(Mark One) | |
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 24, 2016 | |
OR | |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO |
Delaware | 06-1397316 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
251 Ballardvale Street Wilmington, Massachusetts (Address of Principal Executive Offices) | 01887 (Zip Code) |
Large accelerated filer þ | Accelerated filer ¨ | Non-accelerated filer ¨ (Do not check if smaller reporting company) | Smaller reporting company ¨ |
Item | Page | |
PART I - FINANCIAL INFORMATION | ||
1 | Financial Statements | |
Condensed Consolidated Statements of Income (Unaudited) for the three and nine months ended September 24, 2016 and September 26, 2015 | ||
Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the three and nine months ended September 24, 2016 and September 26, 2015 | ||
Condensed Consolidated Balance Sheets (Unaudited) as of September 24, 2016 and December 26, 2015 | ||
Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 24, 2016 and September 26, 2015 | ||
Notes to Unaudited Condensed Consolidated Financial Statements | ||
2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
3 | Quantitative and Qualitative Disclosure About Market Risk | |
4 | Controls and Procedures | |
PART II - OTHER INFORMATION | ||
1 | Legal Proceedings | |
1A | Risk Factors | |
2 | Unregistered Sales of Equity Securities and Use of Proceeds | |
6 | Exhibits | |
Signatures |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | ||||||||||||
Service revenue | $ | 292,849 | $ | 222,506 | $ | 806,397 | $ | 633,666 | |||||||
Product revenue | 132,871 | 126,959 | 408,246 | 375,786 | |||||||||||
Total revenue | 425,720 | 349,465 | 1,214,643 | 1,009,452 | |||||||||||
Costs and expenses: | |||||||||||||||
Cost of services provided (excluding amortization of intangible assets) | 200,118 | 145,165 | 543,588 | 425,614 | |||||||||||
Cost of products sold (excluding amortization of intangible assets) | 69,332 | 66,225 | 204,270 | 193,320 | |||||||||||
Selling, general and administrative | 85,650 | 76,225 | 269,067 | 218,953 | |||||||||||
Amortization of intangible assets | 11,825 | 6,410 | 29,390 | 17,385 | |||||||||||
Operating income | 58,795 | 55,440 | 168,328 | 154,180 | |||||||||||
Other income (expense): | |||||||||||||||
Interest income | 523 | 177 | 1,008 | 758 | |||||||||||
Interest expense | (7,079 | ) | (3,851 | ) | (20,199 | ) | (11,251 | ) | |||||||
Other income (expense), net | 1,017 | 1,390 | 10,059 | 1,749 | |||||||||||
Income from continuing operations, before income taxes | 53,256 | 53,156 | 159,196 | 145,436 | |||||||||||
Provision for income taxes | 15,565 | 15,255 | 48,385 | 26,662 | |||||||||||
Income from continuing operations, net of income taxes | 37,691 | 37,901 | 110,811 | 118,774 | |||||||||||
Income (loss) from discontinued operations, net of income taxes | 342 | (34 | ) | 328 | (48 | ) | |||||||||
Net income | 38,033 | 37,867 | 111,139 | 118,726 | |||||||||||
Less: Net income attributable to noncontrolling interests | 298 | 488 | 1,054 | 1,297 | |||||||||||
Net income attributable to common shareholders | $ | 37,735 | $ | 37,379 | $ | 110,085 | $ | 117,429 | |||||||
Earnings (loss) per common share | |||||||||||||||
Basic: | |||||||||||||||
Continuing operations attributable to common shareholders | $ | 0.79 | $ | 0.81 | $ | 2.34 | $ | 2.52 | |||||||
Discontinued operations | $ | 0.01 | $ | — | $ | — | $ | — | |||||||
Net income attributable to common shareholders | $ | 0.80 | $ | 0.81 | $ | 2.34 | $ | 2.52 | |||||||
Diluted: | |||||||||||||||
Continuing operations attributable to common shareholders | $ | 0.78 | $ | 0.79 | $ | 2.29 | $ | 2.47 | |||||||
Discontinued operations | $ | 0.01 | $ | — | $ | 0.01 | $ | — | |||||||
Net income attributable to common shareholders | $ | 0.79 | $ | 0.79 | $ | 2.30 | $ | 2.47 | |||||||
See Notes to Unaudited Condensed Consolidated Financial Statements. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | ||||||||||||
Net income | $ | 38,033 | $ | 37,867 | $ | 111,139 | $ | 118,726 | |||||||
Other comprehensive income (loss): | |||||||||||||||
Foreign currency translation adjustment and other | (16,888 | ) | (31,843 | ) | (32,798 | ) | (46,559 | ) | |||||||
Cumulative translation adjustment related to intercompany loan forgiveness | — | — | — | (2,341 | ) | ||||||||||
Amortization of net loss and prior service benefit included in net periodic cost for pension and other post-retirement benefit plans | 1,176 | 695 | 1,961 | 2,185 | |||||||||||
Comprehensive income, before income taxes | 22,321 | 6,719 | 80,302 | 72,011 | |||||||||||
Income tax expense related to items of other comprehensive income (Note 9) | 140 | 220 | 424 | 700 | |||||||||||
Comprehensive income, net of income taxes | 22,181 | 6,499 | 79,878 | 71,311 | |||||||||||
Less: Comprehensive income (loss) related to noncontrolling interests, net of income taxes | — | (443 | ) | (9 | ) | 435 | |||||||||
Comprehensive income attributable to common shareholders, net of income taxes | $ | 22,181 | $ | 6,942 | $ | 79,887 | $ | 70,876 | |||||||
See Notes to Unaudited Condensed Consolidated Financial Statements. |
September 24, 2016 | December 26, 2015 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 105,722 | $ | 117,947 | |||
Trade receivables, net | 359,734 | 270,068 | |||||
Inventories | 99,374 | 93,735 | |||||
Prepaid assets | 36,827 | 30,198 | |||||
Other current assets | 52,921 | 47,286 | |||||
Total current assets | 654,578 | 559,234 | |||||
Property, plant and equipment, net | 767,177 | 677,959 | |||||
Goodwill | 763,576 | 438,829 | |||||
Client relationships, net | 318,751 | 213,374 | |||||
Other intangible assets, net | 77,701 | 67,430 | |||||
Deferred tax assets | 22,078 | 40,028 | |||||
Other assets | 86,329 | 71,643 | |||||
Total assets | $ | 2,690,190 | $ | 2,068,497 | |||
Liabilities, Redeemable Noncontrolling Interest and Equity | |||||||
Current liabilities: | |||||||
Current portion of long-term debt and capital leases | $ | 25,970 | $ | 17,033 | |||
Accounts payable | 65,809 | 36,675 | |||||
Accrued compensation | 93,558 | 72,832 | |||||
Deferred revenue | 119,298 | 81,343 | |||||
Accrued liabilities | 80,524 | 89,494 | |||||
Other current liabilities | 25,131 | 12,544 | |||||
Current liabilities of discontinued operations | 1,757 | 1,840 | |||||
Total current liabilities | 412,047 | 311,761 | |||||
Long-term debt, net and capital leases | 1,233,189 | 845,997 | |||||
Deferred tax liabilities | 54,068 | 48,223 | |||||
Other long-term liabilities | 96,771 | 89,062 | |||||
Long-term liabilities of discontinued operations | 6,213 | 7,890 | |||||
Total liabilities | 1,802,288 | 1,302,933 | |||||
Commitments and contingencies | |||||||
Redeemable noncontrolling interest | 15,040 | 28,008 | |||||
Equity: | |||||||
Preferred stock, $0.01 par value; 20,000 shares authorized; no shares issued and outstanding | — | — | |||||
Common stock, $0.01 par value; 120,000 shares authorized; 86,262 shares issued and 47,324 shares outstanding as of September 24, 2016 and 85,464 shares issued and 46,698 shares outstanding as of December 26, 2015 | 863 | 855 | |||||
Additional paid-in capital | 2,465,193 | 2,397,960 | |||||
Retained earnings | 120,623 | 10,538 | |||||
Treasury stock, at cost 38,938 shares and 38,766 shares as of September 24, 2016 and December 26, 2015, respectively | (1,552,964 | ) | (1,540,738 | ) | |||
Accumulated other comprehensive loss | (165,746 | ) | (135,548 | ) | |||
Total equity attributable to common shareholders | 867,969 | 733,067 | |||||
Noncontrolling interests | 4,893 | 4,489 | |||||
Total equity | 872,862 | 737,556 | |||||
Total liabilities, redeemable noncontrolling interest and equity | $ | 2,690,190 | $ | 2,068,497 | |||
See Notes to Unaudited Condensed Consolidated Financial Statements. |
Nine Months Ended | |||||||
September 24, 2016 | September 26, 2015 | ||||||
Cash flows relating to operating activities | |||||||
Net income | $ | 111,139 | $ | 118,726 | |||
Less: Income (loss) from discontinued operations, net of income taxes | 328 | (48 | ) | ||||
Income from continuing operations, net of income taxes | 110,811 | 118,774 | |||||
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities: | |||||||
Depreciation and amortization | 91,116 | 69,330 | |||||
Amortization of debt issuance costs and discounts | 2,325 | 1,970 | |||||
Stock-based compensation | 32,647 | 30,349 | |||||
Deferred income taxes | (270 | ) | (4,235 | ) | |||
Gain on venture capital investments | (8,518 | ) | (3,604 | ) | |||
Gain on bargain purchase | 16 | (9,933 | ) | ||||
Other, net | 4,030 | 1,101 | |||||
Changes in assets and liabilities: | |||||||
Trade receivables, net | (43,260 | ) | (36,430 | ) | |||
Inventories | (4,352 | ) | (470 | ) | |||
Other assets | (5,702 | ) | 8,308 | ||||
Accounts payable | 17,184 | (894 | ) | ||||
Accrued compensation | 8,163 | 2,238 | |||||
Deferred revenue | 2,169 | 1,255 | |||||
Accrued liabilities | (15,182 | ) | 22,189 | ||||
Taxes payable and prepaid taxes | (5,671 | ) | (1,906 | ) | |||
Other liabilities | 617 | (12,147 | ) | ||||
Net cash provided by operating activities | 186,123 | 185,895 | |||||
Cash flows relating to investing activities | |||||||
Acquisition of businesses and assets, net of cash acquired | (597,607 | ) | (211,974 | ) | |||
Capital expenditures | (29,609 | ) | (35,008 | ) | |||
Purchases of investments | (20,278 | ) | (26,315 | ) | |||
Proceeds from sale of investments and distributions from venture capital investments | 28,274 | 24,562 | |||||
Other, net | 3,790 | (244 | ) | ||||
Net cash used in investing activities | (615,430 | ) | (248,979 | ) | |||
Cash flows relating to financing activities | |||||||
Proceeds from long-term debt and revolving credit facility | 926,781 | 453,778 | |||||
Proceeds from exercises of stock options | 21,643 | 36,587 | |||||
Payments on long-term debt, revolving credit facility and capital lease obligations | (526,983 | ) | (391,048 | ) | |||
Purchase of treasury stock | (12,226 | ) | (117,431 | ) | |||
Other, net | 4,976 | 6,674 | |||||
Net cash provided by (used in) financing activities | 414,191 | (11,440 | ) | ||||
Discontinued operations | |||||||
Net cash used in operating activities from discontinued operations | (1,434 | ) | (1,265 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 4,325 | (10,202 | ) | ||||
Net change in cash and cash equivalents | (12,225 | ) | (85,991 | ) | |||
Cash and cash equivalents, beginning of period | 117,947 | 160,023 | |||||
Cash and cash equivalents, end of period | $ | 105,722 | $ | 74,032 | |||
See Notes to Unaudited Condensed Consolidated Financial Statements. |
1. | BASIS OF PRESENTATION |
Research Models and Services | Discovery and Safety Assessment | Manufacturing Support |
Research Models | Discovery Services | Microbial Solutions |
Research Model Services | Safety Assessment | Avian |
Biologics | ||
Contract Manufacturing |
June 27, 2016 | |||
(in thousands) | |||
Trade receivables (contractual amount of $1,104) | $ | 1,104 | |
Other current assets (excluding cash) | 15 | ||
Property, plant and equipment | 912 | ||
Other long-term assets | 187 | ||
Definite-lived intangible assets | 1,230 | ||
Goodwill | 10,433 | ||
Other current liabilities | (1,133 | ) | |
Long-term liabilities | (1,044 | ) | |
Total purchase price allocation | $ | 11,704 |
Definite-Lived Intangible Assets | Weighted Average Amortization Life | ||||
(in thousands) | (in years) | ||||
Client relationships | $ | 650 | 10 | ||
Other intangible assets | 580 | 5 | |||
Total definite-lived intangible assets | $ | 1,230 | 7 |
April 4, 2016 | |||
(in thousands) | |||
Trade receivables (contractual amount of $48,625) | $ | 48,157 | |
Inventories | 2,296 | ||
Other current assets (excluding cash) | 4,021 | ||
Property, plant and equipment | 129,066 | ||
Other long-term assets | 1,060 | ||
Definite-lived intangible assets | 165,400 | ||
Goodwill | 330,229 | ||
Deferred revenue | (39,103 | ) | |
Other current liabilities | (27,386 | ) | |
Long-term liabilities | (36,349 | ) | |
Total purchase price allocation | $ | 577,391 |
Definite-Lived Intangible Assets | Weighted Average Amortization Life | ||||
(in thousands) | (in years) | ||||
Client relationships | $ | 138,000 | 15 | ||
Developed technology | 20,700 | 3 | |||
Backlog | 6,700 | 1 | |||
Total definite-lived intangible assets | $ | 165,400 | 13 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | ||||||||||||
(in thousands) | |||||||||||||||
Revenue | $ | 425,720 | $ | 402,744 | $ | 1,275,175 | $ | 1,166,466 | |||||||
Net income attributable to common shareholders | 39,530 | 40,931 | 129,050 | 116,863 | |||||||||||
Earnings per common share | |||||||||||||||
Basic | $ | 0.84 | $ | 0.88 | $ | 2.75 | $ | 2.51 | |||||||
Diluted | $ | 0.82 | $ | 0.87 | $ | 2.70 | $ | 2.46 |
November 18, 2015 | |||
(in thousands) | |||
Trade receivables (contractual amount of $3,546) | $ | 3,520 | |
Inventories | 129 | ||
Other current assets (excluding cash) | 706 | ||
Property, plant and equipment | 2,528 | ||
Definite-lived intangible assets | 13,330 | ||
Goodwill | 22,894 | ||
Other long-term assets | 250 | ||
Current liabilities | (3,456 | ) | |
Long-term liabilities | (4,470 | ) | |
Total purchase price allocation | $ | 35,431 |
Definite-Lived Intangible Assets | Weighted Average Amortization Life | ||||
(in thousands) | (in years) | ||||
Client relationships | $ | 7,146 | 19 | ||
Developed technology | 5,960 | 19 | |||
Other intangible assets | 224 | 3 | |||
Total definite-lived intangible assets | $ | 13,330 | 19 |
July 24, 2015 | |||
(in thousands) | |||
Trade receivables (contractual amount of $5,410) | $ | 5,288 | |
Inventories | 10,103 | ||
Other current assets (excluding cash) | 13,269 | ||
Property, plant and equipment | 4,639 | ||
Definite-lived intangible assets | 118,140 | ||
Goodwill | 105,550 | ||
Other long-term assets | 537 | ||
Current debt | (9,766 | ) | |
Other current liabilities | (7,136 | ) | |
Long-term liabilities | (28,388 | ) | |
Total purchase price allocation | $ | 212,236 |
Definite-Lived Intangible Assets | Weighted Average Amortization Life | ||||
(in thousands) | (in years) | ||||
Client relationships | $ | 71,000 | 16 | ||
Developed technology | 39,140 | 14 | |||
Trademark and trade names | 5,200 | 14 | |||
Non-compete | 2,800 | 5 | |||
Total definite-lived intangible assets | $ | 118,140 | 15 |
Three Months Ended | Nine Months Ended | ||||||
September 26, 2015 | September 26, 2015 | ||||||
(in thousands) | |||||||
Revenue | $ | 350,819 | $ | 1,026,643 | |||
Net income attributable to common shareholders | 40,826 | 125,863 | |||||
