Charles River Laboratories International, Inc. (NYSE: CRL) today
reported its results for the fourth-quarter and full-year 2009 and
provided guidance for 2010. For the quarter, net sales decreased
5.2% to $295.4 million from $311.4 million in the fourth quarter of
2008. The decrease was net of a foreign currency translation
benefit of 3.8%. Higher sales for the Research Models and Services
(RMS) segment were offset by lower sales for the Preclinical
Services (PCS) segment.
On a GAAP basis, net income for the fourth quarter of 2009 was
$17.6 million, or $0.27 per diluted share, compared to a net loss
of $663.2 million, or $9.93 per diluted share, for the fourth
quarter of 2008. The prior-year results included a non-cash
goodwill impairment of $700.0 million, or $10.43 per diluted share,
in connection with management’s annual assessment of goodwill on
its balance sheet.
On a non-GAAP basis, net income was $32.0 million for the fourth
quarter of 2009, compared to $39.7 million for the same period in
2008, a decrease of 19.4%. Fourth-quarter diluted earnings per
share on a non-GAAP basis were $0.49, a decrease of 16.9% compared
to $0.59 per share in the fourth quarter of 2008. Both the GAAP and
non-GAAP results in the fourth quarter of 2009 were impacted
primarily by lower sales volume, offset in part by cost-savings
actions implemented throughout the year.
James C. Foster, Chairman, President and Chief Executive
Officer, said, “Our results for 2009 reflected a very challenging
environment, which we weathered through a focus on stringent cost
control and realignment of our business to enhance our support of
our clients. Our better-than-expected fourth-quarter performance
improves our level of confidence that the market has stabilized,
and based on strong preclinical bookings for the first quarter of
2010 and early positive indicators for the second quarter, we
believe we are starting to see our clients reinvigorate their late
discovery and early development efforts. Therefore, we anticipate
improvement in demand for our broad portfolio of essential products
and services in 2010, and as the year progresses, sales and
earnings growth.”
Fourth-Quarter Segment
Results
Research Models and Services (RMS)
Sales for the RMS segment were $169.4 million in the fourth
quarter of 2009, an increase of 10.9% from $152.8 million in the
fourth quarter of 2008. Foreign currency translation contributed
5.0% to the sales growth rate. Growth was driven by higher sales of
research models in all geographic locales, as well as the
acquisitions of Piedmont and Cerebricon, which were completed on
May 1 and July 31, 2009, respectively.
In the fourth quarter of 2009, the RMS segment’s GAAP operating
margin was 28.8% compared to 26.2% in the fourth quarter of 2008.
On a non-GAAP basis, the operating margin was 30.1% compared to
27.3% for the same period in the prior year. The margin increase
was primarily the result of higher research model sales.
Preclinical Services (PCS)
Fourth-quarter 2009 net sales for the PCS segment were $125.9
million, a decrease of 20.6% from $158.6 million in the fourth
quarter of 2008. The PCS sales decline was due primarily to lower
market demand from pharmaceutical and biotechnology companies,
partially offset by the positive effect of foreign currency
translation, which increased the growth rate by 2.6%.
On a non-GAAP basis, the PCS operating margin declined to 10.5%
from 18.2% in the fourth quarter of 2008. The non-GAAP operating
margin decline was due primarily to lower sales, partially offset
by cost savings. The fourth-quarter GAAP operating margin was 0.2%,
compared to (428.1%) in the fourth quarter of 2008, which included
the goodwill impairment.
Full-Year
Results
For 2009, net sales decreased by 10.5% to $1.2 billion, from
$1.3 billion in 2008. Foreign currency translation decreased the
sales growth rate by 2.3%.
On a GAAP basis, net income for 2009 was $114.4 million, or
$1.74 per diluted share, compared to a net loss of $524.5 million
in 2008, or $7.80 per diluted share, including the goodwill
impairment of $700.0 million, or $10.36 per diluted share.
On a non-GAAP basis, net income for 2009 was $155.9 million, or
$2.38 per diluted share, compared to $199.8 million, or $2.89 per
diluted share, for 2008.
Research Models and Services (RMS)
For 2009, RMS net sales were $659.9 million, unchanged from net
sales of $659.9 million in 2008. Sales growth resulting from the
acquisitions of MIR (September 15, 2008), Piedmont and Cerebricon
was offset by softer demand for products and services, a 1.3%
negative impact from foreign currency translation and the
divestiture of the Vaccine business in Mexico. The RMS segment’s
GAAP operating margin was 29.3% in 2009, compared to 30.1% for
2008. On a non-GAAP basis, the operating margin was 30.9% compared
to 30.8% in 2008. The slight non-GAAP margin increase was due
primarily to cost savings.
