| Discovery and Safety Assessment | |||||||||||||||||||||||||
| Revenue | $ | 101,791 | $ | 107,490 | $ | 112,627 | $ | 110,470 | $ | 432,378 | $ | 105,138 | |||||||||||||
| Gross margin | 22,517 | 25,534 | 33,061 | 25,654 | 106,766 | 25,659 | |||||||||||||||||||
| Gross margin as a % of revenue | 22.1 | % | 23.8 | % | 29.4 | % | 23.2 | % | 24.7 | % | 24.4 | % | |||||||||||||
| Operating income | 8,443 | 11,261 | 18,968 | 8,741 | 47,413 | 11,713 | |||||||||||||||||||
| Operating income as a % of revenue | 8.3 | % | 10.5 | % | 16.8 | % | 7.9 | % | 11.0 | % | 11.1 | % | |||||||||||||
| Depreciation and amortization | 9,414 | 9,369 | 9,486 | 9,451 | 37,720 | 8,771 | |||||||||||||||||||
| Capital expenditures | 1,792 | 3,064 | 2,459 | 5,246 | 12,561 | 3,711 | |||||||||||||||||||
| Manufacturing Support | |||||||||||||||||||||||||
| Revenue | $ | 54,574 | $ | 55,684 | $ | 55,266 | $ | 56,276 | $ | 221,800 | $ | 61,735 | |||||||||||||
| Gross margin | 26,238 | 28,016 | 27,738 | 26,651 | 108,643 | 31,507 | |||||||||||||||||||
| Gross margin as a % of revenue | 48.1 | % | 50.3 | % | 50.2 | % | 47.4 | % | 49.0 | % | 51.0 | % | |||||||||||||
| Operating income | 14,443 | 16,008 | 16,125 | 14,651 | 61,227 | 18,416 | |||||||||||||||||||
| Operating income as a % of revenue | 26.5 | % | 28.7 | % | 29.2 | % | 26.0 | % | 27.6 | % | 29.8 | % | |||||||||||||
| Depreciation and amortization | 3,694 | 3,849 | 3,881 | 5,655 | 17,079 | 4,081 | |||||||||||||||||||
| Capital expenditures | 2,418 | 2,740 | 2,429 | 2,289 | 9,876 | 2,246 | |||||||||||||||||||
| Unallocated Corporate Overhead | $ | (20,600 | ) | $ | (17,377 | ) | $ | (18,053 | ) | $ | (17,946 | ) | $ | (73,976 | ) | $ | (25,867 | ) | |||||||
| Total | |||||||||||||||||||||||||
| Revenue | $ | 291,238 | $ | 292,933 | $ | 292,129 | $ | 289,228 | $ | 1,165,528 | $ | 299,368 | |||||||||||||
| Gross margin | 104,211 | 102,570 | 99,926 | 88,194 | 394,901 | 108,813 | |||||||||||||||||||
| Gross margin as a % of revenue | 35.8 | % | 35.0 | % | 34.2 | % | 30.5 | % | 33.9 | % | 36.3 | % | |||||||||||||
| Operating income | 42,763 | 43,188 | 40,843 | 24,607 | 151,401 | 39,706 | |||||||||||||||||||
| Operating income as a % of revenue | 14.7 | % | 14.7 | % | 14.0 | % | 8.5 | % | 13.0 | % | 13.3 | % | |||||||||||||
| Depreciation and amortization | 20,010 | 20,410 | 26,915 | 29,301 | 96,636 | 20,051 | |||||||||||||||||||
| Capital expenditures | 6,428 | 9,795 | 9,096 | 13,835 | 39,154 | 11,190 | |||||||||||||||||||
| CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | |||||||||||||||||||||
| SUPPLEMENTAL SCHEDULE: PRIOR PERIODS RECAST FOR BUSINESS SEGMENT REVISION | |||||||||||||||||||||
| SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED) | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||
| Three Months Ended |
Twelve Months |
||||||||||||||||||||
|
March 31, |
June 30, |
September 29, |
December 29, |
December 29, |
|||||||||||||||||
| Research Models and Services | |||||||||||||||||||||
| Revenue | $ | 140,875 | $ | 132,428 | $ | 124,541 | $ | 123,789 | $ | 521,633 | |||||||||||
| Gross margin | 59,154 | 53,900 | 44,364 | 40,873 | 198,291 | ||||||||||||||||
| Gross margin as a % of revenue | 42.0 | % | 40.7 | % | 35.6 | % | 33.0 | % | 38.0 | % | |||||||||||
| Operating income | 44,523 | 41,131 | 29,418 | 28,711 | 143,783 | ||||||||||||||||
| Operating income as a % of revenue | 31.6 | % | 31.1 | % | 23.6 | % | 23.2 | % | 27.6 | % | |||||||||||
| Depreciation and amortization | 6,597 | 6,618 | 6,792 | 6,718 | 26,725 | ||||||||||||||||
| Capital expenditures | 8,039 | 5,378 | 5,834 | 7,826 | 27,077 | ||||||||||||||||
| Discovery and Safety Assessment | |||||||||||||||||||||
| Revenue | $ | 98,840 | $ | 103,787 | $ | 105,080 | $ | 101,201 | $ | 408,908 | |||||||||||
| Gross margin | 23,165 | 25,384 | 24,961 | 24,398 | 97,908 | ||||||||||||||||
| Gross margin as a % of revenue | 23.4 | % | 24.5 | % | 23.8 | % | 24.1 | % | 23.9 | % | |||||||||||
| Operating income | 6,344 | 10,314 | 10,333 | 8,697 | 35,688 | ||||||||||||||||
| Operating income as a % of revenue | 6.4 | % | 9.9 | % | 9.8 | % | 8.6 | % | 8.7 | % | |||||||||||
| Depreciation and amortization | 10,286 | 10,270 | 10,375 | 10,070 | 41,001 | ||||||||||||||||
| Capital expenditures | 2,984 | 1,996 | 2,166 | 2,905 | 10,051 | ||||||||||||||||
| Manufacturing Support | |||||||||||||||||||||
| Revenue | $ | 46,266 | $ | 48,508 | $ | 49,065 | $ | 55,150 | $ | 198,989 | |||||||||||
| Gross margin | 21,893 | 24,301 | 23,935 | 25,753 | 95,882 | ||||||||||||||||
| Gross margin as a % of revenue | 47.3 | % | 50.1 | % | 48.8 | % | 46.7 | % | 48.2 | % | |||||||||||
| Operating income | 12,774 | 14,906 | 14,613 | 15,226 | 57,519 | ||||||||||||||||
| Operating income as a % of revenue | 27.6 | % | 30.7 | % | 29.8 | % | 27.6 | % | 28.9 | % | |||||||||||
| Depreciation and amortization | 3,119 | 3,177 | 3,383 | 3,870 | 13,549 | ||||||||||||||||
| Capital expenditures | 3,089 | 2,067 | 2,242 | 3,009 | 10,407 | ||||||||||||||||
| Unallocated Corporate Overhead | $ | (19,901 | ) | $ | (17,077 | ) | $ | (16,682 | ) | $ | (17,565 | ) | $ | (71,225 | ) | ||||||
| Total | |||||||||||||||||||||
| Revenue | $ | 285,981 | $ | 284,723 | $ | 278,686 | $ | 280,140 | $ | 1,129,530 | |||||||||||
| Gross margin | 104,212 | 103,585 | 93,260 | 91,024 | 392,081 | ||||||||||||||||
| Gross margin as a % of revenue | 36.4 | % | 36.4 | % | 33.5 | % | 32.5 | % | 34.7 | % | |||||||||||
| Operating income | 43,740 | 49,274 | 37,682 | 35,069 | 165,765 | ||||||||||||||||
| Operating income as a % of revenue | 15.3 | % | 17.3 | % | 13.5 | % | 12.5 | % | 14.7 | % | |||||||||||
| Depreciation and amortization | 20,002 | 20,065 | 20,550 | 20,658 | 81,275 | ||||||||||||||||
| Capital expenditures | 14,112 | 9,441 | 10,242 | 13,740 | 47,535 | ||||||||||||||||
| CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | ||||||||||||||||||||||||
| SUPPLEMENTAL SCHEDULE: PRIOR PERIODS RECAST FOR BUSINESS SEGMENT REVISION | ||||||||||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP | ||||||||||||||||||||||||
| SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED) (1) | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||
| Three Months Ended |
Twelve Months |
Three Months |
||||||||||||||||||||||
|
March 30, |
June 29, |
September 28, |
December 28, |
December 28, |
March 29, |
|||||||||||||||||||
| Research Models and Services | ||||||||||||||||||||||||
| Revenue | $ | 134,873 | $ | 129,759 | $ | 124,236 | $ | 122,482 | $ | 511,350 | $ | 132,495 | ||||||||||||
| Add back government billing adjustment | - | 1,495 | - | - | 1,495 | - | ||||||||||||||||||
| Non-GAAP revenue | $ | 134,873 | $ | 131,254 | $ | 124,236 | $ | 122,482 | $ | 512,845 | $ | 132,495 | ||||||||||||
| Operating income | 40,477 | 33,296 | 23,803 | 19,161 | 116,737 | 35,444 | ||||||||||||||||||
| Operating income as a % of revenue | 30.0 | % | 25.4 | % | 19.2 | % | 15.6 | % | 22.8 | % | 26.8 | % | ||||||||||||
| Add back: | ||||||||||||||||||||||||
| Amortization of intangible assets related to acquisitions | 491 | 754 | 457 | 1,076 | 2,778 | 937 | ||||||||||||||||||
| Severance related to cost-savings actions | 86 | 183 | 32 | 1,123 | 1,424 | 1,584 | ||||||||||||||||||
| Government billing adjustment and related expenses | - | 1,855 | 321 | 226 | 2,402 | 67 | ||||||||||||||||||
|
Impairment and other items (2) |
- | - | 7,238 | 6,440 | 13,678 | 980 | ||||||||||||||||||
|
Operating losses (3) |
158 | 51 | 47 | 14 | 270 | 12 | ||||||||||||||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 41,212 | $ | 36,139 | $ | 31,898 | $ | 28,040 | $ | 137,289 | $ | 39,024 | ||||||||||||
| Non-GAAP operating income as a % of revenue | 30.6 | % | 27.5 | % | 25.7 | % | 22.9 | % | 26.8 | % | 29.5 | % | ||||||||||||
| Discovery and Safety Assessment | ||||||||||||||||||||||||
| Revenue | $ | 101,791 | $ | 107,490 | $ | 112,627 | $ | 110,470 | $ | 432,378 | $ | 105,138 | ||||||||||||
| Operating income | 8,443 | 11,261 | 18,968 | 8,741 | 47,413 | 11,713 | ||||||||||||||||||
| Operating income as a % of revenue | 8.3 | % | 10.5 | % | 16.8 | % | 7.9 | % | 11.0 | % | 11.1 | % | ||||||||||||
| Add back: | ||||||||||||||||||||||||
| Amortization of intangible assets related to acquisitions | 2,416 | 2,393 | 2,383 | 2,401 | 9,593 | 1,972 | ||||||||||||||||||
| Severance related to cost-savings actions | 211 | 102 | 397 | 915 | 1,625 | 195 | ||||||||||||||||||
|
Impairment and other items (2) |
- | - | - | 5,829 | 5,829 | - | ||||||||||||||||||
|
Operating losses (3) |
948 | 787 | 737 | 629 | 3,101 | 671 | ||||||||||||||||||
| Costs associated with the evaluation and integration of acquisitions | - | - | - | - | - | - | ||||||||||||||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 12,018 | $ | 14,543 | $ | 22,485 | $ | 18,515 | $ | 67,561 | $ | 14,551 | ||||||||||||
| Non-GAAP operating income as a % of revenue | 11.8 | % | 13.5 | % | 20.0 | % | 16.8 | % | 15.6 | % | 13.8 | % | ||||||||||||