Earnings per common share | |||||||
Basic | $ | 0.88 | $ | 2.70 | |||
Diluted | $ | 0.86 | $ | 2.65 |
May 5, 2015 | |||
(in thousands) | |||
Trade receivables (contractual amount of $995) | $ | 965 | |
Inventories | 1,518 | ||
Other current assets (excluding cash) | 973 | ||
Property, plant and equipment | 13,698 | ||
Definite-lived intangible assets | 3,400 | ||
Current liabilities | (925 | ) | |
Long-term liabilities | (250 | ) | |
Fair value of net assets acquired | 19,379 | ||
Bargain purchase gain | (9,821 | ) | |
Total purchase price allocation | $ | 9,558 |
September 24, 2016 | December 26, 2015 | ||||||
(in thousands) | |||||||
Client receivables | $ | 278,041 | $ | 230,010 | |||
Unbilled revenue | 84,754 | 45,996 | |||||
Total | 362,795 | 276,006 | |||||
Less: Allowance for doubtful accounts | (3,061 | ) | (5,938 | ) | |||
Trade receivables, net | $ | 359,734 | $ | 270,068 |
September 24, 2016 | December 26, 2015 | ||||||
(in thousands) | |||||||
Raw materials and supplies | $ | 18,445 | $ | 15,998 | |||
Work in process | 14,119 | 12,101 | |||||
Finished products | 66,810 | 65,636 | |||||
Inventories | $ | 99,374 | $ | 93,735 |
September 24, 2016 | December 26, 2015 | ||||||
(in thousands) | |||||||
Investments | $ | 7,734 | $ | 20,516 | |||
Prepaid income taxes | 44,467 | 26,350 | |||||
Restricted cash | 572 | 271 | |||||
Other | 148 | 149 | |||||
Other current assets | $ | 52,921 | $ | 47,286 |
September 24, 2016 | December 26, 2015 | ||||||
(in thousands) | |||||||
Life insurance policies | $ | 28,837 | $ | 27,554 | |||
Venture capital investments | 45,653 | 32,730 | |||||
Restricted cash | 1,825 | 1,745 | |||||
Other | 10,014 | 9,614 | |||||
Other assets | $ | 86,329 | $ | 71,643 |
September 24, 2016 | December 26, 2015 | ||||||
(in thousands) | |||||||
Accrued income taxes | $ | 24,138 | $ | 12,168 | |||
Accrued interest and other | 993 | 376 | |||||
Other current liabilities | $ | 25,131 | $ | 12,544 |
September 24, 2016 | December 26, 2015 | ||||||
(in thousands) | |||||||
Long-term pension liability | $ | 32,639 | $ | 34,604 | |||
Accrued executive supplemental life insurance retirement plan and deferred compensation plan | 31,244 | 30,188 | |||||
Other | 32,888 | 24,270 | |||||
Other long-term liabilities | $ | 96,771 | $ | 89,062 |
Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
(in thousands) | |||||||||||||||
Mutual fund | $ | 4,650 | $ | — | $ | (141 | ) | $ | 4,509 | ||||||
Total | $ | 4,650 | $ | — | $ | (141 | ) | $ | 4,509 |
• | Level 1 - Fair values are determined utilizing prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. |
• | Level 2 - Fair values are determined by utilizing quoted prices for identical or similar assets and liabilities in active markets or other market observable inputs such as interest rates, yield curves, and foreign currency spot rates. |
• | Level 3 - Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. |
• | Cash equivalents - Valued at market prices determined through third-party pricing services. |
• | Mutual funds - Valued at the unadjusted quoted net asset value of shares held by the Company. |
• | Foreign currency forward contracts - Valued using market observable inputs, such as forward foreign exchange points and foreign exchanges rates. |
• | Life insurance policies - Valued at cash surrender value based on the fair value of underlying investments. |
• | Contingent consideration - Valued based on a probability weighting of the future cash flows associated with the potential outcomes. |
• | Redeemable noncontrolling interest - Valued using the income approach based on estimated future cash flows of the underlying business discounted by a weighted average cost of capital. |
September 24, 2016 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(in thousands) | |||||||||||||||
Cash equivalents | $ | — | $ | 14 | $ | — | $ | 14 | |||||||
Other assets: | |||||||||||||||
Life insurance policies | — | 21,521 | — | 21,521 | |||||||||||
Total assets measured at fair value | $ | — | $ | 21,535 | $ | — | $ | 21,535 | |||||||
Other current liabilities: | |||||||||||||||
Contingent consideration | $ | — | $ | — | $ | 4,126 | $ | 4,126 | |||||||
Total liabilities measured at fair value | $ | — | $ | — | $ | 4,126 | $ | 4,126 |
December 26, 2015 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(in thousands) | |||||||||||||||
Cash equivalents | $ | — | $ | 190 | $ | — | $ | 190 | |||||||
Other current assets: | |||||||||||||||
Mutual funds | 4,509 | — | — | 4,509 | |||||||||||
Foreign currency forward contracts | — | 15 | — | 15 | |||||||||||
Other assets: | |||||||||||||||
Life insurance policies | — | 20,364 | — | 20,364 | |||||||||||
Total assets measured at fair value | $ | 4,509 | $ | 20,569 | $ | — | $ | 25,078 | |||||||
Other current liabilities: | |||||||||||||||
Contingent consideration | $ | — | $ | — | $ | 1,172 | $ | 1,172 | |||||||
Other long-term liabilities: | |||||||||||||||
Contingent consideration | — | — | 198 | 198 | |||||||||||
Redeemable noncontrolling interest | — | — | 28,008 | 28,008 | |||||||||||
Total liabilities and redeemable noncontrolling interest measured at fair value | $ | — | $ | — | $ | 29,378 | $ | 29,378 |
Nine Months Ended | |||||||
September 24, 2016 | September 26, 2015 | ||||||
(in thousands) | |||||||
Beginning balance | $ | 1,370 | $ | 2,828 | |||
Additions | 3,600 | 675 | |||||
Payments | (874 | ) | (600 | ) | |||
Total gains or losses (realized/unrealized): | |||||||
Reversal of previously recorded contingent liability and change in fair value | 30 | (1,623 | ) | ||||
Ending balance | $ | 4,126 | $ | 1,280 |
Redeemable Noncontrolling Interest | |||
(in thousands) | |||
December 26, 2015 (fair value) | $ | 28,008 | |
Purchase of 12% equity interest | (12,360 | ) | |
Total gains or losses (realized/unrealized): | |||
Net income attributable to noncontrolling interest | 462 | ||
Foreign currency translation | (875 | ) | |
Modification of 13% purchase option | 1,495 | ||
Change in fair value, included in additional paid-in capital | (1,690 | ) | |
September 24, 2016 | $ | 15,040 |
Adjustments to Goodwill | |||||||||||||||||||
December 26, 2015 | Acquisitions | Transfers | Foreign Exchange | September 24, 2016 | |||||||||||||||
(in thousands) | |||||||||||||||||||
RMS | $ | 58,167 | $ | — | $ | (342 | ) | $ | (479 | ) | $ | 57,346 | |||||||
DSA | 247,050 | 293,973 | — | (7,914 | ) | 533,109 | |||||||||||||
Manufacturing | 133,612 | 46,859 | 342 | (7,692 | ) | 173,121 | |||||||||||||
Total | $ | 438,829 | $ | 340,832 | $ | — | $ | (16,085 | ) | $ | 763,576 |
September 24, 2016 | December 26, 2015 | ||||||||||||||||||||||
Gross | Accumulated Amortization | Net | Gross | Accumulated Amortization | Net | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Backlog | $ | 8,645 | $ | (4,979 | ) | $ | 3,666 | $ | 50,568 | $ | (50,554 | ) | $ | 14 | |||||||||
Technology | 74,304 | (11,910 | ) | 62,394 | 60,350 | (5,911 | ) | 54,439 | |||||||||||||||
Trademarks and trade names | 8,439 | (4,029 | ) | 4,410 | 11,495 | (5,944 | ) | 5,551 | |||||||||||||||
Other | 12,390 | (5,159 | ) | 7,231 | 14,711 | (7,285 | ) | 7,426 | |||||||||||||||
Other intangible assets | 103,778 | (26,077 | ) | 77,701 | 137,124 | (69,694 | ) | 67,430 | |||||||||||||||
Client relationships | 518,050 | (199,299 | ) | 318,751 | 396,537 | (183,163 | ) | 213,374 | |||||||||||||||
Intangible assets | $ | 621,828 | $ | (225,376 | ) | $ | 396,452 | $ | 533,661 | $ | (252,857 | ) | $ | 280,804 |
September 24, 2016 | December 26, 2015 | ||||||
(in thousands) | |||||||
Term loans | $ | 641,875 | $ | 390,000 | |||
Revolving credit facility | 596,329 | 446,041 | |||||
Other long-term debt | 197 | 193 | |||||
Total debt | 1,238,401 | 836,234 | |||||
Less: current portion of long-term debt | (24,572 | ) | (15,193 | ) | |||
Long-term debt | 1,213,829 | 821,041 | |||||
Debt discount and debt issuance costs | (8,139 | ) | (6,805 | ) | |||
Long-term debt, net | $ | 1,205,690 | $ | 814,236 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | ||||||||||||
(in thousands) | |||||||||||||||
Numerator: | |||||||||||||||
Income from continuing operations, net of income taxes | $ | 37,691 | $ | 37,901 | $ | 110,811 | $ | 118,774 | |||||||
Income (loss) from discontinued operations, net of income taxes | 342 | (34 | ) | 328 | (48 | ) | |||||||||
Less: Net income attributable to noncontrolling interests | 298 | 488 | 1,054 | 1,297 | |||||||||||
Net income attributable to common shareholders | $ | 37,735 | $ | 37,379 | $ | 110,085 | $ | 117,429 | |||||||
Denominator: | |||||||||||||||
Weighted-average shares outstanding - Basic | 47,160 | 46,290 | 46,954 | 46,572 | |||||||||||
Effect of dilutive securities: | |||||||||||||||
Stock options, restricted stock units, performance share units and restricted stock | 874 | 955 | 884 | 1,012 | |||||||||||
Weighted-average shares outstanding - Diluted | 48,034 | 47,245 | 47,838 | 47,584 |
Foreign Currency Translation Adjustment and Other | Pension and Other Post-Retirement Benefit Plans | Total | |||||||||
(in thousands) | |||||||||||
December 26, 2015 | $ | (82,977 | ) | $ | (52,571 | ) | $ | (135,548 | ) | ||
Other comprehensive loss before reclassifications | (31,735 | ) | — | (31,735 | ) | ||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | 1,961 | 1,961 | ||||||||
Net current period other comprehensive income | (31,735 | ) | 1,961 | (29,774 | ) | ||||||
Income tax expense | — | 424 | 424 | ||||||||
September 24, 2016 | $ | (114,712 | ) | $ | (51,034 | ) | $ | (165,746 | ) |
Pension Plans | |||||||
September 24, 2016 | September 26, 2015 | ||||||
(in thousands) | |||||||
Service cost | $ | 655 | $ | 1,149 | |||
Interest cost | 2,773 | 3,335 | |||||
Expected return on plan assets | (3,038 | ) | (4,383 | ) | |||
Amortization of prior service benefit | (142 | ) | (150 | ) | |||
Amortization of net loss | 503 | 845 | |||||
Settlements | 788 | — | |||||
Net periodic cost | $ | 1,539 | $ | 796 |
Pension Plans | |||||||
September 24, 2016 | September 26, 2015 | ||||||
(in thousands) | |||||||
Service cost | $ | 1,848 | $ | 3,448 | |||
Interest cost | 9,357 | 10,006 | |||||
Expected return on plan assets | (11,028 | ) | (13,147 | ) | |||
Amortization of prior service benefit | (430 | ) | (451 | ) | |||
Amortization of net loss | 1,594 | 2,636 | |||||
Settlements | 788 | — | |||||
Net periodic cost | $ | 2,129 | $ | 2,492 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | ||||||||||||
(in thousands) | |||||||||||||||
Cost of revenue | $ | 1,608 | $ | 1,670 | $ | 4,957 | $ | 4,959 | |||||||
Selling, general and administrative | 8,992 | 8,806 | 27,690 | 25,390 | |||||||||||
Stock-based compensation, before income taxes | 10,600 | 10,476 | 32,647 | 30,349 | |||||||||||
Provision for income taxes | (3,785 | ) | (3,733 | ) | (11,653 | ) | (10,737 | ) | |||||||
Stock-based compensation, net of income taxes | $ | 6,815 | $ | 6,743 | $ | 20,994 | $ | 19,612 |
Notional Amount | Fair Value | Balance Sheet Location | ||||||
(in thousands) | ||||||||
$ | 88,483 | $ | 15 | Other Current Assets |
Three Months Ended | Nine Months Ended | |||||||||||||||
Location of Gain (Loss) | September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | ||||||||||||
(in thousands) | ||||||||||||||||
Other income (expense), net | $ | — | $ | (3,194 | ) | $ | 3,373 | $ | (3,194 | ) |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | ||||||||||||
(in thousands) | |||||||||||||||
RMS | |||||||||||||||
Revenue | $ | 120,928 | $ | 117,894 | $ | 369,325 | $ | 356,570 | |||||||
Operating income | 31,224 | 31,427 | 103,055 | 93,581 | |||||||||||
Depreciation and amortization | 5,245 | 5,279 | 15,613 | 16,590 | |||||||||||
Capital expenditures | 2,532 | 3,022 | 5,966 | 12,111 | |||||||||||
DSA | |||||||||||||||
Revenue | $ | 215,817 | $ | 158,272 | $ | 594,859 | $ | 451,659 | |||||||
Operating income | 31,303 | 33,191 | 94,514 | 84,856 | |||||||||||
Depreciation and amortization | 20,671 | 11,509 | 51,228 | 35,060 | |||||||||||
Capital expenditures | 4,509 | 4,277 | 13,860 | 13,756 | |||||||||||
Manufacturing | |||||||||||||||
Revenue | $ | 88,975 | $ | 73,299 | $ | 250,459 | $ | 201,223 | |||||||
Operating income | 26,711 | 18,491 | 73,447 | 55,872 | |||||||||||
Depreciation and amortization | 6,181 | 5,179 | 18,682 | 12,156 | |||||||||||
Capital expenditures | 1,862 | 2,139 | 8,247 | 5,475 |
Operating Income | Depreciation and Amortization | Capital Expenditures | |||||||||||||||||||||
September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Total reportable segments | $ | 89,238 | $ | 83,109 | $ | 32,097 | $ | 21,967 | $ | 8,903 | $ | 9,438 | |||||||||||
Unallocated corporate | (30,443 | ) | (27,669 | ) | 2,011 | 1,847 | 665 | 1,014 | |||||||||||||||
Total consolidated | $ | 58,795 | $ | 55,440 | $ | 34,108 | $ | 23,814 | $ | 9,568 | $ | 10,452 |
Operating Income | Depreciation and Amortization | Capital Expenditures | |||||||||||||||||||||
September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | ||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Total reportable segments | $ | 271,016 | $ | 234,309 | $ | 85,523 | $ | 63,806 | $ | 28,073 | $ | 31,342 | |||||||||||
Unallocated corporate | (102,688 | ) | (80,129 | ) | 5,593 | 5,524 | 1,536 | 3,666 | |||||||||||||||
Total consolidated | $ | 168,328 | $ | 154,180 | $ | 91,116 | $ | 69,330 | $ | 29,609 | $ | 35,008 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | ||||||||||||
(in thousands) | |||||||||||||||
RMS | $ | 120,928 | $ | 117,894 | $ | 369,325 | $ | 356,570 | |||||||
DSA | 215,817 | 158,272 | 594,859 | 451,659 | |||||||||||
Manufacturing | 88,975 | 73,299 | 250,459 | 201,223 | |||||||||||
Total revenue | $ | 425,720 | $ | 349,465 | $ | 1,214,643 | $ | 1,009,452 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | ||||||||||||
(in thousands) | |||||||||||||||
Stock-based compensation | $ | 6,739 | $ | 6,802 | $ | 20,593 | $ | 19,501 | |||||||
Compensation, benefits, and other employee-related expenses | 9,048 | 6,821 | 29,327 | 24,751 | |||||||||||
External consulting and other service expenses | 4,545 | 4,280 | 16,377 | 11,051 | |||||||||||
Information Technology | 2,903 | 2,618 | 8,399 | 6,167 | |||||||||||
Depreciation | 2,011 | 1,847 | 5,593 | 5,524 | |||||||||||
Acquisition and integration | 2,033 | 3,478 | 13,056 | 7,072 | |||||||||||
Other general unallocated corporate | 3,164 | 1,823 | 9,343 | 6,063 | |||||||||||
Total unallocated corporate expense | $ | 30,443 | $ | 27,669 | $ | 102,688 | $ | 80,129 |