Preclinical Services (PCS)
For 2009, PCS net sales were $542.6 million, a decrease of 20.6%
from net sales of $683.6 million in 2008. The decrease was due
primarily to lower demand for preclinical services, the negative
effect of foreign currency translation, which reduced sales by
3.2%, and the sale of the Phase I clinic in Scotland, partially
offset by the acquisition of NewLabs (September 9, 2008). On a
non-GAAP basis, the operating margin was 14.4% in 2009, compared to
19.9% in 2008. The margin decline was the result of lower sales and
additional costs associated with the start-up of the new
preclinical facilities in Sherbrooke and China, partially offset by
cost savings. The 2009 GAAP operating margin was 6.8%, compared to
(87.3%) in 2008, which included the goodwill impairment.
Items Excluded from Non-GAAP
Results
Items excluded from non-GAAP results in the fourth quarter of
2009 and 2008 were as follows:
($ in millions) 4Q09
4Q08 Amortization of intangible assets $7.1
$7.5 Severance related to cost-savings actions
5.4 -- Goodwill impairment --
700.0 Impairment and other charges (1) 1.8
2.5 Operating losses for PCS Arkansas and
clinical Phase I Scotland 0.8 -- Costs
associated with evaluation of acquisitions 1.8
-- Convertible debt accounting 3.1
2.3 Massachusetts tax law change --
1.9 Reduction of tax benefits – PCS-Massachusetts 0.7
-- Tax benefit of repatriation --
(4.0)
(1) In the fourth quarter of 2009, these items were related
primarily to asset impairments associated with certain RMS and PCS
facilities which are no longer in use. In the fourth quarter of
2008, these items were related primarily to Company’s divestiture
of its Vaccine business in Mexico and closure of its RMS facility
in Hungary.
Items excluded from non-GAAP results in 2009 and 2008 were as
follows:
($ in millions) FY2009
FY2008 Amortization of intangible assets $28.4
$30.3 Severance related to cost-savings actions 16.6
-- Goodwill impairment -- 700.0
Impairment and other charges (1) 5.4 6.7
Operating losses for PCS Arkansas and clinical Phase I Scotland
4.7 -- Costs associated with evaluation of
acquisitions 3.2 1.1 Gain on U.S. pension
curtailment -- (3.3) Gain on the sale of U.K.
real estate (0.8) -- Convertible debt
accounting 11.1 8.4 Deferred tax revaluation
-- 0.8 Massachusetts tax law change --
1.9 Reduction of tax benefits – PCS-Massachusetts
0.7 Tax benefit of repatriation
(1.1) (4.0)
(1) In 2009, these items were related primarily to an asset
impairment charge and costs associated with the Company’s planned
disposition of its PCS facility in Arkansas and the divestiture of
its clinical Phase I business in Scotland, as well as additional
miscellaneous expenses. In 2008, these items were related primarily
to the Company’s disposition of its legacy PCS facility in
Worcester, Massachusetts and the divestiture of its Vaccine
business in Mexico, severance related to cost-savings actions and
advisory fees in connection with repatriation of accumulated
foreign earnings.
2010 Guidance
The Company is providing the following guidance for 2010, which
is based on current foreign exchange rates. This guidance is based
on the assumption that the market for outsourced preclinical
services will begin to improve in the second quarter of 2010, as
pharmaceutical and biotechnology clients re-emphasize discovery and
early development of new therapies, and increase their use of
outsourced services. The guidance also assumes that non-GAAP
earnings per share for the first quarter of 2010 will be below the
fourth quarter of 2009, and that the business will trend stronger
in the second half of the year. The sales guidance is net of an
approximate 1% benefit from foreign currency translation.
2010 GUIDANCE Net sales growth
Low single digits GAAP EPS estimate $1.57 - $1.77
Amortization of intangible assets $0.30 Charges and losses
associated with suspension of operations at PCS-Massachusetts $0.20
Convertible debt accounting $0.13 Non-GAAP EPS estimate
$2.20 - $2.40
Webcast
Charles River Laboratories has scheduled a live webcast on
Tuesday, February 9, at 8:30 a.m. ET to discuss matters relating to
this press release. To participate, please go to ir.criver.com and
select the webcast link. You can also find the associated slide
presentation and reconciliations of non-GAAP financial measures to
comparable GAAP financial measures on the website.
