-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DsV72+lz79PTe0FNHVEEcMRScF7bdOVr9LVMK3RQ9bIEdhkahyCBwjE9nHZ5Wmi1 9ES2GoZAXMV48WxNEZeW8A== 0001104659-06-056442.txt : 20060822 0001104659-06-056442.hdr.sgml : 20060822 20060822103814 ACCESSION NUMBER: 0001104659-06-056442 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20060816 ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060822 DATE AS OF CHANGE: 20060822 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHARLES RIVER LABORATORIES INTERNATIONAL INC CENTRAL INDEX KEY: 0001100682 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 061397316 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-15943 FILM NUMBER: 061047899 BUSINESS ADDRESS: STREET 1: 261 BALLARDVALE STREET CITY: WILMINGTON STATE: MA ZIP: 01867 BUSINESS PHONE: 9786586000 MAIL ADDRESS: STREET 1: 251 BALLARDVALE ST CITY: WILMINGTON STATE: MA ZIP: 01887 FORMER COMPANY: FORMER CONFORMED NAME: CHARLES RIVER LABORATORIES HOLDINGS INC DATE OF NAME CHANGE: 19991208 8-K 1 a06-18475_18k.htm CURRENT REPORT OF MATERIAL EVENTS OR CORPORATE CHANGES

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 8-K

CURRENT REPORT

Pursuant To Section 13 Or 15(d) of
The Securities Exchange Act of 1934

Date of report (Date of earliest event reported): August 16, 2006

CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

001-15943

06-1397316

(Commission File Number)

(IRS Employer Identification No.)

 

 

251 Ballardvale St., Wilmington, MA

01887

(Address of Principal Executive Offices)

(Zip Code)

 

Registrant’s telephone number, including area code: (978) 658-6000

Not applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o              Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o              Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o              Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o              Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 




 

Item 2.01 Completion of Acquisition or Disposition of Assets

On August 16, 2006, Charles River Laboratories International, Inc. (“Charles River” or the “Company”) completed the previously announced sale of its Phase II-IV Clinical Services business to Kendle International, Inc. (“Kendle”). The sale of the Business was completed in accordance with the terms and conditions of the Stock Purchase Agreement, as amended, between Charles River and Kendle dated as of May 9, 2006.

In connection with the sale of the Business, Charles River received approximately $215 million in cash, plus additional cash in satisfaction of a working capital adjustment in accordance with the terms and conditions of the Stock Purchase Agreement.  The purchase price is also subject to a post-closing working capital purchase price adjustment.

There are no material relationships between Kendle and Charles River or any of its affiliates, directors or officers, or any associate of such director or officer.

Item 9.01 Financial Statements and Exhibits

(a)           Financial Statements of Businesses Acquired

Not applicable

(b)           Pro Forma Financial Information

(i)                                     Charles River Pro Forma Condensed Consolidated Balance Sheet (unaudited) as of July 1, 2006.

(ii)                                  Charles River Pro Forma Condensed Consolidated Statements of Operations (unaudited) for the fiscal year ended December 31, 2005.

(iii)                               Charles River Pro Forma Condensed Consolidated Statements of Operations (unaudited) for the fiscal year ended December 25, 2004

(iv)                              Notes to Pro Forma Condensed Consolidated Financial Statements (unaudited)

(c)           Shell Company Transactions

Not applicable

(d)           Exhibits

Not applicable

2




 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Charles River Laboratories International, Inc.