• | On April 4, 2016, we acquired WRH, Inc. (WIL Research), a provider of safety assessment and contract development and manufacturing (CDMO) services to biopharmaceutical and agricultural and industrial chemical companies worldwide. The acquisition enhanced our position as a leading global early-stage CRO by strengthening our ability to partner with clients across the drug discovery and development continuum. The purchase price for WIL Research was approximately $604.8 million, including assumed liabilities of $0.4 million, and was funded by cash on hand and borrowings on our amended credit facility. |
• | On June 27, 2016, we acquired Blue Stream Laboratories, Inc. (Blue Stream), an analytical CRO supporting the development of complex biologics and biosimilars. Combining Blue Stream with our existing discovery, safety assessment, and biologics capabilities creates a leading provider with the ability to support biologic and biosimilar development from characterization through clinical testing and commercialization. The preliminary purchase price for Blue Stream was approximately $11.7 million in cash, including $3.0 million in contingent consideration, and is subject to certain customary adjustments. The acquisition was funded by borrowings on our revolving credit facility. |
• | On September 28, 2016, we acquired Agilux Laboratories, Inc. (Agilux), a CRO that provides a suite of integrated discovery small and large molecule bioanalytical services, drug metabolism and pharmacokinetic (DMPK) services, and pharmacology services. The acquisition supports our strategy to offer clients a broader, integrated portfolio that provides services continuously from the earliest stages of drug research through the nonclinical development process. The preliminary purchase price for Agilux was approximately $64.0 million in cash, which is subject to certain customary adjustments, and was funded by borrowings on our revolving credit facility. |
Research Models and Services | Discovery and Safety Assessment | Manufacturing Support |
Research Models | Discovery Services | Microbial Solutions |
Research Model Services | Safety Assessment | Avian |
Biologics | ||
Contract Manufacturing |
Three Months Ended | |||||||||||||||||
September 24, 2016 | September 26, 2015 | $ change | % change | Impact of FX | |||||||||||||
(in millions, except percentages) | |||||||||||||||||
RMS | $ | 120.9 | $ | 117.9 | $ | 3.0 | 2.6 | % | 0.5 | % | |||||||
DSA | 215.8 | 158.3 | 57.5 | 36.4 | % | (3.4 | )% | ||||||||||
Manufacturing | 89.0 | 73.3 | 15.7 | 21.4 | % | (0.4 | )% | ||||||||||
Total revenue | $ | 425.7 | $ | 349.5 | $ | 76.2 | 21.8 | % | (1.5 | )% |
Three Months Ended | ||||||||||||||
September 24, 2016 | September 26, 2015 | $ change | % change | |||||||||||
(in millions, except percentages) | ||||||||||||||
RMS | $ | 73.0 | $ | 70.2 | $ | 2.8 | 4.0 | % | ||||||
DSA | 152.5 | 104.6 | 47.9 | 45.9 | % | |||||||||
Manufacturing | 44.0 | 36.6 | 7.4 | 19.9 | % | |||||||||
Total cost of services provided and products sold (excluding amortization of intangible assets) | $ | 269.5 | $ | 211.4 | $ | 58.1 | 27.5 | % |
Three Months Ended | ||||||||||||||
September 24, 2016 | September 26, 2015 | $ change | % change | |||||||||||
(in millions, except percentages) | ||||||||||||||
RMS | $ | 16.1 | $ | 15.5 | $ | 0.6 | 3.8 | % | ||||||
DSA | 23.5 | 17.1 | 6.4 | 36.8 | % | |||||||||
Manufacturing | 15.7 | 16.0 | (0.3 | ) | (1.6 | )% | ||||||||
Unallocated corporate | 30.4 | 27.6 | 2.8 | 10.0 | % | |||||||||
Total selling, general and administrative | $ | 85.7 | $ | 76.2 | $ | 9.5 | 12.4 | % |
Nine Months Ended | |||||||||||||||||
September 24, 2016 | September 26, 2015 | $ change | % change | Impact of FX | |||||||||||||
(in millions, except percentages) | |||||||||||||||||
RMS | $ | 369.3 | $ | 356.6 | $ | 12.7 | 3.6 | % | — | % | |||||||
DSA | 594.8 | 451.7 | 143.1 | 31.7 | % | (2.3 | )% | ||||||||||
Manufacturing | 250.5 | 201.2 | 49.3 | 24.5 | % | (0.6 | )% | ||||||||||
Total revenue | $ | 1,214.6 | $ | 1,009.5 | $ | 205.1 | 20.3 | % | (1.2 | )% |
Nine Months Ended | ||||||||||||||
September 24, 2016 | September 26, 2015 | $ change | % change | |||||||||||
(in millions, except percentages) | ||||||||||||||
RMS | $ | 217.3 | $ | 213.7 | $ | 3.6 | 1.7 | % | ||||||
DSA | 409.8 | 305.0 | 104.8 | 34.4 | % | |||||||||
Manufacturing | 120.8 | 100.2 | 20.6 | 20.5 | % | |||||||||
Total cost of services provided and products sold (excluding amortization of intangible assets) | $ | 747.9 | $ | 618.9 | $ | 129.0 | 20.8 | % |
Nine Months Ended | ||||||||||||||
September 24, 2016 | September 26, 2015 | $ change | % change | |||||||||||
(in millions, except percentages) | ||||||||||||||
RMS | $ | 47.2 | $ | 47.0 | $ | 0.2 | 0.5 | % | ||||||
DSA | 71.5 | 51.2 | 20.3 | 39.7 | % | |||||||||
Manufacturing | 47.7 | 40.7 | 7.0 | 17.2 | % | |||||||||
Unallocated corporate | 102.7 | 80.1 | 22.6 | 28.2 | % | |||||||||
Total selling, general and administrative | $ | 269.1 | $ | 219.0 | $ | 50.1 | 22.9 | % |
September 24, 2016 | December 26, 2015 | ||||||
(in millions) | |||||||
Cash and cash equivalents: | |||||||
Held in the U.S. entities | $ | 7.9 | $ | 3.6 | |||
Held in non-U.S. entities | 97.8 | 114.3 | |||||
Total cash and cash equivalents | 105.7 | 117.9 | |||||
Investments: | |||||||
Held in the U.S. entities | — | 4.5 | |||||
Held in non-U.S. entities | 7.7 | 16.0 | |||||
Total cash, cash equivalents and investments | $ | 113.4 | $ | 138.4 |
September 24, 2016 | December 26, 2015 | ||||||
(in millions) | |||||||
Term loans | $ | 641.9 | $ | 390.0 | |||
Revolving credit facility | 596.3 | 446.0 | |||||
Total | $ | 1,238.2 | $ | 836.0 |
Nine Months Ended | |||||||
September 24, 2016 | September 26, 2015 | ||||||
(in millions) | |||||||
Income from continuing operations | $ | 110.8 | $ | 118.8 | |||
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities | 121.3 | 85.0 | |||||
Changes in operating assets and liabilities | (46.0 | ) | (17.9 | ) | |||
Net cash provided by operating activities | $ | 186.1 | $ | 185.9 |
Nine Months Ended | |||||||
September 24, 2016 | September 26, 2015 | ||||||
(in millions) | |||||||
Acquisition of businesses and assets, net of cash acquired | $ | (597.6 | ) | $ | (212.0 | ) | |
Capital expenditures | (29.6 | ) | (35.0 | ) | |||
Investments, net | 8.0 | (1.8 | ) | ||||
Other, net | 3.8 | (0.2 | ) | ||||
Net cash used in investing activities | $ | (615.4 | ) | $ | (249.0 | ) |
Nine Months Ended | |||||||
September 24, 2016 | September 26, 2015 | ||||||
(in millions) | |||||||
Proceeds from long-term debt and revolving credit facility | $ | 926.8 | $ | 453.8 | |||
Proceeds from exercises of stock options | 21.6 | 36.6 | |||||
Payments on long-term debt, capital lease obligation and revolving credit facility | (527.0 | ) | (391.0 | ) | |||
Purchase of treasury stock | (12.2 | ) | (117.4 | ) | |||
Other, net | 5.0 | 6.6 | |||||
Net cash provided by (used in) financing activities | $ | 414.2 | $ | (11.4 | ) |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 24, 2016 | September 26, 2015 | September 24, 2016 | September 26, 2015 | ||||||||||||
(in millions) | |||||||||||||||
RMS | $ | 0.6 | $ | 0.2 | $ | 0.6 | $ | 1.2 | |||||||
DSA | 3.4 | 0.2 | 7.5 | 0.7 | |||||||||||
Manufacturing | — | 1.0 | — | 1.3 | |||||||||||
Corporate | — | 1.1 | — | 2.0 | |||||||||||
Total | $ | 4.0 | $ | 2.5 | $ | 8.1 | $ | 5.2 |
Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in thousands) | ||||||||||
June 26, 2016 to July 23, 2016 | 92 | $ | 82.44 | — | $ | 69,694 | |||||||
July 24, 2016 to August 20, 2016 | 246 | $ | 83.27 | — | $ | 69,694 | |||||||
August 21, 2016 to September 24, 2016 | — | $ | — | — | $ | 69,694 | |||||||
Total | 338 | — |
31.1 | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer. |
32.1+ | Certification of the Principal Executive Officer and the Principal Financial Officer required by Rule 13a-14(a) of 15d-14(a) of the Exchange Act. |
CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | |||
November 2, 2016 | /s/ JAMES C. FOSTER | ||
James C. Foster Chairman, President and Chief Executive Officer | |||
November 2, 2016 | /s/ DAVID R. SMITH | ||
David R. Smith Corporate Executive Vice President and Chief Financial Officer |
1. | I have reviewed this quarterly report on Form 10-Q for the quarter ended September 24, 2016 of the registrant; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and |
d. | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ James C. Foster | |||
November 2, 2016 | James C. Foster Chairman, President and Chief Executive Officer Charles River Laboratories International, Inc. |
1. | I have reviewed this quarterly report on Form 10-Q for the quarter ended September 24, 2016 of the registrant; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and |
d. | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ David R. Smith | |||
November 2, 2016 | David R. Smith Corporate Executive Vice President and Chief Financial Officer Charles River Laboratories International, Inc. |
(1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”); and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ James C. Foster | |||
November 2, 2016 | James C. Foster Chairman, President and Chief Executive Officer Charles River Laboratories International, Inc. | ||
/s/ David R. Smith | |||
November 2, 2016 | David R. Smith Corporate Executive Vice President and Chief Financial Officer Charles River Laboratories International, Inc. |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 24, 2016 |
Oct. 17, 2016 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | CHARLES RIVER LABORATORIES INTERNATIONAL INC | |
Entity Central Index Key | 0001100682 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 24, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 47,328,587 |
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares |
Sep. 24, 2016 |
Dec. 26, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 120,000,000 | 120,000,000 |
Common stock, shares issued (in shares) | 86,262,000 | 85,464,000 |
Common stock, shares outstanding (in shares) | 47,324,000 | 46,698,000 |
Treasury stock (in shares) | 38,938,000 | 38,766,000 |
Basis of Presentation |
9 Months Ended | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 24, 2016 | ||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||
BASIS OF PRESENTATION | BASIS OF PRESENTATION The accompanying condensed consolidated financial statements are unaudited and have been prepared by Charles River Laboratories International, Inc. (the Company) in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and pursuant to the rules and regulations of the Securities and Exchange Commission. The year-end condensed consolidated balance sheet data was derived from the Company’s audited financial statements, but does not include all disclosures required by U.S. GAAP. These condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year 2015. The condensed consolidated financial statements, in the opinion of management, reflect all normal and recurring adjustments necessary for a fair statement of the Company’s financial position and results of operations. The Company’s fiscal year is typically based on a 52-week year, with each quarter composed of 13 weeks. A 53-week year will occur during the fiscal year 2016, with an additional week included in the fourth quarter. Segment Reporting The Company reports its results in three reportable segments: Research Models and Services (RMS), Discovery and Safety Assessment (DSA), and Manufacturing Support (Manufacturing). During the three months ended June 25, 2016, the Company acquired WRH, Inc. (WIL Research), a provider of safety assessment and contract development and manufacturing (CDMO) services. WIL Research’s safety assessment business is reported in the Company’s DSA reportable segment and its CDMO business created a new operating segment, Contract Manufacturing, that is reported as part of the Company’s Manufacturing reportable segment. In addition, changes in the Company’s market strategy for certain services and resulting information provided to the Chief Operating Decision Maker, totaling $1.9 million of revenue and $0.2 million of operating income for the nine months ended September 26, 2015, were reclassified from the Company’s RMS reportable segment to its Manufacturing reportable segment. The Company reported segment results on this basis for all periods presented. The revised reportable segments are as follows:
Use of Estimates The preparation of condensed consolidated financial statements in accordance with U.S. GAAP requires that the Company make estimates and judgments that may affect the reported amounts of assets, liabilities, redeemable noncontrolling interest, revenues, expenses and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, judgments and methodologies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. Changes in estimates are reflected in reported results in the period in which they become known. Consolidation The Company’s condensed consolidated financial statements reflect its financial statements and those of its subsidiaries in which the Company holds a controlling financial interest. For consolidated entities in which the Company owns or is exposed to less than 100% of the economics, the Company records net income (loss) attributable to noncontrolling interests in its consolidated statements of income equal to the percentage of the economic or ownership interest retained in such entities by the respective noncontrolling parties. Intercompany balances and transactions are eliminated in consolidation. Summary of Significant Accounting Policies The Company’s significant accounting policies are described in Note 1, “Description of Business and Summary of Significant Accounting Policies,” in the Company’s Annual Report on Form 10-K for the fiscal year 2015. Newly Issued Accounting Pronouncements In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-15, “Classification of Certain Cash Receipts and Cash Payments.” The standard addresses the classification of certain transactions within the statement of cash flows, including cash payments for debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, and distributions received from equity method investments. The ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company is still evaluating the impact this standard will have on its consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting.” The standard reduces complexity in several aspects of the accounting for employee share-based compensation, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The Company is still evaluating the impact this standard will have on its consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, “Leases.” The standard established the principles that lessees and lessors will apply to report useful information to users of financial statements about the amount, timing and uncertainty of cash flows arising from a lease. The ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is still evaluating the full impact this standard will have on its consolidated financial statements and related disclosures, but expects to recognize substantially all of its leases on the balance sheet by recording a right-to-use asset and a corresponding lease liability. In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory,” that simplifies the subsequent measurement of inventories by replacing the current lower of cost or market test with a lower of cost or net realizable value test. The ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The Company is still evaluating the impact this standard will have on its consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers.” The standard, including subsequently issued amendments, will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. The standard will require an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The standard will be effective for annual and interim periods beginning after December 15, 2017. The Company has not yet selected a transition method and is evaluating the impact the adoption will have on its consolidated financial statements and related disclosures. |