Use of Non-GAAP Financial
Measures
This press release contains non-GAAP financial measures, such as
non-GAAP earnings per diluted share, which exclude the non-cash
goodwill impairment in the fourth quarter of 2008, amortization of
intangible assets and other charges related to our acquisitions,
charges related to the dispositions of our clinical Phase I
business in Scotland and our legacy preclinical facility in
Worcester, Massachusetts, our Vaccine business in Mexico and our
RMS facility in Hungary, expenses associated with evaluating
acquisitions, the gain on the curtailment of our U.S. defined
benefit plan in 2008, income from tax settlements related to our
discontinued operations, the gain on the sale of real estate in the
U.K., charges in connection with a deferred tax revaluation, a
benefit in connection with cash repatriation activities, operating
losses attributable to our businesses we closing or divesting,
severance costs associated with our cost-saving actions, the loss
of tax benefits due to the suspension of operations at PCS
Massachusetts, and the additional interest recorded as a result of
the adoption of a newly issued accounting standard related to our
convertible debt accounting. We exclude these items from the
non-GAAP financial measures because they are outside our normal
operations. There are limitations in using non-GAAP financial
measures, as they are not prepared in accordance with generally
accepted accounting principles, and may be different than non-GAAP
financial measures used by other companies. In particular, we
believe that the inclusion of supplementary non-GAAP financial
measures in this press release helps investors to gain a meaningful
understanding of our core operating results and future prospects
without the effect of these 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 dispositions (and in certain cases, the evaluation of such
transactions, 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 irregularly and the
underlying costs associated with such activities do not necessarily
recur on a regular basis. We believe the costs associated with our
PCS Massachusetts facility are unique given the temporary
suspension of operations at that site and aggregate magnitude of
the related charges and expenses. We believe that the additional
non-cash accounting expenses that we began to incur as a result of
the change in accounting for convertible debt instruments does not
reflect the cash interest expense to the Company. Non-GAAP results
also allow investors to compare the Company’s operations against
the financial results of other companies in the industry who
similarly provide non-GAAP results. The non-GAAP financial measures
included in this press release are not meant to be considered
superior to or a substitute for results of operations prepared in
accordance with GAAP. The Company intends to continue to assess the
potential value of reporting non-GAAP results consistent with
applicable rules and regulations. Reconciliations of the non-GAAP
financial measures used in this press release to the most directly
comparable GAAP financial measures are set forth in the text of
this press release, and can also be found on the Company’s website
at ir.criver.com.
Caution Concerning
Forward-Looking Statements
This news release includes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements may be identified by the use of words
such as “anticipate,” “believe,” “expect,” “will,” “may,”
“estimate,” “plan,” “outlook,” and “project” and other similar
expressions that predict or indicate future events or trends or
that are not statements of historical matters. These statements
also include statements regarding our projected 2010 sales and
earnings; the future demand for drug discovery and development
products and services (particularly in light of the challenging
economic environment), including the outsourcing of these services
and present spending trends by our customers; and Charles River’s
future performance as delineated in our forward-looking guidance,
and particularly our expectations with respect to sales and foreign
exchange impact. 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; negative trends in
research and development spending, negative trends in the level of
outsourced services, or other cost reduction actions by our
customers; the ability to convert backlog to sales; special
interest groups; contaminations; industry trends; new displacement
technologies; USDA and FDA regulations; changes in law; continued
availability of products and supplies; loss of key personnel;
interest rate and foreign currency exchange rate fluctuations;
changes in tax regulation and laws; changes in generally accepted
accounting principles; and any changes in business, political, or
economic conditions due to the threat of future terrorist activity
in the U.S. and other parts of the world, and related U.S. military
action overseas. A further description of these risks,
uncertainties, and other matters can be found in the Risk Factors
detailed in Charles River's Annual Report on Form 10-K as filed on
February 23, 2009, as well as other filings we make with the
Securities and Exchange Commission. Because forward-looking
statements involve risks and uncertainties, actual results and
events may differ materially from results and events currently
expected by Charles River, and Charles River assumes no obligation
and expressly disclaims any duty to update information contained in
this news release except as required by law.
