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UNITED STATES
SECURITES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 25, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 333-91845
CHARLES RIVER LABORATORIES, INC.
(Exact Name of Registrant as specified in its Charter)
DELAWARE 76-0509980
(State of Incorporation) (I.R.S. Employer Identification No.)
251 BALLARDVALE STREET, WILMINGTON, MASSACHUSETTS 01887
(Address of Principal Executive Offices) (Zip Code)
978-658-6000
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ ] No [X]
As of March 25, 2000 there were 10,285,715 shares of the registrant's
common stock outstanding
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Charles River Laboratories, Inc.
Form 10-Q
For the Quarterly Period Ended March 25, 2000
Table of Contents
<TABLE>
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Page
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Part I. Financial Information
Item 1. Financial Statements ...................................................... 3
Condensed Consolidated Statements of Income
(Unaudited) as of March 25, 2000 and
March 27, 1999 .......................................................... 3
Condensed Consolidated Balance sheets
(Unaudited) as of March 25, 2000 and
December 25, 1999 ....................................................... 4
Condensed Consolidated Statements of Cash
Flows (Unaudited) ) as of March 25, 2000
and March 27, 1999 ...................................................... 5
Notes to Unaudited Condensed Consolidated
Interim Financial Statements ............................................ 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ..................................................... 10
Part II. Other Information
Item 6. Exhibits
Signatures
</TABLE>
2
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Item 1.
CHARLES RIVER LABORATORIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(dollars in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------
MARCH 27, MARCH 25,
1999 2000
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<S> <C> <C>
Net sales related to products ......................................... $ 45,157 $ 50,816
Net sales related to services ......................................... 7,123 18,486
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Total net sales ....................................................... $ 52,280 $ 69,302
Costs and Expenses
Cost of products sold .............................................. 27,746 28,993
Cost of services provided .......................................... 4,414 12,399
Selling, general and administrative ................................ 8,819 11,813
Amortization of goodwill and intangibles ........................... 411 865
--------- ---------
Operating income ...................................................... 10,890 15,232
Other income (expense)
Interest income .................................................... 225 142
Interest expense ................................................... (77) (9,301)
Loss from foreign currency, net .................................... (53) (30)
--------- ---------
Income before income taxes, minority interests and earnings from
equity investments ................................................. 10,985 6,043
Provision for income taxes ............................................ 4,526 3,341
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Income before minority interests and earnings from equity
investments ........................................................ 6,459 2,702
Minority interests .................................................... 7 (217)
Earnings from equity investments ...................................... 607 641
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Net income ............................................................ $ 7,073 $ 3,126
--------- ---------
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</TABLE>
See Notes to Consolidated Financial Statements
3
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CHARLES RIVER LABORATORIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 25, MARCH 25,
1999 2000
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<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents ................................................ $ 15,010 $ 18,458
Trade receivables, less allowances of $978 and $1,031, respectively ...... 36,293 53,022
Inventories .............................................................. 30,534 32,462
Deferred tax asset ....................................................... 632 632
Due from affiliates ...................................................... 1,233 131
Other current assets ..................................................... 6,371 7,069
---------- ----------
Total current assets ................................................... 90,073 111,774
Property, plant and equipment, net .......................................... 85,413 119,174
Goodwill and other intangibles, less accumulated amortization
of $6,073 and $8,512, respectively ..................................... 36,958 42,619
Investments in affiliates ................................................... 21,722 2,086
Deferred tax asset .......................................................... 100,907 100,907
Deferred financing costs .................................................... 14,015 13,587
Other assets ................................................................ 13,315 10,800
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Total assets ........................................................... $ 362,403 $ 400,947
---------- ----------
---------- ----------
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities
Current portion of long-term debt ........................................ $ 3,290 $ 7,445
Current portion of capital lease obligation .............................. 253 233
Accounts payable ......................................................... 9,291 9,770
Accrued compensation ..................................................... 10,792 10,174
Accrued ESLIRP ........................................................... 8,315 8,482
Deferred income .......................................................... 7,643 6,860
Accrued interest ......................................................... 8,935 13,416
Accrued liabilities ...................................................... 18,479 22,206
Accrued income taxes ..................................................... 2,738 6,207
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Total current liabilities .............................................. 69,736 84,793
Long-term debt .............................................................. 306,725 311,399
Deferred tax liability ...................................................... 4,990 7,336
Capital lease obligations ................................................... 795 721
Other long-term liabilities ................................................. 2,469 3,706