| Manufacturing Support | ||||||||||||||||||||||||
| Revenue | $ | 54,574 | $ | 55,684 | $ | 55,266 | $ | 56,276 | $ | 221,800 | $ | 61,735 | ||||||||||||
| Operating income | 14,443 | 16,008 | 16,125 | 14,651 | 61,227 | 18,416 | ||||||||||||||||||
| Operating income as a % of revenue | 26.5 | % | 28.7 | % | 29.2 | % | 26.0 | % | 27.6 | % | 29.8 | % | ||||||||||||
| Add back: | ||||||||||||||||||||||||
| Amortization of intangible assets related to acquisitions | 1,341 | 1,317 | 1,339 | 1,438 | 5,435 | 1,430 | ||||||||||||||||||
| Severance related to cost-savings actions | - | - | 46 | 123 | 169 | - | ||||||||||||||||||
|
Impairment and other items (2) |
- | - | - | 1,874 | 1,874 | - | ||||||||||||||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 15,784 | $ | 17,325 | $ | 17,510 | $ | 18,086 | $ | 68,705 | $ | 19,846 | ||||||||||||
| Non-GAAP operating income as a % of revenue | 28.9 | % | 31.1 | % | 31.7 | % | 32.1 | % | 31.0 | % | 32.1 | % | ||||||||||||
| Unallocated Corporate Overhead | $ | (20,600 | ) | $ | (17,377 | ) | $ | (18,053 | ) | $ | (17,946 | ) | $ | (73,976 | ) | $ | (25,867 | ) | ||||||
| Add back: | ||||||||||||||||||||||||
| Severance related to cost-savings actions | - | - | - | - | - | 121 | ||||||||||||||||||
| Costs associated with the evaluation and integration of acquisitions | 486 | 194 | 306 | 766 | 1,752 | 3,305 | ||||||||||||||||||
| Convertible debt accounting | 53 | 54 | - | - | 107 | - | ||||||||||||||||||
| Unallocated corporate overhead, excluding specified charges (Non-GAAP) | $ | (20,061 | ) | $ | (17,129 | ) | $ | (17,747 | ) | $ | (17,180 | ) | $ | (72,117 | ) | $ | (22,441 | ) | ||||||
| Total | ||||||||||||||||||||||||
| Revenue | $ | 291,238 | $ | 292,933 | $ | 292,129 | $ | 289,228 | $ | 1,165,528 | $ | 299,368 | ||||||||||||
| Add back government billing adjustment | - | 1,495 | - | - | 1,495 | - | ||||||||||||||||||
| Non-GAAP revenue | $ | 291,238 | $ | 294,428 | $ | 292,129 | $ | 289,228 | $ | 1,167,023 | $ | 299,368 | ||||||||||||
| Operating income | 42,763 | 43,188 | 40,843 | 24,607 | 151,401 | 39,706 | ||||||||||||||||||
| Operating income as a % of revenue | 14.7 | % | 14.7 | % | 14.0 | % | 8.5 | % | 13.0 | % | 13.3 | % | ||||||||||||
| Add back: | ||||||||||||||||||||||||
| Amortization of intangible assets related to acquisitions | 4,248 | 4,464 | 4,179 | 4,915 | 17,806 | 4,339 | ||||||||||||||||||
| Severance related to cost-savings actions | 297 | 285 | 475 | 2,161 | 3,218 | 1,900 | ||||||||||||||||||
| Government billing adjustment and related expenses | - | 1,855 | 321 | 226 | 2,402 | 67 | ||||||||||||||||||
|
Impairment and other items (2) |
- | - | 7,238 | 14,143 | 21,381 | 980 | ||||||||||||||||||
|
Operating losses (3) |
1,106 | 838 | 784 | 643 | 3,371 | 683 | ||||||||||||||||||
| Costs associated with the evaluation and integration of acquisitions | 486 | 194 | 306 | 766 | 1,752 | 3,305 | ||||||||||||||||||
| Convertible debt accounting | 53 | 54 | - | - | 107 | - | ||||||||||||||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 48,953 | $ | 50,878 | $ | 54,146 | $ | 47,461 | $ | 201,438 | $ | 50,980 | ||||||||||||
| Non-GAAP operating income as a % of revenue | 16.8 | % | 17.3 | % | 18.5 | % | 16.4 | % | 17.3 | % | 17.0 | % | ||||||||||||
(1) 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 and other items which are outside our normal operations, 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, regulations and guidance.
(2) For the three months ended
(3) This item includes operating losses related primarily to the Company's
| CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | ||||||||||||||||||||
| SUPPLEMENTAL SCHEDULE: PRIOR PERIODS RECAST FOR BUSINESS SEGMENT REVISION | ||||||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP | ||||||||||||||||||||
| SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED) (1) | ||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Three Months Ended |
Twelve Months |
|||||||||||||||||||
|
March 31, |
June 30, |
September 29, |
December 29, |
December 29, |
||||||||||||||||
| Research Models and Services | ||||||||||||||||||||
| Revenue | $ | 140,875 | $ | 132,428 | $ | 124,541 | $ | 123,789 | $ | 521,633 | ||||||||||
| Add back government billing adjustment | - | - | - | - | - | |||||||||||||||
| Non-GAAP revenue | $ | 140,875 | $ | 132,428 | $ | 124,541 | $ | 123,789 | $ | 521,633 | ||||||||||
| Operating income | 44,523 | 41,131 | 29,418 | 28,711 | 143,783 | |||||||||||||||
| Operating income as a % of revenue | 31.6 | % | 31.1 | % | 23.6 | % | 23.2 | % | 27.6 | % | ||||||||||
| Add back: | ||||||||||||||||||||
| Amortization of intangible assets related to acquisitions | 218 | 219 | 237 | 241 | 915 | |||||||||||||||
| Severance related to cost-savings actions | - | - | 867 | 148 | 1,015 | |||||||||||||||
|
Impairment and other items (2) |
- | - | 2,927 | 883 | 3,810 | |||||||||||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 44,741 | $ | 41,350 | $ | 33,449 | $ | 29,983 | $ | 149,523 | ||||||||||
| Non-GAAP operating income as a % of revenue | 31.8 | % | 31.2 | % | 26.9 | % | 24.2 | % | 28.7 | % | ||||||||||
| Discovery and Safety Assessment | ||||||||||||||||||||
| Revenue | $ | 98,840 | $ | 103,787 | $ | 105,080 | $ | 101,201 | $ | 408,908 | ||||||||||
| Operating income | 6,344 | 10,314 | 10,333 | 8,697 | 35,688 | |||||||||||||||
| Operating income as a % of revenue | 6.4 | % | 9.9 | % | 9.8 | % | 8.6 | % | 8.7 | % | ||||||||||
| Add back: | ||||||||||||||||||||
| Amortization of intangible assets related to acquisitions | 3,180 | 3,141 | 3,112 | 2,945 | 12,378 | |||||||||||||||
| Severance related to cost-savings actions | 911 | - | 22 | 561 | 1,494 | |||||||||||||||
|
Impairment and other items (2) |
- | - | (233 | ) | 199 | (34 | ) | |||||||||||||
|
Operating losses (3) |
1,054 | 809 | 837 | 941 | 3,641 | |||||||||||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 11,489 | $ | 14,264 | $ | 14,071 | $ | 13,343 | $ | 53,167 | ||||||||||
| Non-GAAP operating income as a % of revenue | 11.6 | % | 13.7 | % | 13.4 | % | 13.2 | % | 13.0 | % | ||||||||||
| Manufacturing Support | ||||||||||||||||||||
| Revenue | $ | 46,266 | $ | 48,508 | $ | 49,065 | $ | 55,150 | $ | 198,989 | ||||||||||
| Operating income | 12,774 | 14,906 | 14,613 | 15,226 | 57,519 | |||||||||||||||
| Operating income as a % of revenue | 27.6 | % | 30.7 | % | 29.8 | % | 27.6 | % | 28.9 | % | ||||||||||
| Add back: | ||||||||||||||||||||
| Amortization of intangible assets related to acquisitions | 1,098 | 1,050 | 1,179 | 1,447 | 4,774 | |||||||||||||||
| Severance related to cost-savings actions | - | - | 82 | (11 | ) | 71 | ||||||||||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 13,872 | $ | 15,956 | $ | 15,874 | $ | 16,662 | $ | 62,364 | ||||||||||
| Non-GAAP operating income as a % of revenue | 30.0 | % | 32.9 | % | 32.4 | % | 30.2 | % | 31.3 | % | ||||||||||
| Unallocated Corporate Overhead | $ | (19,901 | ) | $ | (17,077 | ) | $ | (16,682 | ) | $ | (17,565 | ) | $ | (71,225 | ) | |||||
| Add back: | ||||||||||||||||||||
| Costs associated with the evaluation and integration of acquisitions | 232 | 744 | 658 | 2,140 | 3,774 | |||||||||||||||
| Convertible debt accounting | 53 | 54 | 53 | 53 | 213 | |||||||||||||||
| Unallocated corporate overhead, excluding specified charges (Non-GAAP) | $ | (19,616 | ) | $ | (16,279 | ) | $ | (15,971 | ) | $ | (15,372 | ) | $ | (67,238 | ) | |||||
| Total | ||||||||||||||||||||
| Revenue | $ | 285,981 | $ | 284,723 | $ | 278,686 | $ | 280,140 | $ | 1,129,530 | ||||||||||
| Add back government billing adjustment | - | - | - | - | - | |||||||||||||||
| Non-GAAP revenue | $ | 285,981 | $ | 284,723 | $ | 278,686 | $ | 280,140 | $ | 1,129,530 | ||||||||||
| Operating income | 43,740 | 49,274 | 37,682 | 35,069 | 165,765 | |||||||||||||||
| Operating income as a % of revenue | 15.3 | % | 17.3 | % | 13.5 | % | 12.5 | % | 14.7 | % | ||||||||||
| Add back: | ||||||||||||||||||||
| Amortization of intangible assets related to acquisitions | 4,496 | 4,410 | 4,528 | 4,633 | 18,067 | |||||||||||||||
| Severance related to cost-savings actions | 911 | - | 971 | 698 | 2,580 | |||||||||||||||
|
Impairment and other items (2) |
- | - | 2,694 | 1,082 | 3,776 | |||||||||||||||
|
Operating losses (3) |
1,054 | 809 | 837 | 941 | 3,641 | |||||||||||||||
| Costs associated with the evaluation and integration of acquisitions | 232 | 744 | 658 | 2,140 | 3,774 | |||||||||||||||
| Convertible debt accounting | 53 | 54 | 53 | 53 | 213 | |||||||||||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 50,486 | $ | 55,291 | $ | 47,423 | $ | 44,616 | $ | 197,816 | ||||||||||
| Non-GAAP operating income as a % of revenue | 17.7 | % | 19.4 | % | 17.0 | % | 15.9 | % | 17.5 | % | ||||||||||
(1) 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 and other items which are outside our normal operations, 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, regulations and guidance.