Business Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS ACQUISITIONS | BUSINESS ACQUISITIONS Agilux On September 28, 2016, the Company acquired Agilux Laboratories, Inc. (Agilux), a contract research organization (CRO) that provides a suite of integrated discovery small and large molecule bioanalytical services, drug metabolism and pharmacokinetic services, and pharmacology services. The acquisition supports the Company’s strategy to offer clients a broader, integrated portfolio that provides services continuously from the earliest stages of drug research through the nonclinical development process. The preliminary purchase price for Agilux was approximately $64.0 million in cash, which is subject to certain customary adjustments, and was funded by borrowings on the Company’s revolving credit facility. The Agilux business will be reported as part of the Company’s DSA reportable segment. Due to the limited time between the acquisition date and the filing of this Quarterly Report on Form 10-Q, it is not practicable for the Company to disclose the preliminary allocation of purchase price to assets acquired and liabilities assumed. The Company incurred transaction and integration costs of $1.1 million in connection with the acquisition for the three and nine months ended September 24, 2016, which were included in selling, general and administrative expenses. Blue Stream On June 27, 2016, the Company acquired Blue Stream Laboratories, Inc. (Blue Stream), an analytical CRO supporting the development of complex biologics and biosimilars. Combining Blue Stream with the Company’s existing discovery, safety assessment, and biologics capabilities creates a leading CRO that has the ability to support biologic and biosimilar development from characterization through clinical testing and commercialization. The preliminary purchase price for Blue Stream was approximately $11.7 million in cash, including $3.0 million in contingent consideration, and is subject to certain customary adjustments. The acquisition was funded by borrowings on the Company’s revolving credit facility. The business is reported in the Company’s Manufacturing reportable segment. The contingent consideration is a one-time payment that could become payable based on the achievement of a revenue target. If achieved, the payment will become due in the third quarter of the fiscal year 2017. The aggregate, undiscounted amount of contingent consideration that the Company may pay is $3.0 million. The Company estimated the fair value of this contingent consideration based on a probability-weighted set of outcomes. The purchase price allocation of $11.7 million, net of an insignificant amount of cash acquired, was as follows:
The purchase price allocations were prepared on a preliminary basis and are subject to change as additional information becomes available concerning the fair value and tax basis of the assets acquired and liabilities assumed. Any additional adjustments to the purchase price allocation will be made as soon as practicable but no later than one year from the date of acquisition. The breakout of definite-lived intangible assets acquired was as follows:
The goodwill resulting from the transaction is primarily attributable to the potential growth of the Company’s Manufacturing business from customers and technology introduced through Blue Stream, the assembled workforce of the acquired business, expected synergies, and the development of future proprietary processes. The goodwill attributable to Blue Stream is not deductible for tax purposes. The Company incurred insignificant transaction and integration costs in connection with the acquisition for the three and nine months ended September 24, 2016, which were included in selling, general and administrative expenses. Pro forma financial information as well as actual revenue and operating income (loss) have not been included because Blue Stream’s financial results are not significant when compared with the Company’s consolidated financial results. WIL Research On April 4, 2016, the Company acquired WIL Research, a provider of safety assessment and CDMO services to biopharmaceutical and agricultural and industrial chemical companies worldwide. The acquisition enhanced the Company’s position as a leading global early-stage CRO by strengthening its ability to partner with clients across the drug discovery and development continuum. The purchase price for WIL Research was approximately $604.8 million, including assumed liabilities of $0.4 million. The purchase price includes payment for estimated working capital, which was subject to final adjustment based on the actual working capital of the acquired business. The acquisition was funded by cash on hand and borrowings on the Company’s amended credit facility. See Note 7, “Long-Term Debt and Capital Lease Obligations.” WIL Research’s safety assessment and CDMO businesses are reported in the Company’s DSA and Manufacturing reportable segments, respectively. The purchase price allocation of $577.4 million, net of $27.4 million of cash acquired, was as follows:
The purchase price allocations were prepared on a preliminary basis and are subject to change as additional information becomes available concerning the fair value and tax basis of the assets acquired and liabilities assumed. From the date of the acquisition through September 24, 2016, the Company recorded measurement-period adjustments related to the acquisition that resulted in an immaterial change to the purchase price allocation on a consolidated basis. Any additional adjustments to the purchase price allocation will be made as soon as practicable but no later than one year from the date of acquisition. The breakout of definite-lived intangible assets acquired was as follows:
The goodwill resulting from the transaction, $19.0 million of which is deductible for tax purposes due to a prior asset acquisition, is primarily attributed to the potential growth of the Company’s DSA and Manufacturing businesses from clients introduced through WIL Research, the assembled workforce of the acquired business, and expected cost synergies. The Company incurred transaction and integration costs in connection with the acquisition of $1.3 million and $13.7 million for the three and nine months ended September 24, 2016, respectively, which were included in selling, general and administrative expenses. WIL Research revenue and operating income for the three months ended September 24, 2016 were $57.4 million and $3.6 million, respectively. WIL Research revenue and operating income for the nine months ended September 24, 2016 were $112.6 million and $4.6 million, respectively, since WIL Research was acquired on April 4, 2016. The following selected pro forma consolidated results of operations are presented as if the WIL Research acquisition had occurred as of the beginning of the period immediately preceding the period of acquisition after giving effect to certain adjustments. For the nine months ended September 24, 2016, these adjustments included additional amortization of intangible assets and depreciation of fixed assets of $1.4 million, reversal of interest expense on borrowings of $2.7 million, elimination of intercompany activity and other one-time costs, and the tax impacts of these adjustments. For the nine months ended September 26, 2015, these adjustments included additional amortization of intangible assets and depreciation of fixed assets of $5.8 million, reversal of interest expense on borrowings of $8.2 million, inclusion of acquisition-related transaction costs of $9.8 million, elimination of intercompany activity and other one-time costs, and the tax impacts of these adjustments.
These pro forma results of operations have been prepared for comparative purposes only, and they do not purport to be indicative of the results of operations that actually would have resulted had the acquisition occurred on the date indicated or that may result in the future. No effect has been given for synergies, if any, that may have been realized through the acquisition. Oncotest On November 18, 2015, the Company acquired Oncotest GmbH (Oncotest), a German CRO providing discovery services for oncology, one of the largest therapeutic areas for biopharmaceutical research and development spending. With this acquisition, the Company expanded its oncology services capabilities, enabling it to provide clients with access to a more comprehensive portfolio of technologies, including patient-derived xenograft (PDX) and syngeneic models. The purchase price for Oncotest was approximately $36.0 million, including $0.3 million in contingent consideration. The acquisition was funded by borrowings on the Company's revolving credit facility. The business is reported in the Company’s DSA reportable segment. The contingent consideration is a one-time payment that could become payable based on the achievement of a revenue target for the fiscal year 2016. If achieved, the payment will become due in the first quarter of the fiscal year 2017. The aggregate, undiscounted amount of contingent consideration that the Company may pay is €2.0 million ($2.2 million as of September 24, 2016). The Company estimated the fair value of this contingent consideration based on a probability-weighted set of outcomes. The purchase price allocation of $35.4 million, net of $0.6 million of cash acquired, was as follows:
The purchase price allocations were prepared on a preliminary basis and are subject to change as additional information becomes available concerning the fair value and tax basis of the assets acquired and liabilities assumed. Any additional adjustments to the purchase price allocation will be made as soon as practicable but no later than one year from the date of acquisition. The breakout of definite-lived intangible assets acquired was as follows:
The goodwill resulting from the transaction is primarily attributed to the potential growth in the Company's DSA businesses from customers and technology introduced through Oncotest, the assembled workforce of the acquired business, and expected cost synergies. The goodwill attributable to Oncotest is not deductible for tax purposes. The Company incurred insignificant transaction and integration costs in connection with the acquisition for the three and nine months ended September 24, 2016, which were included in selling, general and administrative expenses. During the three and nine months ended September 26, 2015, the Company incurred $0.9 million of transaction and integration costs in connection with the acquisition. Pro forma financial information as well as actual revenue and operating income (loss) have not been included because Oncotest’s financial results are not significant when compared with the Company’s consolidated financial results. Celsis On July 24, 2015, the Company acquired Celsis Group Limited (Celsis), a leading provider of rapid testing systems for non-sterile bacterial contamination for the biopharmaceutical and consumer products industries. The purpose of this acquisition was to enhance the Company’s portfolio of rapid microbial detection products and services with the addition of rapid bioburden testing products. The purchase price for Celsis was $214.5 million, including assumed debt and certain liabilities of $10.3 million. The acquisition was funded by cash on hand and borrowings on the Company’s revolving credit facility. The business is reported in the Company’s Manufacturing reportable segment. The purchase price allocation of $212.2 million, net of $2.3 million of cash acquired, was as follows:
The breakout of definite-lived intangible assets acquired was as follows:
The goodwill resulting from the transaction is primarily attributed to the potential growth of the Company’s Manufacturing business from clients introduced through Celsis, the assembled workforce of the acquired business, and expected cost synergies. The goodwill attributable to Celsis is not deductible for tax purposes. The Company incurred insignificant transaction and integration costs in connection with the acquisition for the three and nine months ended September 24, 2016 and transaction and integration costs of $3.9 million and $7.4 million for the three and nine months ended September 26, 2015, respectively, which were included in selling, general and administrative expenses. Celsis revenue and operating loss for both the three and nine months ended September 26, 2015 were $4.9 million and $3.1 million, respectively, since Celsis was acquired on July 24, 2015. Beginning on July 24, 2015, Celsis has been fully included in the operating results of the Company. The following selected pro forma consolidated results of operations are presented as if the Celsis acquisition had occurred as of the beginning of the period immediately preceding the period of acquisition after giving effect to certain adjustments, including additional depreciation and amortization of property, plant and equipment, inventory fair value adjustments and intangible assets of $2.4 million for the nine months ended September 26, 2015, and other nonrecurring costs.