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Total liabilities ...................................................... 384,715 407,955
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Commitments and contingencies (Note 3)
Minority interests .......................................................... 304 14,149
Shareholder's equity
Common stock ............................................................. 1 1
Capital in excess of par value ........................................... 119,470 119,470
Retained earnings ........................................................ (132,158) (129,032)
Loans to officers ........................................................ (920) (920)
Accumulated other comprehensive income ................................... (9,009) (10,676)
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Total shareholder's equity ............................................. (22,616) (21,157)
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Total liabilities and shareholder's equity ............................. $ 362,403 $ 400,947
---------- ----------
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</TABLE>
See Notes to Consolidated Financial Statements
4
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CHARLES RIVER LABORATORIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------
MARCH 27, MARCH 25,
1999 2000
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<S> <C> <C>
CASH FLOWS RELATING TO OPERATING ACTIVITIES
Net income ............................................................................. $ 7,073 $ 3,126
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization ........................................................ 2,927 3,764
Amortization of debt issuance costs and discounts .................................... -- 481
Provision for doubtful accounts ...................................................... (26) 82
Earnings from equity investments ..................................................... (607) (641)
Minority interests ................................................................... (7) 217
Deferred income taxes ................................................................ 1,182 (42)
Stock compensation expense ........................................................... 45 --
Other non-cash items ................................................................. 9 12
Changes in assets and liabilities
Trade receivables .................................................................... (3,329) (6,564)
Inventories .......................................................................... 339 (104)
Due from affiliates .................................................................. 41 128
Other current assets ................................................................. (803) (583)
Other assets ......................................................................... (262) (102)
Accounts payable ..................................................................... (1,136) (2,585)
Accrued compensation ................................................................. (1,092) (413)
Accrued ESLIRP ....................................................................... 165 167
Deferred income ...................................................................... 1,579 (782)
Accrued interest ..................................................................... -- 4,478
Accrued liabilities .................................................................. (1,251) (740)
Accrued income taxes ................................................................. 2,687 2,116
Other long-term liabilities .......................................................... (34) (154)
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Net cash provided by operating activities ........................................ $ 7,500 $ 1,861
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CASH FLOWS RELATING TO INVESTING ACTIVITIES
Capital expenditures ................................................................... (1,963) (2,786)
Contingent payments for prior year acquisitions ........................................ (251) --
Acquisition of business, net of cash acquired of $3,163 ................................ -- (6,011)
Proceeds from sale of animal colony .................................................... -- 7,000
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Net cash used in investing activities ............................................ $ (2,214) $ (1,797)
--------- ---------
CASH FLOWS RELATING TO FINANCING ACTIVITIES
Proceeds from long-term debt ........................................................... 1,093 4,114
Payments on long-term debt ............................................................. 71 (300)
Payments on capital lease obligations .................................................. (1,132) (93)
Net activity with Bausch & Lomb ........................................................ (12,906) --
--------- ---------
Net cash provided by (used) in financing activities .............................. $ (12,874) $ 3,721
--------- ---------
Effect of exchange rate changes on cash and cash equivalents .............................. (1,069) (337)
--------- ---------
Net change in cash and cash equivalents ................................................... (8,657) 3,448
Cash and cash equivalents, beginning of period ............................................ 24,811 15,010
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD .................................................. $ 16,154 $ 18,458
--------- ---------
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SUPPLEMENTAL CASH FLOW INFORMATION ........................................................
Cash paid for interest ................................................................. $ 78 $ 4,317
Cash paid for taxes .................................................................... 603 980
</TABLE>
See Notes to Consolidated Financial Statements
5
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CHARLES RIVER LABORATORIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
1. BASIS OF PRESENTATION
The condensed consolidated interim financial statements are unaudited, and
certain information and footnote disclosure related thereto normally included in
financial statements prepared in accordance with generally accepted accounting
principles in the United States, have been omitted in accordance with Rule 10-01
of Regulation S-X. In the opinion of management, the accompanying unaudited
condensed consolidated financial statements were prepared following the same
policies and procedures used in the preparation of the audited financial
statements and reflect all adjustments (consisting of normal recurring
adjustments) considered necessary to present fairly the financial position of
Charles River Laboratories, Inc. ("the Company"). The results of operations for
the interim periods are not necessarily indicative of the results for the entire
fiscal year.