(2) For the year ended
(3) This item includes operating losses related primarily to the Company's
| CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | ||||||||
| SUPPLEMENTAL SCHEDULE: PRESENTATION OF FORMER BUSINESS SEGMENT RESULTS | ||||||||
| RECONCILIATION OF GAAP TO NON-GAAP | ||||||||
| SELECTED FORMER BUSINESS SEGMENT INFORMATION (UNAUDITED) (1) | ||||||||
| (dollars in thousands) | ||||||||
| Three Months Ended | ||||||||
|
June 28, |
June 29, |
|||||||
| Research Models and Services (former segment) | ||||||||
| Revenue | $ | 189,157 | $ | 178,973 | ||||
| Add back government billing adjustment | - | 1,495 | ||||||
| Non-GAAP revenue | $ | 189,157 | $ | 180,468 | ||||
| Operating income | 52,547 | 49,630 | ||||||
| Operating income as a % of revenue | 27.8 | % | 27.7 | % | ||||
| Add back: | ||||||||
| Amortization of intangible assets related to acquisitions | 2,035 | 2,228 | ||||||
| Severance related to cost-savings actions | 2,031 | 295 | ||||||
| Government billing adjustment and related expenses | 13 | 1,855 | ||||||
|
Impairment and other items (2) |
1,725 | - | ||||||
|
Operating losses (3) |
15 | 51 | ||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 58,366 | $ | 54,059 | ||||
| Non-GAAP operating income as a % of revenue | 30.9 | % | 30.0 | % | ||||
| Preclinical Services (former segment) | ||||||||
| Revenue | $ | 128,509 | $ | 113,960 | ||||
| Operating income | 19,901 | 10,935 | ||||||
| Operating income as a % of revenue | 15.5 | % | 9.6 | % | ||||
| Add back: | ||||||||
| Amortization of intangible assets related to acquisitions | 1,917 | 2,236 | ||||||
| Severance related to cost-savings actions | 858 | (10 | ) | |||||
|
Operating losses (3) |
704 | 787 | ||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 23,380 | $ | 13,948 | ||||
| Non-GAAP operating income as a % of revenue | 18.2 | % | 12.2 | % | ||||
| Acquisition of Argenta and BioFocus | ||||||||
| Revenue | $ | 23,513 | $ | - | ||||
| Operating income | 39 | - | ||||||
| Operating income as a % of revenue | 0.2 | % | - | |||||
| Add back: | ||||||||
| Amortization of intangible assets related to acquisitions | 2,902 | - | ||||||
| Costs associated with the evaluation and integration of acquisitions | 203 | - | ||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 3,144 | $ | - | ||||
| Non-GAAP operating income as a % of revenue | 13.4 | % | - | |||||
| Unallocated Corporate Overhead | $ | (21,462 | ) | $ | (17,377 | ) | ||
| Add back: | ||||||||
| Severance related to cost-savings actions | - | - | ||||||
| Costs associated with the evaluation and integration of acquisitions | 1,371 | 194 | ||||||
| Convertible debt accounting | - | 54 | ||||||
| Unallocated corporate overhead, excluding specified charges (Non-GAAP) | $ | (20,091 | ) | $ | (17,129 | ) | ||
| Total | ||||||||
| Revenue | $ | 341,179 | $ | 292,933 | ||||
| Add back government billing adjustment | - | 1,495 | ||||||
| Non-GAAP revenue | $ | 341,179 | $ | 294,428 | ||||
| Operating income | 51,025 | 43,188 | ||||||
| Operating income as a % of revenue | 15.0 | % | 14.7 | % | ||||
| Add back: | ||||||||
| Amortization of intangible assets related to acquisitions | 6,854 | 4,464 | ||||||
| Severance related to cost-savings actions | 2,889 | 285 | ||||||
| Government billing adjustment and related expenses | 13 | 1,855 | ||||||
|
Impairment and other items (2) |
1,725 | - | ||||||
|
Operating losses (3) |
719 | 838 | ||||||
| Costs associated with the evaluation and integration of acquisitions | 1,574 | 194 | ||||||
| Convertible debt accounting | - | 54 | ||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 64,799 | $ | 50,878 | ||||
| Non-GAAP operating income as a % of revenue | 19.0 | % | 17.3 | % | ||||
(1) 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 and other items which are outside our normal operations, 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, regulations and guidance.
(2) For the three months ended
(3) This item includes operating losses related primarily to the Company's
Source:
Charles River Laboratories International, Inc.– Second-Quarter Revenue of
– Second-Quarter GAAP Earnings per Share of
– Updates EPS Guidance for 2014 –
– Revises Financial Reporting into Three Segments –
On a GAAP basis, net income from continuing operations for the second quarter of 2014 was
On a non-GAAP basis, net income from continuing operations was
"We are continuing our focus on targeted sales efforts, which have been particularly successful with the mid-tier clients. And now that we have broadened our early-stage portfolio with the addition of early discovery capabilities, we are engaging in expanded discussions with existing clients and reaching potential clients who are interested in outsourcing entire drug discovery and development programs to a single provider. We believe these discussions will result in expanded and new strategic relationships across our global, mid-tier, and academic clients," Mr. Foster concluded.
Business Segment Revision
During the second quarter of 2014, following the acquisition of Argenta and BioFocus on
Management believes that the new business segments reflect results of operations and facilitate investors' understanding of the Company's business. The changes in segment presentation have no effect on consolidated revenue or net income. The business segment details discussed in this press release are based on the new business segments. Comparable prior periods have been recast based on the new business segments since the first quarter of 2012, and this quarterly financial information is provided in the schedules at the end of this press release.
The revised reportable segments are as follows:
|
Research Models |
Discovery and |
Manufacturing |
||||
| Research Models | Discovery Services (2) | Endotoxin and Microbial Detection | ||||
| Research Model Services (1) | Safety Assessment | Avian Vaccine Services | ||||
| Biologics Testing Solutions |
(1) The Research Models Services business currently includes Genetically Engineered Models and Services (GEMS), Research Animal Diagnostic Services (RADS), and Insourcing Solutions (IS).
(2) The Discovery Services business includes the legacy Discovery Research Services operations (formerly reported in the RMS segment), discovery services which were formerly reported in Preclinical Services, and Argenta and BioFocus.
Prior to recasting the reportable segments, the businesses were reported in two segments as follows:
|
Research Models |
Preclinical |
||
| Research Models | Discovery Services | ||
| (including Avian Vaccine Services) | Safety Assessment | ||
| Research Model Services (1) | Biologics Testing Solutions | ||
| Endotoxin and Microbial Detection |
(1) The Research Models Services business previously included Genetically Engineered Models and Services (GEMS), Research Animal Diagnostic Services (RADS), Insourcing Solutions (IS), and Discovery Research Services.
Second-Quarter Segment Results
Research Models and Services (RMS)
Revenue for the RMS segment was
In the second quarter of 2014, the RMS segment's GAAP operating margin was unchanged at 25.7% compared to the second quarter of 2013. On a non-GAAP basis, the operating margin increased to 29.0% from 27.5% in the second quarter of 2013. Benefits from the Company's global efficiency initiatives drove the operating margin improvement.
Discovery and Safety Assessment (DSA)
Second-quarter 2014 revenue from continuing operations for the DSA segment was
In the second quarter of 2014, the DSA segment's GAAP operating margin was 12.5% compared to 10.5% in the second quarter of 2013. On a non-GAAP basis, the operating margin increased to 17.1% from 13.5% in the second quarter of 2013. The non-GAAP operating margin improvement was due primarily to leverage from higher sales of safety assessment services. In addition, a foreign exchange benefit from a weaker Canadian dollar and the
Manufacturing Support (Manufacturing)
Revenue for the Manufacturing segment was
In the second quarter of 2014, the Manufacturing segment's GAAP operating margin was 31.3% compared to 28.7% for the second quarter of 2013. On a non-GAAP basis, the operating margin increased to 33.4% from 31.1% in the second quarter of 2013. The operating margin improvement was primarily driven by improved utilization for the Biologics business.
Stock Repurchase Update
During the second quarter of 2014, the Company repurchased approximately 1.5 million shares of its common stock for
Six-Month Results
For the first six months of 2014, revenue increased by 9.7% to
On a GAAP basis, net income from continuing operations for the first half of 2014 was
On a non-GAAP basis, net income from continuing operations for the first half of 2014 was
Research Models and Services (RMS)
For the first six months of 2014, RMS revenue was
Discovery and Safety Assessment (DSA)
For the first six months of 2014, DSA revenue was
Manufacturing Support (Manufacturing)
For the first six months of 2014, Manufacturing revenue was
2014 Guidance
The Company is updating its 2014 forward-looking guidance based on continuing operations. Guidance for non-GAAP earnings per share has been increased to primarily reflect the strong second-quarter performance, including the gain from limited partnership investments. Primarily as a result of additional charges associated with the Company's global efficiency initiatives, GAAP earnings per share guidance has been reduced. The Company is maintaining its 2014 revenue guidance and continues to expect foreign currency translation to provide only a small benefit to reported revenue. The outlook for the remainder of the year assumes normal seasonality in the RMS segment.
| 2014 GUIDANCE (from continuing operations) | REVISED | PRIOR | ||
| Net revenue growth, reported | 9.0% – 11.0% | 9.0% – 11.0% | ||
| Impact of foreign exchange | N/M | N/M | ||
| Net revenue growth, constant currency | 9.0% - 11.0% | 9.0% - 11.0% | ||
| GAAP EPS estimate | $2.60 - $2.70 | $2.64 - $2.74 | ||
| Amortization of intangible assets | $0.36 | $0.33 | ||
| Operating losses and other items (1) | $0.06 | $0.04 | ||
| Charges related to global efficiency initiative (2) | $0.16-$0.18 | $0.08-$0.10 | ||
| Costs associated with evaluation and integration of acquisitions | $0.06 | $0.05 | ||
| Non-GAAP EPS estimate | $3.25 - $3.35 | $3.15 - $3.25 |
(1) These costs relate primarily to the Company's
(2) These charges relate primarily to the consolidation of research model production operations and other efficiency initiatives. Other projects in support of the global efficiency initiative are expected, but these charges reflect only the decisions that have already been finalized.