These pro forma results of operations have been prepared for comparative purposes only, and they do not purport to be indicative of the results of operations that actually would have resulted had the acquisition occurred on the date indicated or that may result in the future. No effect has been given for synergies, if any, that may have been realized through the acquisition. Sunrise On May 5, 2015, the Company acquired Sunrise Farms, Inc. (Sunrise), a producer of specific-pathogen-free fertile chicken eggs and chickens used in the manufacture of live viruses. The purpose of this business acquisition was to expand the capabilities of the Company’s existing Avian Vaccine Services business. The purchase price of the acquisition was $9.6 million and was funded by cash on hand and borrowings on the Company's revolving credit facility. The business is reported in the Company's Manufacturing reportable segment. The Company recorded a bargain purchase gain of $9.8 million, which represented the excess of the estimated fair value of the net assets acquired over the preliminary purchase price. The bargain purchase gain was recorded in other income (expense), net, in the Company’s consolidated statement of income and was not recognized for tax purposes. The Company believes there were several factors that contributed to this transaction resulting in a bargain purchase gain, including the highly specialized nature of Sunrise’s business falling outside of the seller’s core activities and a limited pool of potential buyers. Before recognizing the gain from the bargain purchase, the Company reassessed its initial identification and valuation of assets acquired and liabilities assumed to validate that all assets and liabilities that the Company was able to identify at the acquisition date were properly recognized. The purchase price allocation of $9.6 million, net of less than $0.1 million of cash acquired, was as follows:
The identifiable definite-lived intangible assets acquired represent the client relationships intangible, which is being amortized over the estimated useful life of approximately 15 years. The Company incurred insignificant transaction and integration costs in connection with the acquisition for the three and nine months ended September 24, 2016, and transaction and integration costs of $0.1 million and $0.7 million during the three and nine months ended September 26, 2015, respectively, which were included in selling, general and administrative expenses. Pro forma financial information as well as actual revenue and operating income (loss) have not been included because Sunrise’s financial results are not significant when compared with the Company’s consolidated financial results. |
Supplemental Balance Sheet Information |
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Supplemental Balance Sheet Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUPPLEMENTAL BALANCE SHEET INFORMATION | SUPPLEMENTAL BALANCE SHEET INFORMATION The composition of trade receivables, net is as follows:
The composition of inventories is as follows:
The composition of other current assets is as follows:
The composition of other assets is as follows:
The composition of other current liabilities is as follows:
The composition of other long-term liabilities is as follows:
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Venture Capital Investments and Marketable Securities |
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VENTURE CAPITAL INVESTMENTS AND MARKETABLE SECURITIES | VENTURE CAPITAL INVESTMENTS AND MARKETABLE SECURITIES Venture Capital Investments The Company invests in several venture capital funds that invest in start-up companies, primarily in the life sciences industry. The Company’s ownership interest in these funds ranges from 2.7% to 12.0%. The Company accounts for the investments in limited liability partnerships (LLP), which are variable interest entities, under the equity or cost method of accounting. The Company is not the primary beneficiary because it has no power to direct the activities that most significantly affect the LLPs’ economic performance. The Company accounts for the investments in limited liability companies, which are not variable interest entities, under the equity method of accounting. The Company’s total commitments to the entities as of September 24, 2016 were $80.6 million, of which the Company funded $35.3 million through September 24, 2016. During the three and nine months ended September 24, 2016, the Company received dividends of $2.3 million from the entities. During the three and nine months ended September 26, 2015, the Company received dividends totaling $5.3 million and $7.3 million, respectively. The Company recognized a gain of $0.4 million and $3.2 million related to these investments for the three months ended September 24, 2016 and September 26, 2015, respectively. Subsequent to September 24, 2016, the Company invested in a new venture capital fund, which increased the Company’s total commitments by $4.3 million. Marketable Securities The Company held no marketable securities as of September 24, 2016. The following is a summary of the Company's marketable securities as of December 26, 2015, all of which were classified as available-for-sale:
During the three and nine months ended September 24, 2016, the Company realized insignificant losses and received proceeds of $4.6 million from the sale of its available-for-sale securities. There were no sales of available-for-sale securities during the nine months ended September 26, 2015. |
Fair Value |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE | FAIR VALUE The Company has certain assets, liabilities, and redeemable noncontrolling interest recorded at fair value, which have been classified as Level 1, 2, or 3 within the fair value hierarchy:
The fair value hierarchy level is determined by asset, liability, and redeemable noncontrolling interest class based on the lowest level of significant input. The observability of inputs may change for certain assets or liabilities. This condition could cause an asset or liability to be reclassified between levels. The Company recognizes transfers between levels within the fair value hierarchy, if any, at the end of each quarter. During the nine months ended September 24, 2016 and September 26, 2015, there were no transfers between levels. Valuation methodologies used for assets, liabilities, and the redeemable noncontrolling interest measured or disclosed at fair value are as follows:
Assets, liabilities, and redeemable noncontrolling interest measured at fair value on a recurring basis are summarized below:
Contingent Consideration The following table provides a rollforward of the contingent consideration related to the business acquisitions.
The significant unobservable inputs used in the fair value measurement of the Company’s contingent consideration are the probabilities of successful achievement of certain financial targets and a discount rate. Significant increases or decreases in any of the probabilities of success would result in a significantly higher or lower fair value measurement, respectively. Significant increases or decreases in the discount rate would result in a significantly lower or higher fair value measurement, respectively. Debt Instruments The book value of the Company’s term and revolving loans, which are variable rate loans carried at amortized cost, approximates the fair value based on current market pricing of similar debt. As the fair value is based on significant other observable inputs, including current interest and foreign currency exchange rates, it is deemed to be Level 2. Redeemable Noncontrolling Interest The Company’s redeemable noncontrolling interest resulted from the acquisition of a 75% ownership interest in Vital River in January 2013. Concurrent with the acquisition, the Company entered into an agreement with the noncontrolling interest holders that provided the Company with the right to purchase, and the noncontrolling interest holders with the right to sell, the remaining 25% of the entity for cash at its fair value beginning in January 2016. On July 7, 2016, the Company purchased an additional 12% equity interest in Vital River for $10.8 million, resulting in total ownership of 87%. The Company recorded a $1.6 million gain in equity equal to the excess fair value of the 12% equity interest over the purchase price. Concurrent with the transaction, the original agreement was amended providing the Company with the right to purchase, and the noncontrolling interest holders with the right to sell, the remaining 13% equity interest at a contractually defined redemption value, subject to a redemption floor (embedded derivative). These rights are exercisable beginning in 2019 and are accelerated in certain events. The Company recorded a charge of $1.5 million in other income (expense), net, equal to the excess fair value of the hybrid instrument (equity interest with an embedded derivative) over the fair value of the 13% equity interest. As of September 24, 2016, the redeemable noncontrolling interest was measured at the greater of the amount that would be paid if settlement occurred at the balance sheet date based on the contractually defined redemption value and its carrying amount adjusted for net income (loss) attributable to the noncontrolling interest. As the noncontrolling interest holders have the ability to require the Company to purchase the remaining 13% interest, the noncontrolling interest is classified in the mezzanine section of the condensed consolidated balance sheet, which is presented above the equity section and below liabilities. The following table provides a rollforward of the Company’s redeemable noncontrolling interest related to the acquisition of Vital River:
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS Goodwill The following table provides a rollforward of the Company’s goodwill:
During the three months ended June 25, 2016, the Company revised the composition of its reportable segments to align with the view of the business following its acquisition of WIL Research. See Note 1, "Basis of Presentation." As a result of this reorganization, goodwill was allocated from the Company's RMS reportable segment to its Manufacturing reportable segment, as shown in the preceding table within "transfers." The allocation was based on the fair value of each business group within its original reporting unit relative to the fair value of that reporting unit. In addition, the Company completed an assessment of any potential goodwill impairment for all reporting units immediately prior to the reallocation and determined that no impairment existed. Intangible Assets, Net The following table displays intangible assets, net by major class:
During the three months ended March 26, 2016, the Company determined that the carrying values of certain DSA intangible assets were not recoverable and recorded an impairment charge of $1.9 million, which was included in costs of services provided (excluding amortization of intangible assets). |
Long-Term Debt and Capital Lease Obligations |
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Sep. 24, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS | LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS Long-Term Debt Long-term debt, net consists of the following:
As of September 24, 2016 and December 26, 2015, the weighted average interest rate on the Company’s debt was 1.95% and 1.33%, respectively. In April 2015, the Company amended and restated the $970M Credit Facility, creating a $1.3 billion facility ($1.3B Credit Facility) that provided for a $400.0 million term loan and a $900.0 million multi-currency revolving facility. The interest rates applicable to term loans and revolving loans under the Company’s $1.3B Credit Facility were, at the Company’s option, equal to either the alternate base rate (which is the higher of (1) the prime rate, (2) the federal funds rate plus 0.5% or (3) the one-month adjusted LIBOR rate plus 1%), or the adjusted LIBOR rate plus an interest rate margin based upon the Company’s leverage ratio. On March 30, 2016, the Company amended and restated its $1.3B credit facility creating a $1.65 billion credit facility ($1.65B Credit Facility) which (1) extends the maturity date for the credit facility and (2) makes certain other amendments in connection with the Company’s acquisition of WIL Research. The amendment was accounted for as a debt modification with a partial extinguishment of debt. In connection with the transaction, the Company has capitalized approximately $3.3 million and expensed approximately $1.4 million of debt issuance costs. The $1.65B Credit Facility provides for a $650.0 million term loan and a $1.0 billion multi-currency revolving facility. The term loan facility matures in 19 quarterly installments with the last installment due March 30, 2021. The revolving facility matures on March 30, 2021, and requires no scheduled payment before that date. Under specified circumstances, the Company has the ability to increase the term loan and/or revolving line of credit by up to $500 million in the aggregate. The interest rates applicable to term loan and revolving loans under the $1.65B Credit Facility are, at the Company’s option, equal to either the base rate (which is the higher of (1) the prime rate, (2) the federal funds rate plus 0.50%, or (3) the one-month adjusted LIBOR rate plus 1%) or the adjusted LIBOR rate plus an interest rate margin based upon the Company’s leverage ratio. The $1.65B Credit Facility includes certain customary representations and warranties, events of default, notices of material adverse changes to the Company’s business and negative and affirmative covenants. These covenants include (1) maintenance of a ratio of consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) less capital expenditures to consolidated cash interest expense, for any period of four consecutive fiscal quarters, of no less than 3.50 to 1.0 as well as (2) maintenance of a ratio of consolidated indebtedness to consolidated EBITDA for any period of four consecutive fiscal quarters, of no more than 4.25 to 1.0 with step downs to 3.50 to 1.0 by the last day of the three months ended December 30, 2017. As of September 24, 2016, the Company was compliant with all covenants. The obligations of the Company under the $1.65B Credit Facility are collateralized by substantially all of the assets of the Company. Letters of Credit As of September 24, 2016 and December 26, 2015, the Company had $5.1 million and $4.9 million in outstanding letters of credit, respectively. Capital Lease Obligations The Company’s capital lease obligations amounted to $28.9 million and $33.6 million as of September 24, 2016 and December 26, 2015, respectively. |
Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY | EQUITY Earnings Per Share The following table reconciles the numerator and denominator in the computations of basic and diluted earnings per share:
Options to purchase approximately 0.6 million and 0.5 million shares for the three months ended September 24, 2016 and September 26, 2015, respectively, as well as an insignificant number of restricted stock, restricted stock units (RSUs), and performance share units (PSUs), were not included in computing diluted earnings per share because their inclusion would have been anti-dilutive. Options to purchase approximately 0.9 million and 0.5 million shares for the nine months ended September 24, 2016 and September 26, 2015, respectively, as well as an insignificant number of restricted stock, RSUs, and PSUs, were not included in computing diluted earnings per share because their inclusion would have been anti-dilutive. Basic weighted average shares outstanding for both the nine months ended September 24, 2016 and September 26, 2015 excluded the impact of approximately 1.1 million shares of non-vested restricted stock and restricted stock units. Treasury Shares During the nine months ended September 24, 2016, the Company did not repurchase any shares under its authorized stock repurchase program. The Company repurchased approximately 1.5 million shares for $108.8 million in the nine months ended September 26, 2015. As of September 24, 2016, the Company had $69.7 million remaining on the authorized stock repurchase program. The Company’s stock-based compensation plans permit the netting of common stock upon vesting of restricted stock, RSUs, and PSUs in order to satisfy individual minimum statutory tax withholding requirements. During the nine months ended September 24, 2016 and September 26, 2015, the Company acquired approximately 0.2 million shares for $12.2 million and approximately 0.1 million shares for $8.7 million, respectively. Accumulated Other Comprehensive Income Changes to each component of accumulated other comprehensive income, net of income taxes, are as follows:
Foreign currency translation and other includes an insignificant amount of unrealized gains (losses) on available-for-sale marketable securities. Nonredeemable Noncontrolling Interests The Company has investments in several entities whose financial results are consolidated in the Company’s financial statements, as it has a controlling financial interest in these entities. The interests of the respective noncontrolling parties in these entities have been recorded as noncontrolling interests. The activity within the nonredeemable noncontrolling interests was insignificant during the three and nine months ended September 24, 2016 and September 26, 2015. |
Income Taxes |