2. SUPPLEMENTAL BALANCE SHEET INFORMATION
The composition of inventories is as follows:
<TABLE>
<CAPTION>
DECEMBER 25, MARCH 25,
1999 2000
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<S> <C> <C>
Raw materials and supplies .............. $ 4,196 $ 3,785
Work in process ......................... 1,608 1,386
Finished products ....................... 24,730 27,291
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Inventories ............................. $ 30,534 $ 32,462
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</TABLE>
The composition of property, plant and equipment is as follows:
<TABLE>
<CAPTION>
DECEMBER 25, MARCH 25,
1999 2000
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<S> <C> <C>
Land .................................... $ 7,022 $ 9,455
Buildings ............................... 90,730 144,530
Machinery and equipment ................. 82,131 92,396
Leasehold improvements .................. 4,668 4,924
Furniture and fixtures .................. 1,826 1,853
Vehicles ................................ 2,689 2,647
Construction in progress ................ 4,679 4,417
--------- ---------
193,745 260,222
Less accumulated depreciation ........... (108,332) (141,048)
--------- ---------
Net property, plant and equipment ....... $ 85,413 $ 119,174
--------- ---------
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</TABLE>
3. COMMITMENTS AND CONTINGENCIES
INSURANCE
6
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CHARLES RIVER LABORATORIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
The Company maintains insurance for workers' compensation, auto liability,
employee medical and general liability. The per claim loss limits are $250, with
annual aggregate loss limits of $1,500. Related accruals were $2,813 and $2,798
on December 25, 1999 and March 25, 2000, respectively. Separately, the Company
has provided a letter of credit in favor of the insurance carriers in the amount
of $350.
SUPPLY AGREEMENT
The Company is currently engaged in distributing certain products under a
supply agreement. In the event certain minimum sales of $500 in 2000 and $1,000
in 2001 are not achieved, the Company at its option can pay the difference in
cash or terminate the agreement. In the event of such termination the Company
will not be required to make any payments.
LITIGATION
Various lawsuits, claims and proceedings of a nature considered normal to
its business are pending against the Company. In the opinion of management, the
outcome of such proceedings and litigation currently pending will not materially
affect the Company's condensed consolidated financial statements.
The Company is currently under a court order issued in June 1997 to remove
its large animal operations from two islands located in the Florida Keys and
refoliate the islands. The Company continues to hold discussions with the state
of Florida authorities regarding the extent of refoliation required on the
islands and believes the reserves recorded in the accompanying condensed
consolidated financial statements are sufficient to provide for the estimated
exposure in connection with the refoliation. The Company has provided a letter
of credit in regards to the completion of the refoliation on the island for
$350.
4. ACQUISITIONS AND DISPOSALS
On February 28, 2000, the Company acquired an additional 16% of the equity
(340,840 common shares) of its 50% equity joint venture company, Charles River
Japan, from Ajinomoto Co., Inc. The purchase price for the equity was 1.4
billion yen, or $12,844. One billion yen, or $9,174, was paid at closing, and
the balance of 400 million yen, or $3,670, was deferred pursuant to a three-year
balloon promissory note secured by a pledge of the 16% shares. The note bears
interest at the long-term prime rate in Japan, 2.2% at March 25, 2000. Effective
with the acquisition of this additional interest, the Company has control of and
is consolidating the operations of Charles River Japan. The estimated fair value
of the incremental net assets acquired is $6,207. Goodwill of $6,637 has been
recorded in the accompanying condensed consolidated interim financial statements
and is being amortized over its estimated life of 15 years.
On March 10, 2000, the Company announced the closure of its Shamrock
primate import and conditioning business in Small Dole, England. The Company
expects the closure to be completed during the second quarter of 2000. The
actions contemplated in the plan related primarily to severance, property and
equipment dispositions and other miscellaneous activities directly related to
the operations being shut down. Management has met with the 16 employees subject
to its severance plans and has communicated its intended closure actions to
customers. The Company does not expect that the animal sales previously made by
Shamrock will be significantly affected. A restructuring change of $751 related
to the closure has been recorded in selling, general and administrative expenses
in the accompanying condensed consolidated interim financial statements.
During January 2000, the Company sold a product line within its research
model business segment. The selling price of $7,000 approximated the net book
value of the underlying assets at the time of the sales. In addition the Company
had approximately $900 of deferred revenue which related to cash payments
received in advance of shipping the research models. Under the term of the sales
agreement, the Company is no longer obligated to ship research models and,
accordingly, has recorded this amount as income in the accompanying consolidated
interim financial statements. Fiscal 1999 sales associated with this product
line approximated $2,800.