About Charles River
Accelerating Drug Development. Exactly. 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 approximately 8,000 employees worldwide
are focused on providing clients with exactly what they need to
improve and expedite the discovery, development through
first-in-human evaluation, 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 per share data)
Three Months Ended
Twelve Months Ended
December 26,2009
December 27,2008
December 26,2009
December 27,2008
Total net sales $ 295,381 $ 311,447 $ 1,202,551 $ 1,343,493
Cost of products sold and services provided
195,260 199,372
773,183 832,784
Gross margin 100,121 112,075 429,368 510,709 Selling,
general and administrative 61,106 55,379 233,995 230,266 Goodwill
impairment - 700,000 - 700,000 Amortization of intangibles
7,091 7,532
28,447 30,312
Operating income 31,924 (650,836 ) 166,926 (449,869 ) Interest
income (expense) (5,071 ) (4,433 ) (19,905 ) (13,643 ) Other income
(expense)
(498 )
(3,429 ) 2,086
(5,930 ) Income from continuing
operations before income taxes 26,355 (658,698 ) 149,107 (469,442 )
Provision for income taxes
9,037
5,275 39,725
56,174 Income from continuing operations, net
of tax 17,318 (663,973 ) 109,382 (525,616 ) Discontinued
operations, net of tax
(231 )
424 3,220
424 Net income 17,087 (663,549 ) 112,602
(525,192 ) Noncontrolling interests
482
351 1,839
687 Net income attributable to common
shareowners
$ 17,569
$ (663,198 ) $
114,441 $ (524,505
) Earnings per common share Basic: Continuing
operations $ 0.27 $ (9.93 ) $ 1.70 $ (7.80 ) Discontinued
operations $ - $ 0.01 $ 0.05 $ 0.01 Net $ 0.27 $ (9.93 ) $ 1.75 $
(7.80 ) Diluted: Continuing operations $ 0.27 $ (9.93 ) $ 1.69 $
(7.80 ) Discontinued operations $ - $ 0.01 $ 0.05 $ 0.01 Net $ 0.27
$ (9.93 ) $ 1.74 $ (7.80 )
Weighted average number of common
shares outstanding
Basic
65,038,579 66,815,252 65,366,319 67,273,748 Diluted 65,624,186
66,815,252 65,635,895 67,273,748
CHARLES RIVER LABORATORIES
INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED) (dollars in thousands)
December 26,2009
December 27,2008
Assets Current assets Cash and cash equivalents $ 182,574 $
243,592 Trade receivables, net 196,947 210,214 Inventories 102,723
96,882 Other current assets
113,357
67,451 Total current assets 595,601 618,139 Property,
plant and equipment, net 865,743 837,246 Goodwill, net 508,235
457,578 Other intangibles, net 160,292 136,100 Deferred tax asset
18,978 37,348 Other assets
55,244
55,002 Total assets
$
2,204,093 $ 2,141,413
Liabilities and Equity Current liabilities Current portion
of long-term debt & capital leases $ 35,413 $ 35,452 Accounts
payable 31,232 40,517 Accrued compensation 45,522 54,870 Deferred
revenue 72,390 86,707 Accrued liabilities 49,997 60,741 Other
current liabilities
15,219
22,711 Total current liabilities 249,773 300,998
Long-term debt & capital leases 457,419 479,880 Other long-term
liabilities
123,077 118,827
Total liabilities
830,269
899,705 Total equity
1,373,824
1,241,708 Total liabilities and equity
$ 2,204,093 $
2,141,413 CHARLES RIVER LABORATORIES INTERNATIONAL,
INC. SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED)
(dollars in thousands)
Three Months Ended
Twelve Months Ended
December 26,2009
December 27,2008
December 26,2009
December 27,2008
Research Models and Services Net sales $ 169,444 $ 152,841 $
659,929 $ 659,941 Gross margin 70,528 61,141 278,670 284,639 Gross
margin as a % of net sales 41.6 % 40.0 % 42.2 % 43.1 % Operating
income 48,880 40,011 193,349 198,696 Operating income as a % of net
sales 28.8 % 26.2 % 29.3 % 30.1 % Depreciation and amortization
8,433 7,488 33,501 28,239 Capital expenditures 8,995 14,552 31,859
61,878
Preclinical Services Net sales $ 125,937 $
158,606 $ 542,622 $ 683,552 Gross margin 29,593 50,934 150,698
226,070 Gross margin as a % of net sales 23.5 % 32.1 % 27.8 % 33.1
% Operating income 201 (678,944 ) 37,127 (596,437 ) Operating
income as a % of net sales 0.2 % -428.1 % 6.8 % -87.3 %
Depreciation and amortization 15,412 15,445 60,052 63,051 Capital