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Sep. 24, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company’s effective tax rate for the three months ended September 24, 2016 and September 26, 2015 was 29.2% and 28.7%, respectively. The Company’s effective tax rate was 30.4% and 18.3% for the nine months ended September 24, 2016 and September 26, 2015, respectively. For the three months ended September 24, 2016, the increase was primarily attributable to the accrual of withholding taxes in order to access cash from the Company’s Canadian and Chinese operations for use outside of the U.S. and an unbenefited loss due to a site closure, offset by a $1.4 million tax benefit as a result of an enacted U.K. tax law change and favorability from the amount and mix of earnings. For the nine months ended September 24, 2016, the increase reflects the items above as well as a prior year reduction in unrecognized tax benefits and related interest of $10.4 million due to the expiration of the statute of limitations associated with pre-acquisition tax positions on forgiveness of debt and a prior year non-taxable bargain purchase gain of $9.9 million associated with the acquisition of Sunrise. During the three months ended September 24, 2016, the Company’s unrecognized tax benefits increased by $0.2 million to $25.5 million, primarily due to an additional quarter of Canadian Scientific Research and Experimental Development credit reserves offset by the expiration of the statute of limitations on federal reserves. The amount of unrecognized income tax benefits that would impact the effective tax rate stayed constant at $22.2 million. The amount of accrued interest and penalties on unrecognized tax benefits was $1.6 million and $0.2 million, respectively, at September 24, 2016. The Company estimates that it is reasonably possible that the unrecognized tax benefits will decrease by up to $3.5 million over the next twelve-month period, primarily as a result of the outcome of a pending tax ruling and competent authority proceedings. The Company conducts business in a number of tax jurisdictions. As a result, it is subject to tax audits in jurisdictions including the U.S., U.K., China, Japan, France, Germany, and Canada. With few exceptions, the Company is no longer subject to U.S. and international income tax examinations for years before 2013. The Company and certain of its subsidiaries have ongoing tax controversies with various tax authorities in the U.S., Canada, China, and France. The Company does not believe that resolution of these controversies will have a material impact on its financial position or results of operations. In accordance with the Company’s policy, the remaining undistributed earnings of its non-U.S. subsidiaries remain indefinitely reinvested as of September 24, 2016, as they are required to fund needs outside the U.S. and cannot be repatriated in a manner that is substantially tax free. Income tax expense related to change in unrecognized pension gains, losses, and prior service costs was $0.1 million and $0.2 million for the three months ended September 24, 2016 and September 26, 2015, respectively. Income tax expense related to changes in unrecognized pension gains, losses, and prior service costs was $0.4 million and $0.7 million for the nine months ended September 24, 2016 and September 26, 2015, respectively. |
Pension and Other Post-Retirement Benefit Plans |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS | PENSION AND OTHER POST-RETIREMENT BENEFIT PLANS The following table provides the components of net periodic cost for the Company’s pension plans for the three months ended September 24, 2016 and September 26, 2015:
The following table provides the components of net periodic cost for the Company’s pension plans for the nine months ended September 24, 2016 and September 26, 2015:
The net periodic cost for the Company’s post-retirement benefit plan for the three and nine months ended September 24, 2016 and September 26, 2015 was insignificant. |
Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The Company has stock-based compensation plans under which employees and non-employee directors may be granted stock-based awards such as stock options, restricted stock, RSUs, and PSUs. The following table provides stock-based compensation by the financial statement line item in which it is reflected:
During the nine months ended September 24, 2016, the Company issued approximately 0.6 million stock options with a per share weighted average grant date fair value of $15.12, approximately 0.2 million RSUs with a per share weighted average grant date fair value of $75.13, and approximately 0.2 million PSUs with a per share weighted average grant date fair value of $79.81. The maximum number of common shares to be issued upon vesting of PSUs granted during the nine months ended September 24, 2016 is approximately 0.4 million. |
Foreign Currency Contracts |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FOREIGN CURRENCY CONTRACTS | FOREIGN CURRENCY CONTRACTS The Company enters into foreign exchange forward contracts to limit its foreign currency exposure related to intercompany loans that are not of a long-term investment nature. These contracts are recorded at fair value in the Company’s condensed consolidated balance sheet and are not designated as hedging instruments. Any gains or losses on such contracts are immediately recognized in other income (expense), net, and are largely offset by the remeasurement of the underlying intercompany loan balances. The notional amount and fair value of the Company’s foreign currency forward contracts at December 26, 2015 was as follows:
No foreign currency contracts were open as of September 24, 2016. The following table summarizes gains recognized on foreign exchange forward contracts related to intercompany loans denominated in British Pounds and Euros on the Company’s consolidated statement of income:
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Commitments and Contingencies |
9 Months Ended |
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Sep. 24, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Litigation Various lawsuits, claims and proceedings of a nature considered normal to its business are pending against the Company. While the outcome of any of these proceedings cannot be accurately predicted, the Company does not believe the ultimate resolution of any of these existing matters would have a material adverse effect on the Company’s business or financial condition. In July 2015, IDEXX Laboratories, Inc. and IDEXX Distribution, Inc. (collectively, IDEXX) filed a complaint in the United States District Court for the District of Delaware alleging the Company has infringed three recently issued patents related to a blood spot sample collection method used in determining the presence or absence of an infectious disease in a population of rodents. On September 21, 2015, the Company timely filed a motion to dismiss the complaint on the grounds that all of the claims are directed to unpatentable subject matter and therefore are invalid. On October 7, 2015, IDEXX filed an amended complaint, which substantially asserted the same patents and infringement allegations as asserted in the original complaint, and on October 26, 2015, the Company timely filed a motion to dismiss this amended complaint. The hearing on the motion to dismiss was held on January 12, 2016. On July 1, 2016, the Court issued an opinion denying the motion to dismiss. The Company filed its answer to the complaint on July 21, 2016. In addition, on July 29, 2016, the Company initiated an inter partes review (IPR) procedure with the United States Patent and Trademark Office challenging the validity of the IDEXX patents. While no prediction may be made as to the outcome of litigation or the IPR, the Company intends to defend against this proceeding vigorously and therefore an estimate of the possible loss or range of loss cannot be made. In May 2013, the Company commenced an investigation into inaccurate billing with respect to certain government contracts. The Company promptly reported these matters to the relevant government contracting officers, the Department of Health and Human Services’ Office of the Inspector General, and the Department of Justice, and the Company is cooperating with these agencies to ensure the proper repayment and resolution of this matter. The Company previously identified approximately $1.5 million of excess amounts billed on these contracts since January 1, 2007, and recorded a liability for such amount. Based on its ongoing discussions with the government, the Company has recorded an additional charge of $0.3 million during the three months ended September 24, 2016. The Company’s best estimate, which totals $1.8 million, may be subject to change based on the terms of any final settlement with the Department of Justice and the Department of Health and Human Services’ Office of the Inspector General. Lease Commitments During the nine months ended September 24, 2016, the Company assumed or entered into new lease agreements or exercised options to extend the lease terms for certain existing leases. As a result, the Company’s lease obligations through September 24, 2016 increased by $22.5 million. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | SEGMENT INFORMATION The Company revised the composition of its reportable segments during the three months ended June 25, 2016. See Note 1, “Basis of Presentation.” The Company reported segment results on this basis retrospectively for all comparable prior periods presented. The following table presents revenue and other financial information by reportable segment:
For the three months ended September 24, 2016 and September 26, 2015, reconciliations of segment operating income, depreciation and amortization, and capital expenditures to the respective consolidated amounts are as follows:
For the nine months ended September 24, 2016 and September 26, 2015, reconciliations of segment operating income, depreciation and amortization, and capital expenditures to the respective consolidated amounts are as follows:
Revenue for each significant product or service offering is as follows:
A summary of unallocated corporate expense consists of the following:
Other general unallocated corporate expense consists of various departmental costs including those associated with departments such as senior executives, corporate accounting, legal, tax, human resources, treasury, and investor relations. |
Basis of Presentation - Significant Accounting Policies (Policies) |
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Sep. 24, 2016 | ||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||
Fiscal Period | The Company’s fiscal year is typically based on a 52-week year, with each quarter composed of 13 weeks. A 53-week year will occur during the fiscal year 2016, with an additional week included in the fourth quarter. |
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Segment Reporting | The Company reports its results in three reportable segments: Research Models and Services (RMS), Discovery and Safety Assessment (DSA), and Manufacturing Support (Manufacturing). During the three months ended June 25, 2016, the Company acquired WRH, Inc. (WIL Research), a provider of safety assessment and contract development and manufacturing (CDMO) services. WIL Research’s safety assessment business is reported in the Company’s DSA reportable segment and its CDMO business created a new operating segment, Contract Manufacturing, that is reported as part of the Company’s Manufacturing reportable segment. In addition, changes in the Company’s market strategy for certain services and resulting information provided to the Chief Operating Decision Maker, totaling $1.9 million of revenue and $0.2 million of operating income for the nine months ended September 26, 2015, were reclassified from the Company’s RMS reportable segment to its Manufacturing reportable segment. The Company reported segment results on this basis for all periods presented. The revised reportable segments are as follows:
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Use of Estimates | The preparation of condensed consolidated financial statements in accordance with U.S. GAAP requires that the Company make estimates and judgments that may affect the reported amounts of assets, liabilities, redeemable noncontrolling interest, revenues, expenses and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, judgments and methodologies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. Changes in estimates are reflected in reported results in the period in which they become known. |
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Consolidation | The Company’s condensed consolidated financial statements reflect its financial statements and those of its subsidiaries in which the Company holds a controlling financial interest. For consolidated entities in which the Company owns or is exposed to less than 100% of the economics, the Company records net income (loss) attributable to noncontrolling interests in its consolidated statements of income equal to the percentage of the economic or ownership interest retained in such entities by the respective noncontrolling parties. Intercompany balances and transactions are eliminated in consolidation. |
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Newly Issued Accounting Pronouncements | In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-15, “Classification of Certain Cash Receipts and Cash Payments.” The standard addresses the classification of certain transactions within the statement of cash flows, including cash payments for debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, and distributions received from equity method investments. The ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company is still evaluating the impact this standard will have on its consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting.” The standard reduces complexity in several aspects of the accounting for employee share-based compensation, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The Company is still evaluating the impact this standard will have on its consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, “Leases.” The standard established the principles that lessees and lessors will apply to report useful information to users of financial statements about the amount, timing and uncertainty of cash flows arising from a lease. The ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is still evaluating the full impact this standard will have on its consolidated financial statements and related disclosures, but expects to recognize substantially all of its leases on the balance sheet by recording a right-to-use asset and a corresponding lease liability. In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory,” that simplifies the subsequent measurement of inventories by replacing the current lower of cost or market test with a lower of cost or net realizable value test. The ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The Company is still evaluating the impact this standard will have on its consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers.” The standard, including subsequently issued amendments, will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. The standard will require an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The standard will be effective for annual and interim periods beginning after December 15, 2017. The Company has not yet selected a transition method and is evaluating the impact the adoption will have on its consolidated financial statements and related disclosures. |
Basis of Presentation (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reportable Segments | The revised reportable segments are as follows:
The following table presents revenue and other financial information by reportable segment:
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Business Acquisitions (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Acquisitions, by Acquisition | The purchase price allocation of $212.2 million, net of $2.3 million of cash acquired, was as follows:
The purchase price allocation of $9.6 million, net of less than $0.1 million of cash acquired, was as follows:
The purchase price allocation of $577.4 million, net of $27.4 million of cash acquired, was as follows:
The purchase price allocation of $35.4 million, net of $0.6 million of cash acquired, was as follows:
The purchase price allocation of $11.7 million, net of an insignificant amount of cash acquired, was as follows:
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Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination | The breakout of definite-lived intangible assets acquired was as follows:
The breakout of definite-lived intangible assets acquired was as follows:
The breakout of definite-lived intangible assets acquired was as follows:
The breakout of definite-lived intangible assets acquired was as follows:
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Business Acquisition, Pro Forma Information | The following selected pro forma consolidated results of operations are presented as if the WIL Research acquisition had occurred as of the beginning of the period immediately preceding the period of acquisition after giving effect to certain adjustments. For the nine months ended September 24, 2016, these adjustments included additional amortization of intangible assets and depreciation of fixed assets of $1.4 million, reversal of interest expense on borrowings of $2.7 million, elimination of intercompany activity and other one-time costs, and the tax impacts of these adjustments. For the nine months ended September 26, 2015, these adjustments included additional amortization of intangible assets and depreciation of fixed assets of $5.8 million, reversal of interest expense on borrowings of $8.2 million, inclusion of acquisition-related transaction costs of $9.8 million, elimination of intercompany activity and other one-time costs, and the tax impacts of these adjustments.
The following selected pro forma consolidated results of operations are presented as if the Celsis acquisition had occurred as of the beginning of the period immediately preceding the period of acquisition after giving effect to certain adjustments, including additional depreciation and amortization of property, plant and equipment, inventory fair value adjustments and intangible assets of $2.4 million for the nine months ended September 26, 2015, and other nonrecurring costs.
|
Supplemental Balance Sheet Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 24, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Balance Sheet Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Composition of Net Trade Receivables | The composition of trade receivables, net is as follows:
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Composition of Inventories | The composition of inventories is as follows:
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Composition of Other Current Assets | The composition of other current assets is as follows:
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Composition of Other Assets | The composition of other assets is as follows:
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Composition of Other Current Liabilities | The composition of other current liabilities is as follows:
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Composition of Other Long-Term Liabilities | The composition of other long-term liabilities is as follows:
|
Venture Capital Investments and Marketable Securities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 24, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Securities and Equity-Method Affiliates [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Available-for-sale Securities Reconciliation | The following is a summary of the Company's marketable securities as of December 26, 2015, all of which were classified as available-for-sale:
|
Fair Value (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 24, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Assets and Liabilities Measured at Fair Value on a Recurring Basis | Assets, liabilities, and redeemable noncontrolling interest measured at fair value on a recurring basis are summarized below:
|
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Fair Value, Contingent Consideration | The following table provides a rollforward of the contingent consideration related to the business acquisitions.