Webcast
Non-GAAP Reconciliations/Discontinued Operations
The Company reports non-GAAP results in this press release, which exclude certain items that are outside of normal operations. A reconciliation of GAAP to non-GAAP results is provided in the schedules at the end of this press release. In addition, the Company reports results from continuing operations, which exclude results of the Phase I clinical business that was divested in 2011. The Phase I business is reported as a discontinued operation.
Use of Non-GAAP Financial Measures
This press release contains non-GAAP financial measures, such as non-GAAP earnings per diluted share, which exclude the amortization of intangible assets and other charges related to our acquisitions; expenses associated with evaluating and integrating acquisitions; charges, gains and losses attributable to businesses or properties we plan to close, consolidate or divest; severance costs associated with our efficiency initiatives; accelerated depreciation charges related to the consolidation of research model production operations and Biologics Testing Solutions operations; a charge related to a dispute with a large model supplier; gains related to the sales of former research model facilities; an adjustment to prior-period accrued compensation expenses; and the additional interest recorded as a result of the adoption in 2009 of an accounting standard related to our convertible debt accounting which increased interest and depreciation expense. We exclude these items from the non-GAAP financial measures because they are outside our normal operations. This press release also refers to our revenue in both a GAAP and non-GAAP (constant currency) basis. 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 these often-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 (and in certain cases, the evaluation of such acquisitions, whether or not ultimately consummated) 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 on a regular basis. Presenting revenue on a constant currency basis allows investors to measure our revenue growth exclusive of foreign currency exchange fluctuations more clearly. 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 this press release, and can also be found on the Company's website at ir.criver.com.
Caution Concerning Forward-Looking Statements
This press 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 future financial performance including revenue, operating margins, earnings per share, and the expected impact of foreign exchange rates; the future demand for drug discovery and development products and services, including our expectations for future revenue trends; the integration of Argenta and BioFocus, and our expectations with respect to their impact on the Company, our service offerings, strategic relationships, revenue, revenue growth rates, and earnings; the development and performance of our services and products, including the impact this can have on our clients' drug development models; market and industry conditions including the outsourcing of these services and spending trends by our clients; the potential outcome of and impact to our business and financial operations due to litigation and legal proceedings, including with respect to our ongoing investigation of inaccurate billing with respect to certain government contracts; and Charles River's future performance as delineated in our forward-looking guidance, and particularly our expectations with respect to revenue, the impact of foreign exchange, and enhanced efficiency initiatives. 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: the ability to successfully integrate businesses we acquire; the ability to execute our efficiency initiatives on an effective and timely basis (including divestitures and site closures); the timing and magnitude of our share repurchases; negative trends in research and development spending, negative trends in the level of outsourced services, or other cost reduction actions by our clients; the ability to convert backlog to revenue; special interest groups; contaminations; industry trends; new displacement technologies; USDA and
About Charles River
Charles River provides essential products and services to help pharmaceutical and biotechnology companies, government agencies and leading academic institutions around the globe accelerate their research and drug development efforts. Our dedicated employees are focused on providing clients with exactly what they need to improve and expedite the discovery, early-stage development and safe manufacture of new therapies for the patients who need them. To learn more about our unique portfolio and breadth of services, visit www.criver.com.
| CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | ||||||||||||||||
| (dollars in thousands, except for share and per share data) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
|
June 28, |
June 29, |
June 28, |
June 29, |
|||||||||||||
| Total revenue | $ | 341,179 | $ | 292,933 | $ | 640,547 | $ | 584,171 | ||||||||
| Cost of products sold and services provided | 215,545 | 190,363 | 406,100 | 377,390 | ||||||||||||
| Gross margin | 125,634 | 102,570 | 234,447 | 206,781 | ||||||||||||
| Selling, general and administrative | 67,756 | 54,919 | 132,523 | 112,118 | ||||||||||||
| Amortization of intangibles | 6,853 | 4,463 | 11,193 | 8,712 | ||||||||||||
| Operating income | 51,025 | 43,188 | 90,731 | 85,951 | ||||||||||||
| Interest income (expense) | (3,151 | ) | (7,308 | ) | (5,747 | ) | (15,491 | ) | ||||||||
| Other income (expense) | 2,667 | 967 | 8,543 | 2,035 | ||||||||||||
| Income from continuing operations before income taxes | 50,541 | 36,847 | 93,527 | 72,495 | ||||||||||||
| Provision for income taxes | 14,081 | 8,219 | 24,439 | 17,941 | ||||||||||||
| Income from continuing operations, net of tax | 36,460 | 28,628 | 69,088 | 54,554 | ||||||||||||
| Loss from discontinued operations, net of tax | (644 | ) | (915 | ) | (914 | ) | (1,070 | ) | ||||||||
| Net income | 35,816 | 27,713 | 68,174 | 53,484 | ||||||||||||
| Income from noncontrolling interests | (552 | ) | (429 | ) | (678 | ) | (622 | ) | ||||||||
| Net income attributable to common shareowners | $ | 35,264 | $ | 27,284 | $ | 67,496 | $ | 52,862 | ||||||||
| Earnings per common share | ||||||||||||||||
| Basic: | ||||||||||||||||
| Continuing operations | $ | 0.76 | $ | 0.58 | $ | 1.46 | $ | 1.12 | ||||||||
| Discontinued operations | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.02 | ) | ||||
| Net | $ | 0.75 | $ | 0.57 | $ | 1.44 | $ | 1.10 | ||||||||
| Diluted: | ||||||||||||||||
| Continuing operations | $ | 0.75 | $ | 0.58 | $ | 1.43 | $ | 1.11 | ||||||||
| Discontinued operations | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.02 | ) | ||||
| Net | $ | 0.74 | $ | 0.56 | $ | 1.41 | $ | 1.09 | ||||||||
| Weighted average number of common shares outstanding | ||||||||||||||||
| Basic | 46,941,612 | 48,280,371 | 47,016,221 | 47,969,683 | ||||||||||||
| Diluted | 47,684,096 | 48,835,453 | 47,909,233 | 48,647,942 | ||||||||||||
| CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | ||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | ||||||
| (dollars in thousands) | ||||||
|
June 28, |
December 28, |
|||||
| Assets | ||||||
| Current assets | ||||||
| Cash and cash equivalents | $ | 117,012 | $ | 155,927 | ||
| Trade receivables, net | 274,504 | 220,630 | ||||
| Inventories | 92,621 | 89,396 | ||||
| Other current assets | 107,709 | 85,847 | ||||
| Current assets of discontinued businesses | 856 | 750 | ||||
| Total current assets | 592,702 | 552,550 | ||||
| Property, plant and equipment, net | 687,664 | 676,182 | ||||
| Goodwill, net | 297,005 | 230,701 | ||||
| Other intangibles, net | 181,269 | 84,537 | ||||
| Deferred tax asset | 19,746 | 23,671 | ||||
| Other assets | 81,815 | 61,964 | ||||
| Long-term assets of discontinued businesses | 3,261 | 3,151 | ||||
| Total assets | $ | 1,863,462 | $ | 1,632,756 | ||
| Liabilities and Equity | ||||||
| Current liabilities | ||||||
| Current portion of long-term debt and capital leases | $ | 31,932 | $ | 21,437 | ||
| Accounts payable | 35,218 | 31,770 | ||||
| Accrued compensation | 59,224 | 58,461 | ||||
| Deferred revenue | 61,870 | 54,177 | ||||
| Accrued liabilities | 67,462 | 56,712 | ||||
| Other current liabilities | 13,761 | 22,546 | ||||
| Current liabilities of discontinued businesses | 2,181 | 1,931 | ||||
| Total current liabilities | 271,648 | 247,034 | ||||
| Long-term debt & capital leases | 781,617 | 642,352 | ||||
| Other long-term liabilities | 103,305 | 70,632 | ||||
| Long-term liabilities of discontinued businesses | 8,271 | 8,080 | ||||
| Total liabilities | 1,164,841 | 968,098 | ||||
| Redeemable non-controlling interest | 23,483 | 20,581 | ||||
| Total shareholders' equity | 671,815 | 640,984 | ||||
| Non-controlling interest | 3,323 | 3,093 | ||||
| Total liabilities and equity | $ | 1,863,462 | $ | 1,632,756 | ||
| CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | |||||||||||||||||
| SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED) | |||||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||
|
June 28, |
June 29, |
June 28, |
June 29, |
||||||||||||||
| Research Models and Services | |||||||||||||||||
| Revenue | $ | 133,120 | $ | 129,759 | $ | 265,615 | $ | 264,632 | |||||||||
| Gross margin | 52,450 | 49,020 | 104,097 | 104,476 | |||||||||||||
| Gross margin as a % of revenue | 39.4 | % | 37.8 | % | 39.2 | % | 39.5 | % | |||||||||
| Operating income | 34,234 | 33,296 | 69,678 | 73,773 | |||||||||||||
| Operating income as a % of revenue | 25.7 | % | 25.7 | % | 26.2 | % | 27.9 | % | |||||||||
| Depreciation and amortization | 7,165 | 7,192 | 14,364 | 14,094 | |||||||||||||
| Capital expenditures | 2,478 | 3,991 | 7,711 | 6,209 | |||||||||||||
