Regulation G Financial Reconciliations Meeting with Management June 4, 2008
RECONCILIATION OF LAST TWELVE MONTHS (LTM) NET SALES Net Sales Fiscal Year Ended December 29, $1,230,626 Three Months Ended March 29, 2008 337,685 Nine Months Ended March 31, (291,199) Last Twelve Months (LTM) Ended March 29, 2008 $1,277,112 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.
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS PER SHARE (EPS) Twelve Months Ended December 27, 2008E GAAP EPS Estimate $2.59 - $2.69 Amortization of intangible assets $0.30 Gain on curtailment of U.S. defined benefit pension plan ($0.04) Charges related to preclinical facility disposition $0.01-$0.02 Non-GAAP EPS Estimate $2.87 - $2.97 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.
RECONCILIATION OF GAAP TO NON-GAAP OPERATING INCOME Twelve Months Ended December 29, December 30, 2006 December 31, 2005 December 25, 2004 Net sales $ 1,230,626 $ 1,058,385 $ 993,328 $ 724,221 Operating income 227,191 188,173 184,694 157,986 Operating income as a % of net sales 18.5% 17.8% 18.6% 21.8% Amortization related to acquisition 33,509 37,639 47,012 13,857 Stock-based compensation related to Inveresk acquisition 94 634 7,925 1,841 Impairment and other charges 6,269 6,205 365 2,611 Gain on sale of UK real estate (2,047) Pre-acquisition Inveresk stock compensation taxes 845 Repatriation - - 1,305 - Operating income, excluding specified charges (Non-GAAP) $ 265,861 $ 232,651 $ 241,301 $ 176,295 Non-GAAP operating income as a % of net sales 21.6% 22.0% 24.3% 24.3% 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.
RECONCILIATION OF GAAP EARNINGS TO NON-GAAP EARNINGS (dollars in thousands, except for per share data) December 29, Twelve Months Ended December 30, 2006 December 31, 2005 December 25, 2004 Net income (loss) $ 154,406 $ (55,783) $ 141,999 $ 89,792 Less: Discontinued operations 3,146 181,004 3,790 (1,061) Net income from continuing operations 157,552 125,221 145,789 88,731 Amortization related to acquisitions 33,509 37,639 47,011 13,857 Stock-based compensation related to Inveresk acquisition 94 634 7,926 1,841 Impairment and other charges 6,269 6,205 365 2,611 Gain on sale of UK real estate (2,047) - - - Pre-acquisition Inveresk stock compensation taxes 845 - - - Deferred tax revaluation (3,011) - - - Repatriation - - 1,305 - Deferred financing cost - - 2,155 105 Litigation settlement - - - - Deferred tax (reversal) write-off - - (28,271) 7,900 Valuation allowance release - - - (2,111) Tax effect (12,984) (15,514) (18,687) (6,350) Net income from continuing operations, excluding specified charges (Non-GAAP) $ 180,227 $ 154,185 $ 157,593 $ 106,584 Calculation of earnings per common share, excluding specified charges (Non-GAAP): Net income for purposes of calculating earnings per share, excluding specified charges (Non-GAAP) 180,227 $ $ 154,185 $ 157,593 $ 106,584 After-tax equivalent interest expense on 3.5% senior convertible debentures - - 1,208 4,125 Income for purposes of calculating diluted earnings per share, excluding specified charges (Non-GAAP) $ 180,227 $ 154,185 $ 158,801 $ 110,709 Weighted average shares outstanding - Basic 66,960,515 68,945,622 69,730,056 49,601,021 Effect of dilutive securities: 2.25% senior convertible debentures 481,136 - - - 3.5% senior convertible debentures - - 1,462,474 4,759,455 Stock options and contingently issued restricted stock 1,160,369 867,204 1,424,740 1,346,665 Warrants 133,916 135,206 285,115 338,707 Weighted average shares outstanding - Diluted 68,735,936 69,948,032 72,902,385 56,045,848 Basic earnings (loss) per share $ 2.31 $ (0.81) $ 2.04 $ 1.81 Diluted earnings (loss) per share $ 2.25 $ (0.80) $ 1.96 $ 1.68 Basic earnings per share, excluding specified charges (Non-GAAP) $ 2.69 $ 2.24 $ 2.26 $ 2.15 Diluted earnings per share, excluding specified charges (Non-GAAP) $ 2.62 $ 2.20 $ 2.18 $ 1.98 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.
RECONCILIATION OF FREE CASH FLOW (NON-GAAP) December 27, 2008E December 29, Twelve Months Ended December 30, 2006 December 31, 2005 December 25, 2004 Net cash provided by operating activities $280,000-$305,000 $ 288,425 $ 175,973 $ 216,784 $ 180,079 Less: Capital expenditures (220,000)-(240,000) (227,036) (181,747) (94,520) (44,735) Free cash flow $50,000-$75,000 $ 61,389 $ (5,774) $ 122,264 $ 135,344 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.
RECONCILIATION OF ORGANIC SALES GROWTH Quarter Ended March 29, 2008 Total CRL RMS PCS Net Sales Net Sales Net Sales Reported Sales Growth 16.0% 17.8% 14.1% Less: Foreign Exchange Impact 4.2% 6.2% 2.1% Organic Sales Growth 11.8% 11.6% 12.0% 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.