7
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CHARLES RIVER LABORATORIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
5. BUSINESS SEGMENT INFORMATION
The following table presents sales and other financial information by
product line segment for the three months ended March 27, 1999 and March 25,
2000. Sales to unaffiliated customers represent net sales originating in
entities primarily engaged in either animal services or biomedical products and
services.
<TABLE>
<CAPTION>
THREE MONTH ENDED
----------------------------------------
MARCH 27, MARCH 25,
1999 2000
------------------ ------------------
<S> <C> <C>
Research models
Net sales ........................... $ 36,262 $ 41,047
Operating income .................... 9,494 12,695
Total assets ........................ 269,034 299,549
Depreciation and amortization ....... 2,017 2,090
Capital expenditures ................ 1,442 1,485
Biomedical Products and Services
Net sales ........................... 16,018 28,255
Operating income .................... 3,313 5,263
Total assts ......................... 94,022 102,051
Depreciation and amortization ....... 910 1,674
Capital expenditures ................ 521 1,301
</TABLE>
A reconciliation of segment operating income to consolidated operating income is
as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------
MARCH 27, MARCH 25,
1999 2000
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<S> <C> <C>
Total segment operating income ........ $ 12,807 $ 17,958
Unallocated corporate overhead ........ (1,917) (2,726)
--------- --------
Consolidated operating income ......... 10,890 15,232
--------- --------
--------- --------
</TABLE>
6. COMPREHENSIVE INCOME
The components of comprehensive income for the three-month periods ended
March 27, 1999 and March 25, 2000 are set forth below:
8
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CHARLES RIVER LABORATORIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------
MARCH 27, MARCH 25,
1999 2000
--------- --------
<S> <C> <C>
Net income ............................ $ 7,073 $ 3,126
Foreign currency translation .......... (2,565) (1,873)
--------- --------
Comprehensive income .................. $ 4,508 $ 1,253
--------- --------
--------- --------
</TABLE>
9
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Item 2.
THREE MONTHS ENDED MARCH 25, 2000 COMPARED TO THREE MONTHS ENDED MARCH 27, 1999
NET SALES. Net sales for the first three months of 2000 were $69.3 million,
an increase of $17.0 million, or 32.5%, from $52.3 million for the first three
months of 1999.
RESEARCH MODELS. Net sales of research models for the first three months of
2000 were $41.0 million, an increase of $4.7 million, or 12.9%, from $36.3
million for the first three months of 1999. On February 28, 2000, we acquired an
additional 16% equity interest in Charles River Japan, increasing our ownership
to 66%. This consolidation in March increased sales by $3.6 million. Small
animal research model sales increased in North America by $1.3 million, or 8.3%.
Unit and pricing trends remained strong. Small animal research model sales
decreased in Europe by $1.6 million, principally due to the negative impact of
$1.8 million due to foreign currency translations. We also experienced an
increase in the large animal import and conditioning area of $0.5 million,
mainly due to pricing.
BIOMEDICAL PRODUCTS AND SERVICES. Net sales of biomedical products and
services for the first three months of 2000 were $28.3 million, an increase of
$12.3 million, or 76.9%, from $16.0 million for the first three months of 1999.
At the beginning of the fourth quarter in 1999 we acquired Sierra Biomedical
which had sales of $8.1 million in the first three months of 2000. The remaining
increase was due to significant sales increases of transgenic and research
support services of $1.1 million, endotoxin detection systems of $0.5 million,
biosafety testing increase of $0.8 million and sales from our contract site
management contracts of $1.1 million, primarily due to better customer awareness
of our outsourcing solutions.
COST OF PRODUCTS SOLD AND SERVICES PROVIDED. Cost of products sold and
services provided for the first three months of 2000 was $41.4 million, an
increase of $9.2 million, or 28.6%, from $32.2 million for the first three
months of 1999.
RESEARCH MODELS. Cost of products sold and services provided for research
models for the first three months of 2000 was $23.1 million, an increase of $1.3
million, or 6.0%, compared to $21.8 million for the first three months of 1999.
Cost of products sold and services provided for the first three months of 2000
was 56.3% of net sales compared to 60.1% of net sales for the first three months
of 1999. Cost of products sold and services provided increased at a lower rate
than net sales due to the more favorable product mix and better pricing, as well
as improved capacity utilization.