 

 

 

Date:

August 22, 2006

 

By:

/s/ Joannne P. Acford

 

 

Name:

Joanne P. Acford

 

 

Title:

Corporate Senior Vice President, General Counsel and Corporate Secretary

 

3




 

CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)

(dollars in thousands, except per share amounts)

 

 

 

 

(a)

 

(b)

 

 

 

 

 

Historical

 

Clinical Services

 

 

 

 

 

 

 

Company

 

Phase II-IV

 

 

 

Pro Forma

 

 

 

July 1, 2006(1)

 

Business

 

ISS

 

July 1, 2006

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

193,067

 

$

215,000

(c)

$

 

$

408,067

 

Trade receivables, net

 

177,555

 

 

 

 

 

177,555

 

Inventories

 

69,036

 

 

 

 

 

69,036

 

Current assets of discontinued operations

 

44,179

 

(38,912

)

(5,267

)

 

Other current assets

 

42,546

 

 

 

42,546

 

Total current assets

 

526,383

 

176,088

 

(5,267

)

697,204

 

Property, plant and equipment, net

 

440,348

 

 

 

 

 

440,348

 

Goodwill, net

 

1,097,932

 

 

 

 

 

1,097,932

 

Other intangibles, net

 

164,302

 

 

 

 

 

164,302

 

Deferred tax asset

 

100,633

 

 

 

 

 

100,633

 

Long term assets of discontinued operations

 

217,385

 

(218,036

)

651

 

 

Other assets

 

70,103

 

 

 

70,103

 

Total assets

 

$

2,617,086

 

$

(41,948

)

$

(4,616

)

$

2,570,522

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Current portion of long-term debt and capital lease obligations

 

$

36,724

 

$

 

$

 

$

36,724

 

Accounts payable

 

26,813

 

 

 

 

 

26,813

 

Accrued compensation

 

35,449

 

 

 

 

 

35,449

 

Deferred income

 

82,352

 

 

 

 

 

82,352

 

Accrued liabilities

 

34,450

 

40,000

(d)

 

 

74,450

 

Current liabilities of discontinued operations

 

31,968

 

(30,581

)

(1,387

)

 

Other current liabilities

 

27,367

 

 

 

27,367

 

Total current liabilities

 

275,123

 

9,419

 

(1,387

)

283,155

 

Long-term debt and capital lease obligations

 

571,808

 

 

 

 

 

571,808

 

Long term liabilities of discontinued operations

 

8,168

 

(8,168

)

 

 

Other long-term liabilities

 

112,189

 

 

 

112,189

 

Total liabilities

 

967,288

 

1,251

 

(1,387

)

967,152

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

Minority interests

 

8,808

 

 

 

8,808

 

Shareholders’ equity

 

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value; 20,000,000 shares authorized; no shares issued and outstanding

 

 

 

 

 

 

 

Common stock, $0.01 par value; 120,000,000 shares authorized; 72,931,145 issued and 68,304,750 outstanding at July 1, 2006

 

730

 

 

 

 

 

730

 

Capital in excess of par value

 

1,796,229

 

 

 

 

 

1,796,229

 

Accumulated (deficit) earnings

 

4,540

 

(43,199

)(e)

(3,229

)(f)

(41,888

)

Treasury stock, at cost, 4,626,395 shares and 406,175 shares at July 1, 2006

 

(189,423

)

 

 

 

 

(189,423

)

Accumulated other comprehensive income

 

28,914

 

 

 

28,914

 

Total shareholders’ equity

 

1,640,990

 

(43,199

)

(3,229

)

1,594,562

 

Total liabilities and shareholders’ equity

 

$

2,617,086

 

$

(41,948

)

$

(4,616

)

$

2,570,522

 


(1)             As reported in Charles River Laboratories International, Inc.’s quarterly report on Form 10-Q for the six months ended July 1, 2006.