RECONCILIATION OF GAAP TO NON-GAAP SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED) Three Months Ended March 29, 2008 March 31, Research Models and Services Net sales $ 168,596 $ 143,068 Operating income 55,813 47,021 Operating income as a % of net sales 33.1% 32.9% Amortization related to acquisitions 534 374 Operating income, excluding specified charges (Non-GAAP) $ 56,347 $ 47,395 Non-GAAP operating income as a % of net sales 33.4% 33.1% Preclinical Services Net sales $ 169,089 $ 148,131 Operating income 23,268 23,444 Operating income as a % of net sales 13.8% 15.8% Amortization related to acquisitions 7,037 7,481 Impairment and other charges 686 819 Operating income, excluding specified charges (Non-GAAP) $ 30,991 $ 31,744 Non-GAAP operating income as a % of net sales 18.3% 21.4% Unallocated Corporate Overhead $ (15,581) $ (15,764) Stock-based compensation related to Inveresk acquisition - 70 Unallocated corporate overhead, excluding specified charges (Non-GAAP) $ (15,581) $ (15,694) Total Net sales $ 337,685 $ 291,199 Operating income 63,500 54,701 Operating income as a % of net sales 18.8% 18.8% Amortization related to acquisition 7,571 7,855 Stock-based compensation related to Inveresk acquisition - 70 Impairment and other charges 686 819 Operating income, excluding specified charges (Non-GAAP) $ 71,757 $ 63,445 Non-GAAP operating income as a % of net sales 21.2% 21.8% 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.
RECONCILIATION OF GAAP EARNINGS TO NON-GAAP EARNINGS (dollars in thousands, except for per share data) Three Months Ended March 29, 2008 March 31, Net income $ 45,154 $ 36,763 Less: Discontinued operations - 464 Net income from continuing operations 45,154 37,227 Amortization related to acquisitions 7,571 7,855 Stock-based compensation related to Inveresk acquisition - 70 Impairment and other charges 686 819 Tax effect (2,605) (2,784) Net income from continuing operations, excluding specified charges (Non-GAAP) $ 50,806 $ 43,187 Weighted average shares outstanding - Basic 67,504,848 66,346,152 Effect of dilutive securities: 2.25% senior convertible debentures 1,421,424 - Stock options and contingently issued restricted stock 1,363,212 1,153,912 Warrants 269,972 132,716 Weighted average shares outstanding - Diluted 70,559,456 67,632,780 Basic earnings per share $ 0.67 $ 0.55 Diluted earnings per share $ 0.64 $ 0.54 Basic earnings per share, excluding specified charges (Non-GAAP) $ 0.75 $ 0.65 Diluted earnings per share, excluding specified charges (Non-GAAP) $ 0.72 $ 0.64 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 onetime 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.
RECONCILIATION OF NON-GAAP BUSINESS SEGMENT ANALYSIS Twelve Months Ended % of Total December 29, Net Sales Research Models and Services $ 577,231 47% Preclinical Services $ 653,395 53% Total $ 1,230,626 100% Non-GAAP Operating Income Research Models and Services $ 179,024 56% Preclinical Services $ 140,244 44% Segment Non-GAAP Operating Income before unallocated corporate overhead $ 319,268 100% Unallocated corporate overhead $ (53,407) Total - Non-GAAP Operating Income $ 265,861 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.
RECONCILIATION OF GAAP TO NON-GAAP SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED) Twelve Months Ended December 29, December 30, 2006 Research Models and Services Net sales $ 577,231 $ 514,999 Operating income 177,151 147,789 Operating income as a % of net sales 30.7% 28.7% Amortization related to acquisitions 1,873 461 Impairment and other charges - 3,115 Operating income, excluding specified charges (Non-GAAP) $ 179,024 $ 151,365 Non-GAAP operating income as a % of net sales 31.0% 29.4% Preclinical Services Net sales $ 653,395 $ 543,386 Operating income 103,541 82,323 Operating income as a % of net sales 15.8% 15.2% Amortization related to acquisitions 31,636 37,178 Impairment and other charges 6,269 3,090 Gain on sale of UK real estate (2,047) - Pre-acquisition Inveresk stock compensation taxes 845 - Operating income, excluding specified charges (Non-GAAP) $ 140,244 $ 122,591 Non-GAAP operating income as a % of net sales 21.5% 22.6% Unallocated Corporate Overhead $ (53,501) $ (41,939) Stock-based compensation related to Inveresk acquisition 94 635 Unallocated corporate overhead, excluding specified charges (Non-GAAP) $ (53,407) $ (41,304) Total Net sales $ 1,230,626 $ 1,058,385 Operating income 227,191 188,173 Operating income as a % of net sales 18.5% 17.8% Amortization related to acquisitions 33,509 37,639 Stock-based compensation related to Inveresk acquisition 94 635 Impairment and other charges 6,269 6,205 Gain on sale of UK real estate (2,047) - Pre-acquisition Inveresk stock compensation taxes 845 - Operating income, excluding specified charges (Non-GAAP) $ 265,861 $ 232,652 Non-GAAP operating income as a % of net sales 21.6% 22.0% 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.