| Discovery and Safety Assessment | |||||||||||||||||
| Revenue | $ | 142,614 | $ | 107,490 | $ | 247,752 | $ | 209,281 | |||||||||
| Gross margin | 39,457 | 25,534 | 65,116 | 48,051 | |||||||||||||
| Gross margin as a % of revenue | 27.7 | % | 23.8 | % | 26.3 | % | 23.0 | % | |||||||||
| Operating income | 17,798 | 11,261 | 29,511 | 19,704 | |||||||||||||
| Operating income as a % of revenue | 12.5 | % | 10.5 | % | 11.9 | % | 9.4 | % | |||||||||
| Depreciation and amortization | 13,241 | 9,369 | 22,012 | 18,783 | |||||||||||||
| Capital expenditures | 4,340 | 3,064 | 8,051 | 4,856 | |||||||||||||
| Manufacturing Support | |||||||||||||||||
| Revenue | $ | 65,445 | $ | 55,684 | $ | 127,180 | $ | 110,258 | |||||||||
| Gross margin | 33,727 | 28,016 | 65,234 | 54,254 | |||||||||||||
| Gross margin as a % of revenue | 51.5 | % | 50.3 | % | 51.3 | % | 49.2 | % | |||||||||
| Operating income | 20,455 | 16,008 | 38,871 | 30,451 | |||||||||||||
| Operating income as a % of revenue | 31.3 | % | 28.7 | % | 30.6 | % | 27.6 | % | |||||||||
| Depreciation and amortization | 3,894 | 3,849 | 7,975 | 7,543 | |||||||||||||
| Capital expenditures | 2,497 | 2,740 | 4,743 | 5,158 | |||||||||||||
| Unallocated Corporate Overhead | $ | (21,462 | ) | $ | (17,377 | ) | $ | (47,329 | ) | $ | (37,977 | ) | |||||
| Total | |||||||||||||||||
| Revenue | $ | 341,179 | $ | 292,933 | $ | 640,547 | $ | 584,171 | |||||||||
| Gross margin | 125,634 | 102,570 | 234,447 | 206,781 | |||||||||||||
| Gross margin as a % of revenue | 36.8 | % | 35.0 | % | 36.6 | % | 35.4 | % | |||||||||
| Operating income | 51,025 | 43,188 | 90,731 | 85,951 | |||||||||||||
| Operating income as a % of revenue | 15.0 | % | 14.7 | % | 14.2 | % | 14.7 | % | |||||||||
| Depreciation and amortization | 24,300 | 20,410 | 44,351 | 40,420 | |||||||||||||
| Capital expenditures | 9,315 | 9,795 | 20,505 | 16,223 | |||||||||||||
| CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | ||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP | ||||||||||||||||
| SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED) (1) | ||||||||||||||||
| (dollars in thousands) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
|
June 28, |
June 29, |
June 28, |
June 29, |
|||||||||||||
| Research Models and Services | ||||||||||||||||
| Revenue | $ | 133,120 | $ | 129,759 | $ | 265,615 | $ | 264,632 | ||||||||
| Add back government billing adjustment | - | 1,495 | - | 1,495 | ||||||||||||
| Non-GAAP revenue | $ | 133,120 | $ | 131,254 | $ | 265,615 | $ | 266,127 | ||||||||
| Operating income | 34,234 | 33,296 | 69,678 | 73,773 | ||||||||||||
| Operating income as a % of revenue | 25.7 | % | 25.7 | % | 26.2 | % | 27.9 | % | ||||||||
| Add back: | ||||||||||||||||
| Amortization of intangible assets related to acquisitions | 608 | 754 | 1,545 | 1,245 | ||||||||||||
| Severance related to cost-savings actions | 2,011 | 183 | 3,595 | 269 | ||||||||||||
| Government billing adjustment and related expenses | 13 | 1,855 | 80 | 1,855 | ||||||||||||
|
Impairment and other items (2) |
1,725 | - | 2,705 | - | ||||||||||||
|
Operating losses (3) |
15 | 51 | 27 | 209 | ||||||||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 38,606 | $ | 36,139 | $ | 77,630 | $ | 77,351 | ||||||||
| Non-GAAP operating income as a % of revenue | 29.0 | % | 27.5 | % | 29.2 | % | 29.1 | % | ||||||||
| Discovery and Safety Assessment | ||||||||||||||||
| Revenue | $ | 142,614 | $ | 107,490 | $ | 247,752 | $ | 209,281 | ||||||||
| Operating income | 17,798 | 11,261 | 29,511 | 19,704 | ||||||||||||
| Operating income as a % of revenue | 12.5 | % | 10.5 | % | 11.9 | % | 9.4 | % | ||||||||
| Add back: | ||||||||||||||||
| Amortization of intangible assets related to acquisitions | 4,891 | 2,393 | 6,863 | 4,809 | ||||||||||||
| Severance related to cost-savings actions | 854 | 102 | 1,049 | 313 | ||||||||||||
|
Operating losses (3) |
704 | 787 | 1,375 | 1,735 | ||||||||||||
| Costs associated with the evaluation and integration of acquisitions | 203 | - | 203 | - | ||||||||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 24,450 | $ | 14,543 | $ | 39,001 | $ | 26,561 | ||||||||
| Non-GAAP operating income as a % of revenue | 17.1 | % | 13.5 | % | 15.7 | % | 12.7 | % | ||||||||
| Manufacturing Support | ||||||||||||||||
| Revenue | $ | 65,445 | $ | 55,684 | $ | 127,180 | $ | 110,258 | ||||||||
| Operating income | 20,455 | 16,008 | 38,871 | 30,451 | ||||||||||||
| Operating income as a % of revenue | 31.3 | % | 28.7 | % | 30.6 | % | 27.6 | % | ||||||||
| Add back: | ||||||||||||||||
| Amortization of intangible assets related to acquisitions | 1,355 | 1,317 | 2,785 | 2,658 | ||||||||||||
| Severance related to cost-savings actions | 24 | - | 24 | - | ||||||||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 21,834 | $ | 17,325 | $ | 41,680 | $ | 33,109 | ||||||||
| Non-GAAP operating income as a % of revenue | 33.4 | % | 31.1 | % | 32.8 | % | 30.0 | % | ||||||||
| Unallocated Corporate Overhead | $ | (21,462 | ) | $ | (17,377 | ) | $ | (47,329 | ) | $ | (37,977 | ) | ||||
| Add back: | ||||||||||||||||
| Severance related to cost-savings actions | - | - | 121 | - | ||||||||||||
| Costs associated with the evaluation and integration of acquisitions | 1,371 | 194 | 4,676 | 680 | ||||||||||||
| Convertible debt accounting | - | 54 | - | 107 | ||||||||||||
| Unallocated corporate overhead, excluding specified charges (Non-GAAP) | $ | (20,091 | ) | $ | (17,129 | ) | $ | (42,532 | ) | $ | (37,190 | ) | ||||
| Total | ||||||||||||||||
| Revenue | $ | 341,179 | $ | 292,933 | $ | 640,547 | $ | 584,171 | ||||||||
| Add back government billing adjustment | - | 1,495 | - | 1,495 | ||||||||||||
| Non-GAAP revenue | $ | 341,179 | $ | 294,428 | $ | 640,547 | $ | 585,666 | ||||||||
| Operating income | 51,025 | 43,188 | 90,731 | 85,951 | ||||||||||||
| Operating income as a % of revenue | 15.0 | % | 14.7 | % | 14.2 | % | 14.7 | % | ||||||||
| Add back: | ||||||||||||||||
| Amortization of intangible assets related to acquisitions | 6,854 | 4,464 | 11,193 | 8,712 | ||||||||||||
| Severance related to cost-savings actions | 2,889 | 285 | 4,789 | 582 | ||||||||||||
| Government billing adjustment and related expenses | 13 | 1,855 | 80 | 1,855 | ||||||||||||
|
Impairment and other items (2) |
1,725 | - | 2,705 | - | ||||||||||||
|
Operating losses (3) |
719 | 838 | 1,402 | 1,944 | ||||||||||||
| Costs associated with the evaluation and integration of acquisitions | 1,574 | 194 | 4,879 | 680 | ||||||||||||
| Convertible debt accounting | - | 54 | - | 107 | ||||||||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 64,799 | $ | 50,878 | $ | 115,779 | $ | 99,831 | ||||||||
| Non-GAAP operating income as a % of revenue | 19.0 | % | 17.3 | % | 18.1 | % | 17.0 | % | ||||||||
(1) 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 and other items which are outside our normal operations, 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, regulations and guidance.
(2) For the three and six months ended
(3) This item includes operating losses related primarily to the Company's
| CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | ||||||||||||||||
| RECONCILIATION OF GAAP EARNINGS TO NON-GAAP EARNINGS (1) | ||||||||||||||||
| (dollars in thousands, except for share and per share data) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
|
June 28, |
June 29, |
June 28, |
June 29, |
|||||||||||||
| Net income attributable to common shareholders | $ | 35,264 | $ | 27,284 | $ | 67,496 | $ | 52,862 | ||||||||
| Less: Discontinued operations | 644 | 915 | 914 | 1,070 | ||||||||||||
| Net income from continuing operations | 35,908 | 28,199 | 68,410 | 53,932 | ||||||||||||
| Add back: | ||||||||||||||||
| Amortization of intangible assets related to acquisitions | 6,854 | 4,464 | 11,193 | 8,712 | ||||||||||||
| Severance related to cost-savings actions | 2,889 | 285 | 4,789 | 582 | ||||||||||||
| Impairment and other items (2) | 1,725 | - | 2,705 | - | ||||||||||||
| Operating losses (3) | 719 | 838 | 1,402 | 1,944 | ||||||||||||
| Costs associated with the evaluation and integration of acquisitions | 1,574 | 194 | 4,879 | 680 | ||||||||||||
| Government billing adjustment and related expenses | 13 | 1,855 | 80 | 1,855 | ||||||||||||
| Write-off of deferred financing costs and fees related to debt refinancing | - | 645 | - | 645 | ||||||||||||
| Convertible debt accounting, net (4) | - | 2,897 | - | 6,710 | ||||||||||||
| Tax effect of items above | (3,426 | ) | (3,709 | ) | (7,928 | ) | (6,166 | ) | ||||||||
| Net income from continuing operations, excluding specified charges (Non-GAAP) | $ | 46,256 | $ | 35,668 | $ | 85,530 | $ | 68,894 | ||||||||
| Weighted average shares outstanding - Basic | 46,941,612 | 48,280,371 | 47,016,221 | 47,969,683 | ||||||||||||
| Effect of dilutive securities: | ||||||||||||||||
| Stock options and contingently issued restricted stock | 742,484 | 555,082 | 893,012 | 678,259 | ||||||||||||
| Weighted average shares outstanding - Diluted | 47,684,096 | 48,835,453 | 47,909,233 | 48,647,942 | ||||||||||||
| Basic earnings per share from continuing operations | $ | 0.76 | $ | 0.58 | $ | 1.46 | $ | 1.12 | ||||||||
| Diluted earnings per share from continuing operations | $ | 0.75 | $ | 0.58 | $ | 1.43 | $ | 1.11 | ||||||||
| Basic earnings per share from continuing operations, excluding specified charges (Non-GAAP) | $ | 0.99 | $ | 0.74 | $ | 1.82 | $ | 1.44 | ||||||||
| Diluted earnings per share from continuing operations, excluding specified charges (Non-GAAP) | $ | 0.97 | $ | 0.73 | $ | 1.79 | $ | 1.42 | ||||||||
(1) 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 and other items which are outside our normal operations, 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, regulations and guidance.