expenditures 7,490 33,080 48,153 137,980
Unallocated Corporate Overhead $ (17,157 ) $ (11,903 ) $
(63,550 ) $ (52,128 )
Total Net sales $
295,381 $ 311,447 $ 1,202,551 $ 1,343,493 Gross margin 100,121
112,075 429,368 510,709 Gross margin as a % of net sales 33.9 %
36.0 % 35.7 % 38.0 % Operating income 31,924 (650,836 ) 166,926
(449,869 ) Operating income as a % of net sales 10.8 % -209.0 %
13.9 % -33.5 % Depreciation and amortization 23,845 22,933 93,553
91,290 Capital expenditures 16,485 47,632 80,012 199,858
CHARLES
RIVER LABORATORIES INTERNATIONAL, INC. RECONCILIATION OF
GAAP TO NON-GAAP SELECTED BUSINESS SEGMENT INFORMATION
(UNAUDITED) (1) (dollars in thousands)
Three Months Ended
Twelve Months Ended
December 26,2009
December 27,2008
December 26,2009
December 27,2008
Research Models and Services Net sales $ 169,444 $ 152,841 $
659,929 $ 659,941 Operating income 48,880 40,011 193,349 198,696
Operating income as a % of net sales 28.8 % 26.2 % 29.3 % 30.1 %
Add back: Amortization related to acquisitions 1,320 872 6,303
2,602 Severance 383 - 3,997 - Impairment and other charges
(2) 357 901
357 1,850
Operating income, excluding specified charges (Non-GAAP) $
50,940 $ 41,784 $ 204,006 $ 203,148 Non-GAAP operating income as a
% of net sales 30.1 % 27.3 % 30.9 % 30.8 %
Preclinical
Services Net sales $ 125,937 $ 158,606 $ 542,622 $ 683,552
Operating income 201 (678,944 ) 37,127 (596,437 ) Operating income
as a % of net sales 0.2 % -428.1 % 6.8 % -87.3 % Add back:
Amortization related to acquisitions 5,771 6,660 22,145 27,710
Severance 4,991 - 10,014 Goodwill impairment - 700,000 - 700,000
Impairment and other charges
(2) 1,402 1,190 4,846 4,423
Operating losses for PCS Arkansas and Phase 1 Scotland 808 - 4,654
- Gain on sale of UK real estate
(12
) -
(839 ) -
Operating income, excluding specified charges (Non-GAAP) $ 13,161 $
28,906 $ 77,947 $ 135,696 Non-GAAP operating income as a % of net
sales 10.5 % 18.2 % 14.4 % 19.9 %
Unallocated
Corporate Overhead $ (17,157 ) $ (11,903 ) $ (63,550 ) $
(52,128 ) Add back: Severance - - 2,625 - Impairment and other
charges
(2) 4 416 198 416 Costs associated with the
evaluation of acquisitions 1,830 - 3,246 1,125 U.S. pension
curtailment - - - (3,276 ) Convertible debt accounting
(3)
54 40
204 107 Unallocated
corporate overhead, excluding specified charges (Non-GAAP) $
(15,269 ) $ (11,447 ) $ (57,277 ) $ (53,756 )
Total Net sales $ 295,381 $ 311,447 $ 1,202,551 $ 1,343,493
Operating income 31,924 (650,836 ) 166,926 (449,869 ) Operating
income as a % of net sales 10.8 % -209.0 % 13.9 % -33.5 % Add back:
Amortization related to acquisitions 7,091 7,532 28,448 30,312
Severance 5,374 - 16,636 - Goodwill impairment - 700,000 - 700,000
Impairment and other charges
(2) 1,763 2,507 5,401 6,689
Operating losses for PCS Arkansas and Phase 1 Scotland 808 - 4,654
- Costs associated with the evaluation of acquisitions 1,830 -
3,246 1,125 U.S. pension curtailment - - - (3,276 ) Gain on sale of
UK real estate (12 ) - (839 ) - Convertible debt accounting
(3) 54 40
204 107
Operating income, excluding specified charges (Non-GAAP) $
48,832 $ 59,243 $ 224,676 $ 285,088 Non-GAAP operating income as a
% of net sales 16.5 % 19.0 % 18.7 % 21.2 %
(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 December 26,
2009 these items primarily related to asset impairments associated
with certain of the Company's RMS and PCS facilities. For the
twelve months ended December 26, 2009 these items related primarily
to an asset impairment charge and costs associated with the
Company's planned disposition of its PCS facility in Arkansas and
the divesture of its clinical Phase I business in Scotland, as well
as miscellaneous expenses. For the three and twelve months ended
December 27, 2008, these items primarily related to the Company's
disposition of its legacy PCS facility in Worcester, Massachusetts
and the divesture of its Vaccine business (RMS) in Mexico,
severance related to cost-savings actions and advisory fees in
connection with repatriation of accumulated foreign earnings.