BIOMEDICAL PRODUCTS AND SERVICES. Cost of products sold and services
provided for biomedical products and services for the first three months of 2000
was $18.2 million, an increase of $8.3 million, or 83.8%, compared to $9.9
million for the first three months of 1999. Cost of products sold and services
provided was 64.3% of net sales for the first three months of 2000 compared to
61.9% for the first three months of 1999. This was principally due to the
acquisition of Sierra Biomedical.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the first three months of 2000 were $11.8 million,
an increase of $3.0 million, or 34.1%, from $8.8 million for the first three
months of 1999. Selling, general and administrative expenses for the first three
months of 2000 were 17.0% of net sales compared to 16.8% of net sales for the
first three months of 1999.
RESEARCH MODELS. Selling, general and administrative expenses for research
models for the first three months of 2000 were $5.2 million, an increase of $0.2
million, or 4.0%, compared to $5.0 million for the first three months of 1999.
Selling, general and administrative expenses for the first three months of 2000
were 12.7% of net sales, compared to 13.8% for the first three months of 1999.
BIOMEDICAL PRODUCTS AND SERVICES. Selling, general and administrative
expenses for biomedical products and services for the first three months of 2000
were $4.0 million, an increase of $1.6 million, or 66.7%, compared to $2.4
million for the first three months of 1999. Selling, general and administrative
expenses for the first three months of 2000 decreased to 14.1% of net sales,
compared to 15.0% of net sales for the first three months of 1999. The
acquisition of Sierra Biomedical in the fourth quarter of 1999 is the major
reason for the increase in expenses, but since selling, general and
administrative expenses at Sierra Biomedical are lower as a percentage of net
sales than Charles River Laboratories, Inc., this contributed to the overall
percentage decrease.
10
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UNALLOCATED CORPORATE OVERHEAD. Unallocated corporate overhead, which
consists of various corporate expenses, was $2.7 million for the first three
months of 2000, an increase of $0.8 million, or 42.1%, compared to $1.9 million
for the first three months of 1999.
AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES. Amortization of goodwill
and other intangibles for the first three months of 2000 was $0.9 million, an
increase of $0.5 million from $0.4 million for the first three months of 1999.
The increase was due to the effect of additional amortization of intangibles
resulting from our Sierra Biomedical acquisition.
OPERATING INCOME. Operating income for the first three months of 2000 was
$15.2 million, an increase of $4.3 million, or 39.4%, from $10.9 million for the
first three months of 1999. Operating income for the first three months of 2000
was 21.9% of net sales, compared to 20.8% of net sales for the first three
months of 1999. Operating income increased in total and as a percentage of net
sales for the reasons described above.
RESEARCH MODELS. Operating income from sales of research models for the
first three months of 2000 was $12.7 million, an increase of $3.2 million, or
33.7%, from $9.5 million for the first three months of 1999. Operating income
from sales of research models for the first three months of 2000 was 31.0% of
net sales, compared to 26.2% for the first three months of 1999. The increase
was attributable to the factors described above.
BIOMEDICAL PRODUCTS AND SERVICES. Operating income from sales of biomedical
products and services for the first three months of 2000 was $5.3 million, an
increase of $2.0 million, or 60.6%, from $3.3 million for the first three months
of 1999. Operating income from sales of biomedical products and services for the
first three months of 2000 decreased to 18.7% of net sales, compared to 20.6% of
net sales for the first three months of 1999. This was primarily due to the
acquisition of Sierra Biomedical, and the impact of the additional amortization
of intangibles.
INCOME TAXES. The effective tax rate of 55.3% for the first three months of
2000 as compared to 41.2% for the first three months of 1999 is due to several
permanent differences, including non-deductible interest expense, goodwill and a
valuation allowance on a portion of the deferred tax asset.
INTEREST EXPENSE. Interest expense for the first three months of 2000 was
$9.3 million. The $9.3 million increase was primarily due to the additional debt
incurred as a result of the recapitalization, which occurred on September 29,
1999.
NET INCOME. Net income for the first three months of 2000 was $3.1 million,
a decrease of $4.0 million from $7.1 million for the first three months of 1999.
The decrease was attributable to the increased interest expense.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents of Charles River totaled $18.5 million at March
25, 2000 compared with $15.0 million at December 25, 1999. Our principal sources
of liquidity are cash flow from operations and borrowings under our credit
facility.