(2) For the three and six months ended
(3) This item includes operating losses related primarily to the Company's
(4) The three and six months ended
| CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | ||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP REVENUE GROWTH (YEAR-OVER-YEAR) | ||||||||||||
| EXCLUDING THE IMPACT OF FOREIGN EXCHANGE AND A GOVERNMENT BILLING ADJUSTMENT | ||||||||||||
| For the Three and Six Months Ended June 28, 2014 | ||||||||||||
| For the three months ended June 28, 2014: |
Total CRL |
RMS Segment |
DSA Segment |
MS Segment |
||||||||
| Revenue growth, reported | 16.5 | % | 2.6 | % | 32.7 | % | 17.5 | % | ||||
| Impact of foreign exchange | 1.4 | % | 1.1 | % | 1.3 | % | 2.3 | % | ||||
| Impact of government billing adjustment | 0.6 | % | 1.2 | % | 0.0 | % | 0.0 | % | ||||
| Non-GAAP revenue growth, constant currency | 14.5 | % | 0.3 | % | 31.4 | % | 15.2 | % | ||||
| For the six months ended June 28, 2014: |
Total CRL |
RMS Segment |
DSA Segment |
MS Segment |
||||||||
| Revenue growth, reported | 9.7 | % | 0.4 | % | 18.4 | % | 15.3 | % | ||||
| Impact of foreign exchange | 1.0 | % | 0.6 | % | 0.9 | % | 1.9 | % | ||||
| Impact of government billing adjustment | 0.3 | % | 0.6 | % | 0.0 | % | 0.0 | % | ||||
| Non-GAAP revenue growth, constant currency | 8.4 | % | (0.8 | %) | 17.5 | % | 13.4 | % | ||||
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. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | ||||||||
| (dollars in thousands) | ||||||||
|
Six Months Ended |
||||||||
|
June 28, |
June 29, |
|||||||
| Cash flows relating to operating activities: | ||||||||
| Net income | $ | 68,174 | $ | 53,484 | ||||
| Less: Loss from discontinued operations | (914 | ) | (1,070 | ) | ||||
| Income from continuing operations | 69,088 | 54,554 | ||||||
| Summary of non-cash adjustments | 59,081 | 66,386 | ||||||
| Changes in assets and liabilities | (42,731 | ) | (41,997 | ) | ||||
| Net cash provided by operating activities | 85,438 | 78,943 | ||||||
| Cash flows relating to investing activities: | ||||||||
| Acquisition of businesses, net of cash acquired | (183,151 | ) | (24,218 | ) | ||||
| Capital expenditures | (20,505 | ) | (16,223 | ) | ||||
| Other | 1,158 | 454 | ||||||
| Net cash used in investing activities | (202,498 | ) | (39,987 | ) | ||||
| Cash flow relating to financing activities: | ||||||||
| Net cash used in financing activities | 78,212 | (29,417 | ) | |||||
| Cash flows used in discontinued operations | (689 | ) | (946 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | 622 | (4,757 | ) | |||||
| Net change in cash and cash equivalents | (38,915 | ) | 3,836 | |||||
| Cash and cash equivalents, beginning of period | 155,927 | 109,685 | ||||||
| Cash and cash equivalents, end of period | $ | 117,012 | $ | 113,521 | ||||
| CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | |||||||||||||||||||||||||
| SUPPLEMENTAL SCHEDULE: PRIOR PERIODS RECAST FOR BUSINESS SEGMENT REVISION | |||||||||||||||||||||||||
| SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED) | |||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||
| Three Months Ended |
Twelve Months |
Three Months |
|||||||||||||||||||||||
|
March 30, |
June 29, |
September 28, |
December 28, |
December 28, |
March 29, |
||||||||||||||||||||
| Research Models and Services | |||||||||||||||||||||||||
| Revenue | $ | 134,873 | $ | 129,759 | $ | 124,236 | $ | 122,482 | $ | 511,350 | $ | 132,495 | |||||||||||||
| Gross margin | 55,456 | 49,020 | 39,127 | 35,889 | 179,492 | 51,647 | |||||||||||||||||||
| Gross margin as a % of revenue | 41.1 | % | 37.8 | % | 31.5 | % | 29.3 | % | 35.1 | % | 39.0 | % | |||||||||||||
| Operating income | 40,477 | 33,296 | 23,803 | 19,161 | 116,737 | 35,444 | |||||||||||||||||||
| Operating income as a % of revenue | 30.0 | % | 25.7 | % | 19.2 | % | 15.6 | % | 22.8 | % | 26.8 | % | |||||||||||||
| Depreciation and amortization | 6,902 | 7,192 | 13,548 | 14,195 | 41,837 | 7,199 | |||||||||||||||||||
| Capital expenditures | 2,218 | 3,991 | 4,208 | 6,300 | 16,717 | 5,233 | |||||||||||||||||||
| Discovery and Safety Assessment | |||||||||||||||||||||||||
| Revenue | $ | 101,791 | $ | 107,490 | $ | 112,627 | $ | 110,470 | $ | 432,378 | $ | 105,138 | |||||||||||||
| Gross margin | 22,517 | 25,534 | 33,061 | 25,654 | 106,766 | 25,659 | |||||||||||||||||||
| Gross margin as a % of revenue | 22.1 | % | 23.8 | % | 29.4 | % | 23.2 | % | 24.7 | % | 24.4 | % | |||||||||||||
| Operating income | 8,443 | 11,261 | 18,968 | 8,741 | 47,413 | 11,713 | |||||||||||||||||||
| Operating income as a % of revenue | 8.3 | % | 10.5 | % | 16.8 | % | 7.9 | % | 11.0 | % | 11.1 | % | |||||||||||||
| Depreciation and amortization | 9,414 | 9,369 | 9,486 | 9,451 | 37,720 | 8,771 | |||||||||||||||||||
| Capital expenditures | 1,792 | 3,064 | 2,459 | 5,246 | 12,561 | 3,711 | |||||||||||||||||||
| Manufacturing Support | |||||||||||||||||||||||||
| Revenue | $ | 54,574 | $ | 55,684 | $ | 55,266 | $ | 56,276 | $ | 221,800 | $ | 61,735 | |||||||||||||
| Gross margin | 26,238 | 28,016 | 27,738 | 26,651 | 108,643 | 31,507 | |||||||||||||||||||
| Gross margin as a % of revenue | 48.1 | % | 50.3 | % | 50.2 | % | 47.4 | % | 49.0 | % | 51.0 | % | |||||||||||||
| Operating income | 14,443 | 16,008 | 16,125 | 14,651 | 61,227 | 18,416 | |||||||||||||||||||
| Operating income as a % of revenue | 26.5 | % | 28.7 | % | 29.2 | % | 26.0 | % | 27.6 | % | 29.8 | % | |||||||||||||
| Depreciation and amortization | 3,694 | 3,849 | 3,881 | 5,655 | 17,079 | 4,081 | |||||||||||||||||||
| Capital expenditures | 2,418 | 2,740 | 2,429 | 2,289 | 9,876 | 2,246 | |||||||||||||||||||
| Unallocated Corporate Overhead | $ | (20,600 | ) | $ | (17,377 | ) | $ | (18,053 | ) | $ | (17,946 | ) | $ | (73,976 | ) | $ | (25,867 | ) | |||||||
| Total | |||||||||||||||||||||||||
| Revenue | $ | 291,238 | $ | 292,933 | $ | 292,129 | $ | 289,228 | $ | 1,165,528 | $ | 299,368 | |||||||||||||
| Gross margin | 104,211 | 102,570 | 99,926 | 88,194 | 394,901 | 108,813 | |||||||||||||||||||
| Gross margin as a % of revenue | 35.8 | % | 35.0 | % | 34.2 | % | 30.5 | % | 33.9 | % | 36.3 | % | |||||||||||||
| Operating income | 42,763 | 43,188 | 40,843 | 24,607 | 151,401 | 39,706 | |||||||||||||||||||
| Operating income as a % of revenue | 14.7 | % | 14.7 | % | 14.0 | % | 8.5 | % | 13.0 | % | 13.3 | % | |||||||||||||
| Depreciation and amortization | 20,010 | 20,410 | 26,915 | 29,301 | 96,636 | 20,051 | |||||||||||||||||||
| Capital expenditures | 6,428 | 9,795 | 9,096 | 13,835 | 39,154 | 11,190 | |||||||||||||||||||
| CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | |||||||||||||||||||||
| SUPPLEMENTAL SCHEDULE: PRIOR PERIODS RECAST FOR BUSINESS SEGMENT REVISION | |||||||||||||||||||||
| SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED) | |||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||
| Three Months Ended |
Twelve Months |
||||||||||||||||||||
|
March 31, |
June 30, |
September 29, |
December 29, |
December 29, |
|||||||||||||||||
| Research Models and Services | |||||||||||||||||||||
| Revenue | $ | 140,875 | $ | 132,428 | $ | 124,541 | $ | 123,789 | $ | 521,633 | |||||||||||
| Gross margin | 59,154 | 53,900 | 44,364 | 40,873 | 198,291 | ||||||||||||||||
| Gross margin as a % of revenue | 42.0 | % | 40.7 | % | 35.6 | % | 33.0 | % | 38.0 | % | |||||||||||
| Operating income | 44,523 | 41,131 | 29,418 | 28,711 | 143,783 | ||||||||||||||||
| Operating income as a % of revenue | 31.6 | % | 31.1 | % | 23.6 | % | 23.2 | % | 27.6 | % | |||||||||||
| Depreciation and amortization | 6,597 | 6,618 | 6,792 | 6,718 | 26,725 | ||||||||||||||||
| Capital expenditures | 8,039 | 5,378 | 5,834 | 7,826 | 27,077 | ||||||||||||||||
| Discovery and Safety Assessment | |||||||||||||||||||||
| Revenue | $ | 98,840 | $ | 103,787 | $ | 105,080 | $ | 101,201 | $ | 408,908 | |||||||||||
| Gross margin | 23,165 | 25,384 | 24,961 | 24,398 | 97,908 | ||||||||||||||||
| Gross margin as a % of revenue | 23.4 | % | 24.5 | % | 23.8 | % | 24.1 | % | 23.9 | % | |||||||||||
| Operating income | 6,344 | 10,314 | 10,333 | 8,697 | 35,688 | ||||||||||||||||
| Operating income as a % of revenue | 6.4 | % | 9.9 | % | 9.8 | % | 8.6 | % | 8.7 | % | |||||||||||