(3) 2009 and 2008 include the impact of new
convertible debt accounting, which increased depreciation expense.
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
RECONCILIATION OF GAAP EARNINGS TO NON-GAAP EARNINGS (1)
(dollars in thousands, except for per share data)
Three Months
Ended Twelve Months Ended
December 26,2009
December 27,2008
December 26,2009
December 27,2008
Net income attributable to common shareholders $ 17,569 $
(663,198 ) $ 114,441 $ (524,505 ) Less: Discontinued operations
231 (424
) (3,220 )
(424 ) Net income from continuing
operations 17,800 (663,622 ) 111,221 (524,929 ) Add back:
Amortization related to acquisitions 7,091 7,532 28,448 30,312
Severance 5,374 - 16,636 - Goodwill impairment - 700,000 - 700,000
Impairment and other charges
(2) 1,763 2,507 5,401 6,689
Operating losses for PCS Arkansas and Phase 1 Scotland 808 - 4,654
- Costs associated with the evaluation of acquisitions 1,830 -
3,246 1,125 U.S. pension curtailment - - - (3,276 ) Gain on sale of
UK real estate (12 ) - (839 ) - Convertible debt accounting, net
(3) 3,106 2,318 11,106 8,432 Deferred tax revaluation - - -
763 Tax effect of goodwill impairment - (2,897 ) - (2,897 )
Massachusetts tax law change - 1,897 - 1,897 Reduction of tax
benefits – PCS Massachusetts 719 - 719 - Tax benefit of
repatriation - (4,045 ) (1,084 ) (4,045 ) Tax effect
(6,493 ) (4,025
) (23,583 )
(14,302 ) Net income, excluding specified
charges (Non-GAAP)
$ 31,986
$ 39,665 $
155,925 $ 199,769
Weighted average shares outstanding - Basic
65,038,579 66,815,252 65,366,319 67,273,748 Effect of dilutive
securities: 2.25% senior convertible debentures - - - 776,387 Stock
options and contingently issued restricted stock 585,593 185,968
267,650 1,009,781 Warrants
14
3,510 1,926
87,420 Weighted average shares outstanding -
Diluted
65,624,186
67,004,730 65,635,895
69,147,336 Basic earnings
per share $ 0.27 $ (9.93 ) $ 1.75 $ (7.80 ) Diluted earnings per
share $ 0.27 $ (9.93 ) $ 1.74 $ (7.80 ) Basic earnings per
share, excluding specified charges (Non-GAAP) $ 0.49 $ 0.59 $ 2.39
$ 2.97 Diluted earnings per share, excluding specified charges
(Non-GAAP) $ 0.49 $ 0.59 $ 2.38 $ 2.89
(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 December 26,
2009 these items primarily related to asset impairments associated
with certain of the Company's RMS and PCS facilities. For the
twelve months ended December 26, 2009 these items related primarily
to an asset impairment charge and costs associated with the
Company's planned disposition of its PCS facility in Arkansas and
the divesture of its clinical Phase I business in Scotland, as well
as miscellaneous expenses. For the three and twelve months ended
December 27, 2008, these items primarily related to the Company's
disposition of its legacy PCS facility in Worcester, Massachusetts
and the divesture of its Vaccine business (RMS) in Mexico,
severance related to cost-savings actions and advisory fees in
connection with repatriation of accumulated foreign earnings.
(3) The three and twelve months ended December 26,
2009 include the impact of new convertible debt accounting, which
increased interest expense by $3,063 and $11,892, capitalized
interest by $11 and $990 and depreciation expense by $54 and $204,
respectively. The three and twelve months ended December 27, 2008
have been restated to include the impact of new convertible debt
accounting, which increased interest expense by $2,860 and $11,102,
capitalized interest by $581 and $2,776 and depreciation expense by
$39 and $106, respectively.
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