Cash flow from operating activities for the three months ending March 25,
2000 was $1.9 million, compared to $7.5 million for the first three months of
1999. Net income for the first three months of 2000 was $3.1 million compared to
$7.1 million for the first three months of 1999. Net income was impacted by the
non-cash interest expense accrual of $4.5 million. In addition, there was an
increase in accounts receivable.
Net cash used in investment activities for the three months ending March
25, 2000 was $1.8 million, compared to $2.2 million for the first three months
of 1999. On February 28, 2000, the company acquired an additional 16% of the
equity (340,840 common shares) of its 50% equity joint venture company, Charles
River Japan, from Ajinomoto Co., Inc. The purchase price for the equity was 1.4
billion yen or $12.8 million. One billion yen or $9.2 million was paid at
closing and the balance of 400 million yen or $3.7 million was deferred pursuant
to a three year balloon promissory note. In addition, we acquired $3.2 million
in cash. In January we sold our primate colony in Florida for $7.0 million.
Capital expenditures for the first three months ended March 25, 2000 were $2.8
million compared to $2.0 million for the first three months of 1999.
Net cash provided from financing activities for the three months ending
March 25, 2000 was $3.7 million compared to $12.9 million in net cash used in
financing activities for the first three months of 1999. We increased
11
<PAGE>
our borrowings under the revolving loan by an additional $4.0 million during
the first three months ended March 25, 2000. We had net activity with Bausch &
Lomb, our 100% shareholder up until the recapitalization, of $12.9 million
for the first three months of 1999.
We anticipate that our operating cash flow, together with borrowings under our
credit facility, will be sufficient to meet our anticipated future operating
expenses, capital expenditures and debt service obligations as they become due.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are subject to market risks arising from changes in interest rates and
foreign currency exchange rates. Our primary interest rate exposure results from
changes in LIBOR or the base rate which are used to determine the applicable
interest rates under our term loans and revolving credit facility. We have
entered into an interest rate protection agreement designed to protect us
against fluctuations in interest rates with respect to at least 50% of the
aggregate principal amount of the term loans and the senior subordinated notes.
Interest rate swaps have the effect of converting variable rate obligations to
fixed or other interest rate obligations. Our potential loss over one year that
would result from a hypothetical, instantaneous and unfavorable change of 100
basis points in the interest rate on all of our variable rate obligations would
be approximately $1.6 million. Fluctuations in interest rates will not affect
the interest payable on the senior subordinated notes, senior discount
debentures or subordinated discount note, which is fixed.
We do not use financial instruments for trading or other speculative
purposes.
We also have exposure to some foreign currency exchange-rate fluctuations
for the cash flows received from our foreign affiliates. This risk is mitigated
by the fact that their operations are conducted in their respective local
currencies, and it is not our intention to repatriate earnings prospectively.
Currently, we do not engage in any foreign currency hedging activities as we do
not believe that our foreign currency exchange-rate risk is material.
12
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) No Reports on Form 8-K were filed during the quarter
ended March 25, 2000
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHARLES RIVER LABORATORIES, INC.
-----------------------------------------------
May 8, 2000 /s/ Thomas F. Ackerman
----------------------
Thomas F. Ackerman
Sr. Vice President and Chief Financial Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE CONSOLIDATED
STATEMENT OF EARNINGS FOR THE THREE MONTHS ENDED MARCH 25, 2000 AND THE
CONSOLIDATED BALANCE SHEET AT MARCH 25, 2000 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-2000
<PERIOD-END> MAR-25-2000
<CASH> 18,458
<SECURITIES> 0
<RECEIVABLES> 53,022
<ALLOWANCES> 1,031
<INVENTORY> 32,462
<CURRENT-ASSETS> 111,774
<PP&E> 119,174
<DEPRECIATION> 141,048
<TOTAL-ASSETS> 400,947
<CURRENT-LIABILITIES> 84,793
<BONDS> 312,120
0
0
<COMMON> 1
<OTHER-SE> (21,158)
<TOTAL-LIABILITY-AND-EQUITY> 400,947
<SALES> 69,302
<TOTAL-REVENUES> 69,302
<CGS> 41,392
<TOTAL-COSTS> 41,392
<OTHER-EXPENSES> 12,678
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,301
<INCOME-PRETAX> 6,043
<INCOME-TAX> 3,341
<INCOME-CONTINUING> 2,702
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,126
<EPS-BASIC> 0<F1>
<EPS-DILUTED> 0<F1>
<FN>
<F1>The Company's equity is not publicly stated.
</FN>
</TABLE>