| Depreciation and amortization | 10,286 | 10,270 | 10,375 | 10,070 | 41,001 | ||||||||||||||||
| Capital expenditures | 2,984 | 1,996 | 2,166 | 2,905 | 10,051 | ||||||||||||||||
| Manufacturing Support | |||||||||||||||||||||
| Revenue | $ | 46,266 | $ | 48,508 | $ | 49,065 | $ | 55,150 | $ | 198,989 | |||||||||||
| Gross margin | 21,893 | 24,301 | 23,935 | 25,753 | 95,882 | ||||||||||||||||
| Gross margin as a % of revenue | 47.3 | % | 50.1 | % | 48.8 | % | 46.7 | % | 48.2 | % | |||||||||||
| Operating income | 12,774 | 14,906 | 14,613 | 15,226 | 57,519 | ||||||||||||||||
| Operating income as a % of revenue | 27.6 | % | 30.7 | % | 29.8 | % | 27.6 | % | 28.9 | % | |||||||||||
| Depreciation and amortization | 3,119 | 3,177 | 3,383 | 3,870 | 13,549 | ||||||||||||||||
| Capital expenditures | 3,089 | 2,067 | 2,242 | 3,009 | 10,407 | ||||||||||||||||
| Unallocated Corporate Overhead | $ | (19,901 | ) | $ | (17,077 | ) | $ | (16,682 | ) | $ | (17,565 | ) | $ | (71,225 | ) | ||||||
| Total | |||||||||||||||||||||
| Revenue | $ | 285,981 | $ | 284,723 | $ | 278,686 | $ | 280,140 | $ | 1,129,530 | |||||||||||
| Gross margin | 104,212 | 103,585 | 93,260 | 91,024 | 392,081 | ||||||||||||||||
| Gross margin as a % of revenue | 36.4 | % | 36.4 | % | 33.5 | % | 32.5 | % | 34.7 | % | |||||||||||
| Operating income | 43,740 | 49,274 | 37,682 | 35,069 | 165,765 | ||||||||||||||||
| Operating income as a % of revenue | 15.3 | % | 17.3 | % | 13.5 | % | 12.5 | % | 14.7 | % | |||||||||||
| Depreciation and amortization | 20,002 | 20,065 | 20,550 | 20,658 | 81,275 | ||||||||||||||||
| Capital expenditures | 14,112 | 9,441 | 10,242 | 13,740 | 47,535 | ||||||||||||||||
| CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | ||||||||||||||||||||||||
| SUPPLEMENTAL SCHEDULE: PRIOR PERIODS RECAST FOR BUSINESS SEGMENT REVISION | ||||||||||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP | ||||||||||||||||||||||||
| SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED) (1) | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||
| Three Months Ended |
Twelve Months |
Three Months |
||||||||||||||||||||||
|
March 30, |
June 29, |
September 28, |
December 28, |
December 28, |
March 29, |
|||||||||||||||||||
| Research Models and Services | ||||||||||||||||||||||||
| Revenue | $ | 134,873 | $ | 129,759 | $ | 124,236 | $ | 122,482 | $ | 511,350 | $ | 132,495 | ||||||||||||
| Add back government billing adjustment | - | 1,495 | - | - | 1,495 | - | ||||||||||||||||||
| Non-GAAP revenue | $ | 134,873 | $ | 131,254 | $ | 124,236 | $ | 122,482 | $ | 512,845 | $ | 132,495 | ||||||||||||
| Operating income | 40,477 | 33,296 | 23,803 | 19,161 | 116,737 | 35,444 | ||||||||||||||||||
| Operating income as a % of revenue | 30.0 | % | 25.4 | % | 19.2 | % | 15.6 | % | 22.8 | % | 26.8 | % | ||||||||||||
| Add back: | ||||||||||||||||||||||||
| Amortization of intangible assets related to acquisitions | 491 | 754 | 457 | 1,076 | 2,778 | 937 | ||||||||||||||||||
| Severance related to cost-savings actions | 86 | 183 | 32 | 1,123 | 1,424 | 1,584 | ||||||||||||||||||
| Government billing adjustment and related expenses | - | 1,855 | 321 | 226 | 2,402 | 67 | ||||||||||||||||||
|
Impairment and other items (2) |
- | - | 7,238 | 6,440 | 13,678 | 980 | ||||||||||||||||||
|
Operating losses (3) |
158 | 51 | 47 | 14 | 270 | 12 | ||||||||||||||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 41,212 | $ | 36,139 | $ | 31,898 | $ | 28,040 | $ | 137,289 | $ | 39,024 | ||||||||||||
| Non-GAAP operating income as a % of revenue | 30.6 | % | 27.5 | % | 25.7 | % | 22.9 | % | 26.8 | % | 29.5 | % | ||||||||||||
| Discovery and Safety Assessment | ||||||||||||||||||||||||
| Revenue | $ | 101,791 | $ | 107,490 | $ | 112,627 | $ | 110,470 | $ | 432,378 | $ | 105,138 | ||||||||||||
| Operating income | 8,443 | 11,261 | 18,968 | 8,741 | 47,413 | 11,713 | ||||||||||||||||||
| Operating income as a % of revenue | 8.3 | % | 10.5 | % | 16.8 | % | 7.9 | % | 11.0 | % | 11.1 | % | ||||||||||||
| Add back: | ||||||||||||||||||||||||
| Amortization of intangible assets related to acquisitions | 2,416 | 2,393 | 2,383 | 2,401 | 9,593 | 1,972 | ||||||||||||||||||
| Severance related to cost-savings actions | 211 | 102 | 397 | 915 | 1,625 | 195 | ||||||||||||||||||
|
Impairment and other items (2) |
- | - | - | 5,829 | 5,829 | - | ||||||||||||||||||
|
Operating losses (3) |
948 | 787 | 737 | 629 | 3,101 | 671 | ||||||||||||||||||
| Costs associated with the evaluation and integration of acquisitions | - | - | - | - | - | - | ||||||||||||||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 12,018 | $ | 14,543 | $ | 22,485 | $ | 18,515 | $ | 67,561 | $ | 14,551 | ||||||||||||
| Non-GAAP operating income as a % of revenue | 11.8 | % | 13.5 | % | 20.0 | % | 16.8 | % | 15.6 | % | 13.8 | % | ||||||||||||
| Manufacturing Support | ||||||||||||||||||||||||
| Revenue | $ | 54,574 | $ | 55,684 | $ | 55,266 | $ | 56,276 | $ | 221,800 | $ | 61,735 | ||||||||||||
| Operating income | 14,443 | 16,008 | 16,125 | 14,651 | 61,227 | 18,416 | ||||||||||||||||||
| Operating income as a % of revenue | 26.5 | % | 28.7 | % | 29.2 | % | 26.0 | % | 27.6 | % | 29.8 | % | ||||||||||||
| Add back: | ||||||||||||||||||||||||
| Amortization of intangible assets related to acquisitions | 1,341 | 1,317 | 1,339 | 1,438 | 5,435 | 1,430 | ||||||||||||||||||
| Severance related to cost-savings actions | - | - | 46 | 123 | 169 | - | ||||||||||||||||||
|
Impairment and other items (2) |
- | - | - | 1,874 | 1,874 | - | ||||||||||||||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 15,784 | $ | 17,325 | $ | 17,510 | $ | 18,086 | $ | 68,705 | $ | 19,846 | ||||||||||||
| Non-GAAP operating income as a % of revenue | 28.9 | % | 31.1 | % | 31.7 | % | 32.1 | % | 31.0 | % | 32.1 | % | ||||||||||||
| Unallocated Corporate Overhead | $ | (20,600 | ) | $ | (17,377 | ) | $ | (18,053 | ) | $ | (17,946 | ) | $ | (73,976 | ) | $ | (25,867 | ) | ||||||
| Add back: | ||||||||||||||||||||||||
| Severance related to cost-savings actions | - | - | - | - | - | 121 | ||||||||||||||||||
| Costs associated with the evaluation and integration of acquisitions | 486 | 194 | 306 | 766 | 1,752 | 3,305 | ||||||||||||||||||
| Convertible debt accounting | 53 | 54 | - | - | 107 | - | ||||||||||||||||||
| Unallocated corporate overhead, excluding specified charges (Non-GAAP) | $ | (20,061 | ) | $ | (17,129 | ) | $ | (17,747 | ) | $ | (17,180 | ) | $ | (72,117 | ) | $ | (22,441 | ) | ||||||
| Total | ||||||||||||||||||||||||
| Revenue | $ | 291,238 | $ | 292,933 | $ | 292,129 | $ | 289,228 | $ | 1,165,528 | $ | 299,368 | ||||||||||||
| Add back government billing adjustment | - | 1,495 | - | - | 1,495 | - | ||||||||||||||||||
| Non-GAAP revenue | $ | 291,238 | $ | 294,428 | $ | 292,129 | $ | 289,228 | $ | 1,167,023 | $ | 299,368 | ||||||||||||
| Operating income | 42,763 | 43,188 | 40,843 | 24,607 | 151,401 | 39,706 | ||||||||||||||||||
| Operating income as a % of revenue | 14.7 | % | 14.7 | % | 14.0 | % | 8.5 | % | 13.0 | % | 13.3 | % | ||||||||||||
| Add back: | ||||||||||||||||||||||||
| Amortization of intangible assets related to acquisitions | 4,248 | 4,464 | 4,179 | 4,915 | 17,806 | 4,339 | ||||||||||||||||||
| Severance related to cost-savings actions | 297 | 285 | 475 | 2,161 | 3,218 | 1,900 | ||||||||||||||||||
| Government billing adjustment and related expenses | - | 1,855 | 321 | 226 | 2,402 | 67 | ||||||||||||||||||
|
Impairment and other items (2) |
- | - | 7,238 | 14,143 | 21,381 | 980 | ||||||||||||||||||
|
Operating losses (3) |
1,106 | 838 | 784 | 643 | 3,371 | 683 | ||||||||||||||||||
| Costs associated with the evaluation and integration of acquisitions | 486 | 194 | 306 | 766 | 1,752 | 3,305 | ||||||||||||||||||
| Convertible debt accounting | 53 | 54 | - | - | 107 | - | ||||||||||||||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 48,953 | $ | 50,878 | $ | 54,146 | $ | 47,461 | $ | 201,438 | $ | 50,980 | ||||||||||||
| Non-GAAP operating income as a % of revenue | 16.8 | % | 17.3 | % | 18.5 | % | 16.4 | % | 17.3 | % | 17.0 | % | ||||||||||||
(1) 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 and other items which are outside our normal operations, 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, regulations and guidance.