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Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following table provides a rollforward of the Company’s redeemable noncontrolling interest related to the acquisition of Vital River:
|
Goodwill and Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 24, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in the Gross Carrying Amount and Accumulated Amortization of Goodwill | The following table provides a rollforward of the Company’s goodwill:
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Schedule of Finite-Lived Intangible Assets | The following table displays intangible assets, net by major class:
|
Long-Term Debt and Capital Lease Obligations (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 24, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | Long-term debt, net consists of the following:
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Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 24, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of the Numerator and Denominator in the Computations of the Basic and Diluted Earnings Per Share | The following table reconciles the numerator and denominator in the computations of basic and diluted earnings per share:
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Schedule of Accumulated Other Comprehensive Income | Changes to each component of accumulated other comprehensive income, net of income taxes, are as follows:
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Pension and Other Post-Retirement Benefit Plans Employee Benefits (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 24, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Costs (Benefits) | The following table provides the components of net periodic cost for the Company’s pension plans for the three months ended September 24, 2016 and September 26, 2015:
The following table provides the components of net periodic cost for the Company’s pension plans for the nine months ended September 24, 2016 and September 26, 2015:
|
Stock-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 24, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock-Based Compensation Expense | The following table provides stock-based compensation by the financial statement line item in which it is reflected:
|
Foreign Currency Contracts (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 24, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign Currency Contracts | The notional amount and fair value of the Company’s foreign currency forward contracts at December 26, 2015 was as follows:
|
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Derivative Instruments, Gain (Loss) | The following table summarizes gains recognized on foreign exchange forward contracts related to intercompany loans denominated in British Pounds and Euros on the Company’s consolidated statement of income:
|
Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 24, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue and Other Financial Information by Business Segment | The revised reportable segments are as follows:
The following table presents revenue and other financial information by reportable segment:
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Reconciliation of Segment Operating Income to Consolidated Operating Income | For the three months ended September 24, 2016 and September 26, 2015, reconciliations of segment operating income, depreciation and amortization, and capital expenditures to the respective consolidated amounts are as follows:
For the nine months ended September 24, 2016 and September 26, 2015, reconciliations of segment operating income, depreciation and amortization, and capital expenditures to the respective consolidated amounts are as follows:
|
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Schedule of Net Sales for Each Significant Product or Service Offering | Revenue for each significant product or service offering is as follows:
|
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Summary of Unallocated Corporate Overhead | A summary of unallocated corporate expense consists of the following:
|
Business Acquisitions- Agilux Additional Information (Details) - Agilux Laboratories - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Sep. 28, 2016 |
Sep. 24, 2016 |
Sep. 24, 2016 |
|
Business Acquisition [Line Items] | |||
Integration related costs and transaction costs | $ 1.1 | $ 1.1 | |
Subsequent Event | |||
Business Acquisition [Line Items] | |||
Purchase price | $ 64.0 |
Business Acquisitions- Blue Stream Additional Information (Details) - Blue Stream Laboratories $ in Thousands |
Jun. 27, 2016
USD ($)
|
---|---|
Business Acquisition [Line Items] | |
Purchase price | $ 11,700 |
Maximum contingent consideration | 3,000 |
Total purchase price allocation | $ 11,704 |
Business Acquisitions- Blue Stream Purchase Price Allocation (Details) - USD ($) $ in Thousands |
Sep. 24, 2016 |
Jun. 27, 2016 |
Dec. 26, 2015 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 763,576 | $ 438,829 | |
Blue Stream Laboratories | |||
Business Acquisition [Line Items] | |||
Trade receivables, contractual amount | $ 1,104 | ||
Trade receivables | 1,104 | ||
Other current assets (excluding cash) | 15 | ||
Property, plant and equipment | 912 | ||
Other long-term assets | 187 | ||
Definite-lived intangible assets | 1,230 | ||
Goodwill | 10,433 | ||
Other current liabilities | (1,133) | ||
Long-term liabilities | (1,044) | ||
Total purchase price allocation | $ 11,704 |
Business Acquisitions- Blue Stream Definite Lived Intangible Assets (Details) - Blue Stream Laboratories $ in Thousands |
Jun. 27, 2016
USD ($)
|
---|---|
Business Acquisition [Line Items] | |
Definite-Lived Intangible Assets | $ 1,230 |
Weighted Average Amortization Life | 7 years |
Client relationships | |
Business Acquisition [Line Items] | |
Definite-Lived Intangible Assets | $ 650 |
Weighted Average Amortization Life | 10 years |
Other intangible assets | |
Business Acquisition [Line Items] | |
Definite-Lived Intangible Assets | $ 580 |
Weighted Average Amortization Life | 5 years |
Business Acquisitions- WIL Research Additional Information (Details) - WIL Research - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Apr. 04, 2016 |
Sep. 24, 2016 |
Sep. 24, 2016 |
Sep. 26, 2015 |
|
Business Acquisition [Line Items] | ||||
Purchase price | $ 604,800 | |||
Assumed liabilities | 400 | |||
Total purchase price allocation | 577,391 | |||
Cash acquired | 27,400 | |||
Goodwill, expected tax deductible amount | $ 19,000 | |||
Integration related costs and transaction costs | $ 1,300 | $ 13,700 | ||
Revenue | 57,400 | 112,600 | ||
Operating income (loss) | $ 3,600 | 4,600 | ||
Amortization of intangible assets and depreciation of fixed assets | 1,400 | $ 5,800 | ||
Reversal of interest expense on borrowings | $ 2,700 | 8,200 | ||
Transaction costs | $ 9,800 |
Business Acquisitions- WIL Research Purchase Price Allocation (Details) - USD ($) $ in Thousands |
Sep. 24, 2016 |
Apr. 04, 2016 |
Dec. 26, 2015 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 763,576 | $ 438,829 | |
WIL Research | |||
Business Acquisition [Line Items] | |||
Trade receivables, contractual amount | $ 48,625 | ||
Trade receivables | 48,157 | ||
Inventories | 2,296 | ||
Other current assets (excluding cash) | 4,021 | ||
Property, plant and equipment | 129,066 | ||
Other long-term assets | 1,060 | ||
Definite-lived intangible assets | 165,400 | ||
Goodwill | 330,229 | ||
Deferred revenue | (39,103) | ||
Other current liabilities | (27,386) | ||
Long-term liabilities | (36,349) | ||
Total purchase price allocation | $ 577,391 |
Business Acquisitions- WIL Research Definite Lived Intangible Assets (Details) - WIL Research $ in Thousands |
Apr. 04, 2016
USD ($)
|
---|---|
Business Acquisition [Line Items] | |
Definite-Lived Intangible Assets | $ 165,400 |
Weighted Average Amortization Life | 13 years |
Client relationships | |
Business Acquisition [Line Items] | |
Definite-Lived Intangible Assets | $ 138,000 |
Weighted Average Amortization Life | 15 years |
Developed technology | |
Business Acquisition [Line Items] | |
Definite-Lived Intangible Assets | $ 20,700 |
Weighted Average Amortization Life | 3 years |
Backlog | |
Business Acquisition [Line Items] | |
Definite-Lived Intangible Assets | $ 6,700 |
Weighted Average Amortization Life | 1 year |
Business Acquisitions- WIL Research Pro Forma Financial Information (Details) - WIL Research - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
|
Business Acquisition [Line Items] | ||||
Revenue | $ 425,720 | $ 402,744 | $ 1,275,175 | $ 1,166,466 |
Net income attributable to common shareholders | $ 39,530 | $ 40,931 | $ 129,050 | $ 116,863 |
Earnings per common share | ||||
Basic (in dollars per share) | $ 0.84 | $ 0.88 | $ 2.75 | $ 2.51 |
Diluted (in dollars per share) | $ 0.82 | $ 0.87 | $ 2.70 | $ 2.46 |
Business Acquisitions- Oncotest Additional Information (Details) - Oncotest $ in Thousands, € in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Nov. 18, 2015
USD ($)
|
Sep. 26, 2015
USD ($)
|
Sep. 26, 2015
USD ($)
|
Sep. 24, 2016
EUR (€)
|
Sep. 24, 2016
USD ($)
|
|
Business Acquisition [Line Items] | |||||
Integration related costs and transaction costs | $ 900 | $ 900 | |||
Purchase price | $ 36,000 | ||||
Contingent consideration | 300 | ||||
Maximum contingent consideration | € 2.0 | $ 2,200 | |||
Total purchase price allocation | 35,431 | ||||
Cash acquired | $ 600 |
Business Acquisitions- Oncotest Purchase Price Allocation (Details) - USD ($) $ in Thousands |
Sep. 24, 2016 |
Dec. 26, 2015 |
Nov. 18, 2015 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 763,576 | $ 438,829 | |
Oncotest | |||
Business Acquisition [Line Items] | |||
Trade receivables, contractual amount | $ 3,546 | ||
Trade receivables | 3,520 | ||
Inventories | 129 | ||
Other current assets (excluding cash) | 706 | ||
Property, plant and equipment | 2,528 | ||
Definite-lived intangible assets | 13,330 | ||
Goodwill | 22,894 | ||
Other long-term assets | 250 | ||
Current liabilities | (3,456) | ||
Long-term liabilities | (4,470) | ||
Total purchase price allocation | $ 35,431 |
Business Acquisitions- Oncotest Definite Lived Intangible Assets (Details) - Oncotest $ in Thousands |
Nov. 18, 2015
USD ($)
|
---|---|
Business Acquisition [Line Items] | |
Definite-Lived Intangible Assets | $ 13,330 |
Weighted Average Amortization Life | 19 years |
Client relationships | |
Business Acquisition [Line Items] | |
Definite-Lived Intangible Assets | $ 7,146 |
Weighted Average Amortization Life | 19 years |
Developed technology | |
Business Acquisition [Line Items] | |
Definite-Lived Intangible Assets | $ 5,960 |
Weighted Average Amortization Life | 19 years |
Other intangible assets | |
Business Acquisition [Line Items] | |
Definite-Lived Intangible Assets | $ 224 |
Weighted Average Amortization Life | 3 years |
Business Acquisitions - Celsis, Additional Information (Details) - Celsis - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Jul. 24, 2015 |
Sep. 26, 2015 |
Sep. 26, 2015 |
|
Business Acquisition [Line Items] | |||
Purchase price | $ 214,500 | ||
Assumed liabilities | 10,300 | ||
Total purchase price allocation | 212,236 | ||
Cash acquired | $ 2,300 | ||
Integration related costs and transaction costs | $ 3,900 | $ 7,400 | |
Revenue | 4,900 | 4,900 | |
Operating income (loss) | $ (3,100) | (3,100) | |
Depreciation, amortization, and Write-down of Inventory | $ 2,400 |
Business Acquisitions - Celsis Purchase Price Allocation (Details) - USD ($) $ in Thousands |
Sep. 24, 2016 |
Dec. 26, 2015 |
Jul. 24, 2015 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 763,576 | $ 438,829 | |
Celsis | |||
Business Acquisition [Line Items] | |||
Trade receivables, contractual amount | $ 5,410 | ||
Trade receivables | 5,288 | ||
Inventories | 10,103 | ||
Other current assets (excluding cash) | 13,269 | ||
Property, plant and equipment | 4,639 | ||
Definite-lived intangible assets | 118,140 | ||
Goodwill | 105,550 | ||
Other long-term assets | 537 | ||
Current debt | (9,766) | ||
Other current liabilities | (7,136) | ||
Long term liabilities | (28,388) | ||
Total purchase price allocation | $ 212,236 |
Business Acquisitions - Celsis Definite-Lived Intangible Assets (Details) - Celsis $ in Thousands |
Jul. 24, 2015
USD ($)
|
---|---|
Business Acquisition [Line Items] | |
Definite-Lived Intangible Assets | $ 118,140 |
Weighted Average Amortization Life | 15 years |
Client relationships | |
Business Acquisition [Line Items] | |
Definite-Lived Intangible Assets | $ 71,000 |
Weighted Average Amortization Life | 16 years |
Developed technology | |
Business Acquisition [Line Items] | |
Definite-Lived Intangible Assets | $ 39,140 |
Weighted Average Amortization Life | 14 years |
Trademark and trade names | |
Business Acquisition [Line Items] | |
Definite-Lived Intangible Assets | $ 5,200 |
Weighted Average Amortization Life | 14 years |
Non-compete | |
Business Acquisition [Line Items] | |
Definite-Lived Intangible Assets | $ 2,800 |
Weighted Average Amortization Life | 5 years |
Business Acquisitions Business Acquisitions- Celsis Pro Forma Financial Information (Details) - Celsis - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 26, 2015 |
Sep. 26, 2015 |
|
Business Acquisition [Line Items] | ||
Revenue | $ 350,819 | $ 1,026,643 |
Net income attributable to common shareholders | $ 40,826 | $ 125,863 |
Earnings (loss) per common share | ||
Basic (in dollars per share) | $ 0.88 | $ 2.70 |
Diluted (in dollars per share) | $ 0.86 | $ 2.65 |
Business Acquisitions - Sunrise, Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
May 05, 2015 |
Sep. 24, 2016 |
Sep. 24, 2016 |
Sep. 26, 2015 |
Dec. 26, 2015 |
|
Business Acquisition [Line Items] | |||||
Gain on bargain purchase | $ (16) | $ 9,933 | |||
Sunrise | |||||
Business Acquisition [Line Items] | |||||
Purchase price | $ 9,558 | ||||
Gain on bargain purchase | 9,821 | $ 9,900 | |||
Cash acquired | $ 100 | ||||
Integration related costs and transaction costs | $ 100 | $ 700 | |||
Sunrise | Client relationships | |||||
Business Acquisition [Line Items] | |||||