(2) For the three months ended
(3) This item includes operating losses related primarily to the Company's
| CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | ||||||||||||||||||||
| SUPPLEMENTAL SCHEDULE: PRIOR PERIODS RECAST FOR BUSINESS SEGMENT REVISION | ||||||||||||||||||||
| RECONCILIATION OF GAAP TO NON-GAAP | ||||||||||||||||||||
| SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED) (1) | ||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Three Months Ended |
Twelve Months |
|||||||||||||||||||
|
March 31, |
June 30, |
September 29, |
December 29, |
December 29, |
||||||||||||||||
| Research Models and Services | ||||||||||||||||||||
| Revenue | $ | 140,875 | $ | 132,428 | $ | 124,541 | $ | 123,789 | $ | 521,633 | ||||||||||
| Add back government billing adjustment | - | - | - | - | - | |||||||||||||||
| Non-GAAP revenue | $ | 140,875 | $ | 132,428 | $ | 124,541 | $ | 123,789 | $ | 521,633 | ||||||||||
| Operating income | 44,523 | 41,131 | 29,418 | 28,711 | 143,783 | |||||||||||||||
| Operating income as a % of revenue | 31.6 | % | 31.1 | % | 23.6 | % | 23.2 | % | 27.6 | % | ||||||||||
| Add back: | ||||||||||||||||||||
| Amortization of intangible assets related to acquisitions | 218 | 219 | 237 | 241 | 915 | |||||||||||||||
| Severance related to cost-savings actions | - | - | 867 | 148 | 1,015 | |||||||||||||||
|
Impairment and other items (2) |
- | - | 2,927 | 883 | 3,810 | |||||||||||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 44,741 | $ | 41,350 | $ | 33,449 | $ | 29,983 | $ | 149,523 | ||||||||||
| Non-GAAP operating income as a % of revenue | 31.8 | % | 31.2 | % | 26.9 | % | 24.2 | % | 28.7 | % | ||||||||||
| Discovery and Safety Assessment | ||||||||||||||||||||
| Revenue | $ | 98,840 | $ | 103,787 | $ | 105,080 | $ | 101,201 | $ | 408,908 | ||||||||||
| Operating income | 6,344 | 10,314 | 10,333 | 8,697 | 35,688 | |||||||||||||||
| Operating income as a % of revenue | 6.4 | % | 9.9 | % | 9.8 | % | 8.6 | % | 8.7 | % | ||||||||||
| Add back: | ||||||||||||||||||||
| Amortization of intangible assets related to acquisitions | 3,180 | 3,141 | 3,112 | 2,945 | 12,378 | |||||||||||||||
| Severance related to cost-savings actions | 911 | - | 22 | 561 | 1,494 | |||||||||||||||
|
Impairment and other items (2) |
- | - | (233 | ) | 199 | (34 | ) | |||||||||||||
|
Operating losses (3) |
1,054 | 809 | 837 | 941 | 3,641 | |||||||||||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 11,489 | $ | 14,264 | $ | 14,071 | $ | 13,343 | $ | 53,167 | ||||||||||
| Non-GAAP operating income as a % of revenue | 11.6 | % | 13.7 | % | 13.4 | % | 13.2 | % | 13.0 | % | ||||||||||
| Manufacturing Support | ||||||||||||||||||||
| Revenue | $ | 46,266 | $ | 48,508 | $ | 49,065 | $ | 55,150 | $ | 198,989 | ||||||||||
| Operating income | 12,774 | 14,906 | 14,613 | 15,226 | 57,519 | |||||||||||||||
| Operating income as a % of revenue | 27.6 | % | 30.7 | % | 29.8 | % | 27.6 | % | 28.9 | % | ||||||||||
| Add back: | ||||||||||||||||||||
| Amortization of intangible assets related to acquisitions | 1,098 | 1,050 | 1,179 | 1,447 | 4,774 | |||||||||||||||
| Severance related to cost-savings actions | - | - | 82 | (11 | ) | 71 | ||||||||||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 13,872 | $ | 15,956 | $ | 15,874 | $ | 16,662 | $ | 62,364 | ||||||||||
| Non-GAAP operating income as a % of revenue | 30.0 | % | 32.9 | % | 32.4 | % | 30.2 | % | 31.3 | % | ||||||||||
| Unallocated Corporate Overhead | $ | (19,901 | ) | $ | (17,077 | ) | $ | (16,682 | ) | $ | (17,565 | ) | $ | (71,225 | ) | |||||
| Add back: | ||||||||||||||||||||
| Costs associated with the evaluation and integration of acquisitions | 232 | 744 | 658 | 2,140 | 3,774 | |||||||||||||||
| Convertible debt accounting | 53 | 54 | 53 | 53 | 213 | |||||||||||||||
| Unallocated corporate overhead, excluding specified charges (Non-GAAP) | $ | (19,616 | ) | $ | (16,279 | ) | $ | (15,971 | ) | $ | (15,372 | ) | $ | (67,238 | ) | |||||
| Total | ||||||||||||||||||||
| Revenue | $ | 285,981 | $ | 284,723 | $ | 278,686 | $ | 280,140 | $ | 1,129,530 | ||||||||||
| Add back government billing adjustment | - | - | - | - | - | |||||||||||||||
| Non-GAAP revenue | $ | 285,981 | $ | 284,723 | $ | 278,686 | $ | 280,140 | $ | 1,129,530 | ||||||||||
| Operating income | 43,740 | 49,274 | 37,682 | 35,069 | 165,765 | |||||||||||||||
| Operating income as a % of revenue | 15.3 | % | 17.3 | % | 13.5 | % | 12.5 | % | 14.7 | % | ||||||||||
| Add back: | ||||||||||||||||||||
| Amortization of intangible assets related to acquisitions | 4,496 | 4,410 | 4,528 | 4,633 | 18,067 | |||||||||||||||
| Severance related to cost-savings actions | 911 | - | 971 | 698 | 2,580 | |||||||||||||||
|
Impairment and other items (2) |
- | - | 2,694 | 1,082 | 3,776 | |||||||||||||||
|
Operating losses (3) |
1,054 | 809 | 837 | 941 | 3,641 | |||||||||||||||
| Costs associated with the evaluation and integration of acquisitions | 232 | 744 | 658 | 2,140 | 3,774 | |||||||||||||||
| Convertible debt accounting | 53 | 54 | 53 | 53 | 213 | |||||||||||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 50,486 | $ | 55,291 | $ | 47,423 | $ | 44,616 | $ | 197,816 | ||||||||||
| Non-GAAP operating income as a % of revenue | 17.7 | % | 19.4 | % | 17.0 | % | 15.9 | % | 17.5 | % | ||||||||||
(1) 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 and other items which are outside our normal operations, 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, regulations and guidance.
(2) For the year ended
(3) This item includes operating losses related primarily to the Company's
| CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | ||||||||
| SUPPLEMENTAL SCHEDULE: PRESENTATION OF FORMER BUSINESS SEGMENT RESULTS | ||||||||
| RECONCILIATION OF GAAP TO NON-GAAP | ||||||||
| SELECTED FORMER BUSINESS SEGMENT INFORMATION (UNAUDITED) (1) | ||||||||
| (dollars in thousands) | ||||||||
| Three Months Ended | ||||||||
|
June 28, |
June 29, |
|||||||
| Research Models and Services (former segment) | ||||||||
| Revenue | $ | 189,157 | $ | 178,973 | ||||
| Add back government billing adjustment | - | 1,495 | ||||||
| Non-GAAP revenue | $ | 189,157 | $ | 180,468 | ||||
| Operating income | 52,547 | 49,630 | ||||||
| Operating income as a % of revenue | 27.8 | % | 27.7 | % | ||||
| Add back: | ||||||||
| Amortization of intangible assets related to acquisitions | 2,035 | 2,228 | ||||||
| Severance related to cost-savings actions | 2,031 | 295 | ||||||
| Government billing adjustment and related expenses | 13 | 1,855 | ||||||
|
Impairment and other items (2) |
1,725 | - | ||||||
|
Operating losses (3) |
15 | 51 | ||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 58,366 | $ | 54,059 | ||||
| Non-GAAP operating income as a % of revenue | 30.9 | % | 30.0 | % | ||||
| Preclinical Services (former segment) | ||||||||
| Revenue | $ | 128,509 | $ | 113,960 | ||||
| Operating income | 19,901 | 10,935 | ||||||
| Operating income as a % of revenue | 15.5 | % | 9.6 | % | ||||
| Add back: | ||||||||
| Amortization of intangible assets related to acquisitions | 1,917 | 2,236 | ||||||
| Severance related to cost-savings actions | 858 | (10 | ) | |||||
|
Operating losses (3) |
704 | 787 | ||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 23,380 | $ | 13,948 | ||||
| Non-GAAP operating income as a % of revenue | 18.2 | % | 12.2 | % | ||||
| Acquisition of Argenta and BioFocus | ||||||||
| Revenue | $ | 23,513 | $ | - | ||||
| Operating income | 39 | - | ||||||
| Operating income as a % of revenue | 0.2 | % | - | |||||
| Add back: | ||||||||
| Amortization of intangible assets related to acquisitions | 2,902 | - | ||||||
| Costs associated with the evaluation and integration of acquisitions | 203 | - | ||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 3,144 | $ | - | ||||
| Non-GAAP operating income as a % of revenue | 13.4 | % | - | |||||
| Unallocated Corporate Overhead | $ | (21,462 | ) | $ | (17,377 | ) | ||
| Add back: | ||||||||
| Severance related to cost-savings actions | - | - | ||||||
| Costs associated with the evaluation and integration of acquisitions | 1,371 | 194 | ||||||
| Convertible debt accounting | - | 54 | ||||||
| Unallocated corporate overhead, excluding specified charges (Non-GAAP) | $ | (20,091 | ) | $ | (17,129 | ) | ||
| Total | ||||||||
| Revenue | $ | 341,179 | $ | 292,933 | ||||
| Add back government billing adjustment | - | 1,495 | ||||||
| Non-GAAP revenue | $ | 341,179 | $ | 294,428 | ||||
| Operating income | 51,025 | 43,188 | ||||||
| Operating income as a % of revenue | 15.0 | % | 14.7 | % | ||||
| Add back: | ||||||||
| Amortization of intangible assets related to acquisitions | 6,854 | 4,464 | ||||||
| Severance related to cost-savings actions | 2,889 | 285 | ||||||
| Government billing adjustment and related expenses | 13 | 1,855 | ||||||
|
Impairment and other items (2) |
1,725 | - | ||||||
|
Operating losses (3) |
719 | 838 | ||||||
| Costs associated with the evaluation and integration of acquisitions | 1,574 | 194 | ||||||
| Convertible debt accounting | - | 54 | ||||||
| Operating income, excluding specified charges (Non-GAAP) | $ | 64,799 | $ | 50,878 | ||||
| Non-GAAP operating income as a % of revenue | 19.0 | % | 17.3 | % | ||||
(1) 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 and other items which are outside our normal operations, 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, regulations and guidance.
(2) For the three months ended
(3) This item includes operating losses related primarily to the Company's
Source:
Charles River Laboratories International, Inc.
Investor Contact:
Susan E. Hardy, 781-222-6190
Corporate Vice President, Investor Relations
[email protected]
or
Media Contact:
Amy Cianciaruso, 781-222-6168
Executive Director, Public Relations
[email protected]
Investor Contact:
Susan E. Hardy, 781-222-6190
Corporate Vice President, Investor Relations
[email protected]
or
Media Contact:
Amy Cianciaruso, 781-222-6168
Executive Director, Public Relations
[email protected]