Useful life of intangible assets acquired | 15 years |
Business Acquisitions - Sunrise Purchase Price Allocation (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
May 05, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
Dec. 26, 2015 |
|
Business Acquisition [Line Items] | ||||
Bargain purchase gain | $ 16 | $ (9,933) | ||
Sunrise | ||||
Business Acquisition [Line Items] | ||||
Trade receivables, contractual amount | $ 995 | |||
Trade receivables | 965 | |||
Inventories | 1,518 | |||
Other current assets (excluding cash) | 973 | |||
Property, plant and equipment | 13,698 | |||
Definite-lived intangible assets | 3,400 | |||
Current liabilities | (925) | |||
Long-term liabilities | (250) | |||
Fair value of net assets acquired | 19,379 | |||
Bargain purchase gain | (9,821) | $ (9,900) | ||
Total purchase price allocation | $ 9,558 |
Venture Capital Investments and Marketable Securities - Additional Information (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|---|
Nov. 03, 2016 |
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
Dec. 26, 2015 |
|
Schedule of Equity Method Investments [Line Items] | ||||||
Committed contribution | $ 80,600,000 | $ 80,600,000 | ||||
Committed contributions funded | 35,300,000 | 35,300,000 | ||||
Dividends received | 2,303,000 | $ 5,300,000 | 2,300,000 | $ 7,300,000 | ||
Gain (loss) from venture capital investments | 400,000 | $ 3,200,000 | ||||
Marketable securities | 0 | 0 | $ 4,509,000 | |||
Proceeds from sale of available-for-sale securities | $ 4,600,000 | $ 4,600,000 | $ 0 | |||
Minimum | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Ownership percentage | 2.70% | 2.70% | ||||
Maximum | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Ownership percentage | 12.00% | 12.00% | ||||
Subsequent Event | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Increase in committed contribution | $ 4,300,000 |
Venture Capital Investments and Marketable Securities - Summary of Marketable Securities (Details) - USD ($) |
Sep. 24, 2016 |
Dec. 26, 2015 |
---|---|---|
Schedule of Available-for-sale Securities [Line Items] | ||
Cost | $ 4,650,000 | |
Gross Unrealized Gains | 0 | |
Gross Unrealized Losses | (141,000) | |
Fair Value | $ 0 | 4,509,000 |
Mutual fund | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost | 4,650,000 | |
Gross Unrealized Gains | 0 | |
Gross Unrealized Losses | (141,000) | |
Fair Value | $ 4,509,000 |
Fair Value - Contingent Consideration (Details) - Contingent Consideration - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
|
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | $ 1,370 | $ 2,828 |
Additions | 3,600 | 675 |
Payments | (874) | (600) |
Total gains or losses (realized/unrealized): | ||
Reversal of previously recorded contingent liability and change in fair value | 30 | (1,623) |
September 24, 2016 | $ 4,126 | $ 1,280 |
Goodwill and Intangible Assets - Schedule of Other Intangible Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 26, 2016 |
Sep. 24, 2016 |
Dec. 26, 2015 |
|
Other intangible assets | |||
Gross | $ 621,828 | $ 533,661 | |
Accumulated Amortization | (225,376) | (252,857) | |
Net | 396,452 | 280,804 | |
Impairment charge | $ 1,900 | ||
Backlog | |||
Other intangible assets | |||
Gross | 8,645 | 50,568 | |
Accumulated Amortization | (4,979) | (50,554) | |
Net | 3,666 | 14 | |
Technology | |||
Other intangible assets | |||
Gross | 74,304 | 60,350 | |
Accumulated Amortization | (11,910) | (5,911) | |
Net | 62,394 | 54,439 | |
Trademarks and trade names | |||
Other intangible assets | |||
Gross | 8,439 | 11,495 | |
Accumulated Amortization | (4,029) | (5,944) | |
Net | 4,410 | 5,551 | |
Other | |||
Other intangible assets | |||
Gross | 12,390 | 14,711 | |
Accumulated Amortization | (5,159) | (7,285) | |
Net | 7,231 | 7,426 | |
Other intangible assets | |||
Other intangible assets | |||
Gross | 103,778 | 137,124 | |
Accumulated Amortization | (26,077) | (69,694) | |
Net | 77,701 | 67,430 | |
Client relationships | |||
Other intangible assets | |||
Gross | 518,050 | 396,537 | |
Accumulated Amortization | (199,299) | (183,163) | |
Net | $ 318,751 | $ 213,374 |
Long-Term Debt and Capital Lease Obligations - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands |
Sep. 24, 2016 |
Dec. 26, 2015 |
---|---|---|
Debt Instrument [Line Items] | ||
Total debt | $ 1,238,401 | $ 836,234 |
Less: current portion of long-term debt | (24,572) | (15,193) |
Long-term debt | 1,213,829 | 821,041 |
Debt discount and debt issuance costs | (8,139) | (6,805) |
Long-term debt, net | 1,205,690 | 814,236 |
Term loans | ||
Debt Instrument [Line Items] | ||
Total debt | 641,875 | 390,000 |
Revolving credit facility | ||
Debt Instrument [Line Items] | ||
Total debt | 596,329 | 446,041 |
Other long-term debt | ||
Debt Instrument [Line Items] | ||
Total debt | $ 197 | $ 193 |
Equity - Earnings Per Share (Details) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
|
Numerator: | ||||
Income from continuing operations, net of income taxes | $ 37,691 | $ 37,901 | $ 110,811 | $ 118,774 |
Less: Income (loss) from discontinued operations, net of income taxes | 342 | (34) | 328 | (48) |
Less: Net income attributable to noncontrolling interests | 298 | 488 | 1,054 | 1,297 |
Net income attributable to common shareholders | $ 37,735 | $ 37,379 | $ 110,085 | $ 117,429 |
Denominator: | ||||
Weighted-average shares outstanding—Basic (in shares) | 47,160 | 46,290 | 46,954 | 46,572 |
Effect of dilutive securities: | ||||
Stock options, restricted stock units, performance share units and restricted stock (in shares) | 874 | 955 | 884 | 1,012 |
Weighted-average shares outstanding—Diluted (in shares) | 48,034 | 47,245 | 47,838 | 47,584 |
Equity - Earnings Per Share, Additional Information (Details) - shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
|
Employee Stock Option | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share amount (in shares) | 0.6 | 0.5 | 0.9 | 0.5 |
Restricted Stock, Restricted Stock Units, and Performance Share Units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share amount (in shares) | 1.1 | 1.1 |
Equity - Treasury Shares (Details) - USD ($) $ in Thousands, shares in Millions |
9 Months Ended | |
---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
|
Treasury Shares | ||
Purchase of treasury stock | $ 12,226 | $ 117,431 |
Shares acquired to satisfy minimum individual statutory tax withholdings for vesting of equity instruments (in shares) | 0.2 | 0.1 |
Shares acquired to satisfy minimum individual statutory tax withholdings for vesting of equity instruments | $ 12,200 | $ 8,700 |
Authorized Share Repurchase Program | ||
Treasury Shares | ||
Stock repurchased during period (in shares) | 1.5 | |
Purchase of treasury stock | $ 108,800 | |
Remaining authorized repurchase amount | $ 69,700 |
Pension and Other Post-Retirement Benefit Plans (Details) - Pension Plans - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
|
Employee benefits | ||||
Service cost | $ 655 | $ 1,149 | $ 1,848 | $ 3,448 |
Interest cost | 2,773 | 3,335 | 9,357 | 10,006 |
Expected return on plan assets | (3,038) | (4,383) | (11,028) | (13,147) |
Amortization of prior service benefit | (142) | (150) | (430) | (451) |
Amortization of net loss | 503 | 845 | 1,594 | 2,636 |
Settlements | 788 | 0 | 788 | 0 |
Net periodic cost | $ 1,539 | $ 796 | $ 2,129 | $ 2,492 |
Stock-Based Compensation - Stock Based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
|
Stock-based compensation expense | ||||
Stock-based compensation, before income taxes | $ 10,600 | $ 10,476 | $ 32,647 | $ 30,349 |
Provision for income taxes | (3,785) | (3,733) | (11,653) | (10,737) |
Stock-based compensation, net of income taxes | 6,815 | 6,743 | 20,994 | 19,612 |
Cost of revenue | ||||
Stock-based compensation expense | ||||
Stock-based compensation, before income taxes | 1,608 | 1,670 | 4,957 | 4,959 |
Selling, general and administrative | ||||
Stock-based compensation expense | ||||
Stock-based compensation, before income taxes | $ 8,992 | $ 8,806 | $ 27,690 | $ 25,390 |
Stock-Based Compensation - Summary of Stock-Based Compensation Grants (Details) shares in Millions |
9 Months Ended |
---|---|
Sep. 24, 2016
$ / shares
shares
| |
Stock Options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Stock options granted (in shares) | 0.6 |
Stock options weighted average grant date fair value (in dollars per share) | $ / shares | $ 15.12 |
Restricted Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares granted (in shares) | 0.2 |
Weighted-average grant date fair value (in dollars per share) | $ / shares | $ 75.13 |
Performance Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares granted (in shares) | 0.2 |
Weighted-average grant date fair value (in dollars per share) | $ / shares | $ 79.81 |
Maximum shares to be awarded under plan (in shares) | 0.4 |
Foreign Currency Contracts - Notional Amount and Fair Value (Details) - Foreign Currency Forward Contract $ in Thousands |
Dec. 26, 2015
USD ($)
|
---|---|
Derivative [Line Items] | |
Other current assets, notional amount | $ 88,483 |
Other Current Assets | |
Derivative [Line Items] | |
Other current assets, fair value | $ 15 |
Foreign Currency Contracts - Effect on Statement of Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
|
Other income (expense), net | Foreign Currency Forward Contract | ||||
Derivatives, Fair Value [Line Items] | ||||
Gain (Loss) Recognized | $ 0 | $ (3,194) | $ 3,373 | $ (3,194) |
Commitments and Contingencies (Details) $ in Millions |
1 Months Ended | 3 Months Ended | 9 Months Ended | |
---|---|---|---|---|
Jul. 31, 2015
patent
|
Sep. 24, 2016
USD ($)
|
Sep. 24, 2016
USD ($)
|
Jun. 25, 2016
USD ($)
|
|
Loss Contingencies [Line Items] | ||||
Increase in lease obligations | $ 22.5 | |||
Government billing | ||||
Loss Contingencies [Line Items] | ||||
Reserve for estimated possible loss | $ 1.8 | $ 1.8 | $ 1.5 | |
Increase in reserve for estimated possible loss | $ 0.3 | |||
Pending Litigation | Idexx | ||||
Loss Contingencies [Line Items] | ||||
Number of patents infringed upon | patent | 3 |
Segment Information - Revenue and Other Financial Information by Reportable Segment (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
|
Segment Reporting Information [Line Items] | ||||
Revenue | $ 425,720 | $ 349,465 | $ 1,214,643 | $ 1,009,452 |
Operating income | 58,795 | 55,440 | 168,328 | 154,180 |
Depreciation and amortization | 34,108 | 23,814 | 91,116 | 69,330 |
Capital expenditures | 9,568 | 10,452 | 29,609 | 35,008 |
Operating segments | ||||
Segment Reporting Information [Line Items] | ||||
Operating income | 89,238 | 83,109 | 271,016 | 234,309 |
Depreciation and amortization | 32,097 | 21,967 | 85,523 | 63,806 |
Capital expenditures | 8,903 | 9,438 | 28,073 | 31,342 |
RMS | Operating segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 120,928 | 117,894 | 369,325 | 356,570 |
Operating income | 31,224 | 31,427 | 103,055 | 93,581 |
Depreciation and amortization | 5,245 | 5,279 | 15,613 | 16,590 |
Capital expenditures | 2,532 | 3,022 | 5,966 | 12,111 |
DSA | Operating segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 215,817 | 158,272 | 594,859 | 451,659 |
Operating income | 31,303 | 33,191 | 94,514 | 84,856 |
Depreciation and amortization | 20,671 | 11,509 | 51,228 | 35,060 |
Capital expenditures | 4,509 | 4,277 | 13,860 | 13,756 |
Manufacturing | Operating segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 88,975 | 73,299 | 250,459 | 201,223 |
Operating income | 26,711 | 18,491 | 73,447 | 55,872 |
Depreciation and amortization | 6,181 | 5,179 | 18,682 | 12,156 |
Capital expenditures | $ 1,862 | $ 2,139 | $ 8,247 | $ 5,475 |
Segment Information - Reconciliation of Segment Operating Income, Depreciation and Amortization, and Capital Expenditures (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
|
Segment Reporting Information [Line Items] | ||||
Operating income | $ 58,795 | $ 55,440 | $ 168,328 | $ 154,180 |
Depreciation and amortization | 34,108 | 23,814 | 91,116 | 69,330 |
Capital expenditures | 9,568 | 10,452 | 29,609 | 35,008 |
Total reportable segments | ||||
Segment Reporting Information [Line Items] | ||||
Operating income | 89,238 | 83,109 | 271,016 | 234,309 |
Depreciation and amortization | 32,097 | 21,967 | 85,523 | 63,806 |
Capital expenditures | 8,903 | 9,438 | 28,073 | 31,342 |
Unallocated corporate | ||||
Segment Reporting Information [Line Items] | ||||
Operating income | (30,443) | (27,669) | (102,688) | (80,129) |
Depreciation and amortization | 2,011 | 1,847 | 5,593 | 5,524 |
Capital expenditures | $ 665 | $ 1,014 | $ 1,536 | $ 3,666 |
Segment Information - Revenue Per Significant Product or Service (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
|
Segment Reporting Information [Line Items] | ||||
Revenue | $ 425,720 | $ 349,465 | $ 1,214,643 | $ 1,009,452 |
Operating segments | RMS | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 120,928 | 117,894 | 369,325 | 356,570 |
Operating segments | DSA | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 215,817 | 158,272 | 594,859 | 451,659 |
Operating segments | Manufacturing | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | $ 88,975 | $ 73,299 | $ 250,459 | $ 201,223 |
Segment Information - Summary of Unallocated Corporate Overhead (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 24, 2016 |
Sep. 26, 2015 |
Sep. 24, 2016 |
Sep. 26, 2015 |
|
Segment Reporting Information [Line Items] | ||||
Stock-based compensation | $ 10,600 | $ 10,476 | $ 32,647 | $ 30,349 |
Unallocated corporate | ||||
Segment Reporting Information [Line Items] | ||||
Stock-based compensation | 6,739 | 6,802 | 20,593 | 19,501 |
Compensation, benefits, and other employee-related expenses | 9,048 | 6,821 | 29,327 | 24,751 |
External consulting and other service expenses | 4,545 | 4,280 | 16,377 | 11,051 |
Information Technology | 2,903 | 2,618 | 8,399 | 6,167 |
Depreciation | 2,011 | 1,847 | 5,593 | 5,524 |
Acquisition and integration | 2,033 | 3,478 | 13,056 | 7,072 |
Other general unallocated corporate | 3,164 | 1,823 | 9,343 | 6,063 |
Total unallocated corporate expense | $ 30,443 | $ 27,669 | $ 102,688 | $ 80,129 |
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