4




 

CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 (dollars in thousands, except per share amounts)

 

 

Historical

 

(a)

 

(b)

 

 

 

 

 

Company

 

Clinical Services

 

 

 

Pro Forma

 

 

 

Fiscal Year Ended

 

Phase II-IV

 

 

 

Fiscal Year Ended

 

 

 

December 31, 2005(1)

 

Business

 

ISS

 

December 31, 2005

 

 

 

 

 

 

 

 

 

 

 

Net sales related to products

 

$

364,303

 

$

 

$

 

$

364,303

 

Net sales related to services

 

757,925

 

110,761

 

18,139

 

629,025

 

Total net sales

 

1,122,228

 

110,761

 

18,139

 

993,328

 

Costs and expenses

 

 

 

 

 

 

 

 

 

Cost of products sold

 

199,517

 

 

 

199,517

 

Cost of services provided

 

493,976

 

73,717

 

16,152

 

404,107

 

Selling, general and administrative

 

189,544

 

22,839

 

8,706

 

157,999

 

Amortization of intangibles

 

58,172

 

10,239

 

922

 

47,011

 

Operating income

 

181,019

 

3,966

 

(7,641

)

184,694

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

3,929

 

226

 

 

3,703

 

Interest expense

 

(24,361

)

 

(29

)

(24,332

)

Other, net

 

(174

)

3

 

 

(177

)

Income before income taxes and minority interests

 

160,413

 

4,195

 

(7,670

)

163,888

 

Provision for income taxes

 

16,576

 

1,601

 

(1,286

)

16,261

 

Income before minority interests

 

143,837

 

2,594

 

(6,384

)

147,627

 

Minority interests

 

(1,838

)

 

 

(1,838

)

Net income

 

$

141,999

 

$

2,594

 

$

(6,384

)

$

145,789

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share

 

 

 

 

 

 

 

 

 

Basic

 

$

2.04

 

 

 

 

 

$

2.09

 

Diluted

 

$

1.96

 

 

 

 

 

$

2.02

 

 

 

 

 

 

 

 

 

 

 

Shares Oustanding

 

 

 

 

 

 

 

 

 

Basic

 

69,730,056

 

 

 

 

 

69,730,056

 

Diluted

 

72,902,385

 

 

 

 

 

72,902,385

 


(1)             As reported in Charles River Laboratories International, Inc.’s annual report on Form 10-K for the fiscal year ended December 31, 2005.

5




 

CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 (dollars in thousands, except per share amounts)

 

 

Historical

 

(a)

 

(b)

 

 

 

 

 

Company

 

Clinical Services

 

 

 

Pro Forma

 

 

 

Fiscal Year Ended

 

Phase II-IV

 

 

 

Fiscal Year Ended

 

 

 

December 25, 2004(1)

 

Business

 

ISS

 

December 25, 2004

 

 

 

 

 

 

 

 

 

 

 

Net sales related to products

 

$

339,994

 

$

 

$

 

$

339,994

 

Net sales related to services

 

426,923

 

19,306

 

23,389

 

384,228

 

Total net sales

 

766,917

 

19,306

 

23,389

 

724,222

 

Costs and expenses

 

 

 

 

 

 

 

 

 

Cost of products sold

 

185,428

 

 

 

185,428

 

Cost of services provided

 

282,923

 

15,192

 

17,660

 

250,071

 

Selling, general and administrative

 

121,448

 

2,660

 

1,910

 

116,878

 

Amortization of intangibles

 

16,795

 

2,106

 

832

 

13,857

 

Operating income

 

160,323

 

(652

)

2,987

 

157,988

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

3,285

 

24

 

 

3,261

 

Interest expense

 

(11,806

)

(37

)

(51

)

(11,718

)

Other, net

 

723

 

(994

)

 

1,717

 

Income before income taxes and minority interests

 

152,525

 

(1,659

)

2,936

 

151,248

 

Provision for income taxes

 

61,156

 

(172

)

1,168

 

60,160

 

Income before minority interests

 

91,369

 

(1,487

)

1,768

 

91,088

 

Minority interests

 

(1,577

)

 

 

(1,577

)

Net income

 

$

89,792

 

$

(1,487

)

$

1,768

 

$

89,511

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share

 

 

 

 

 

 

 

 

 

Basic

 

$

1.81

 

 

 

 

 

$

1.80

 

Diluted

 

$

1.68

 

 

 

 

 

$

1.67

 

 

 

 

 

 

 

 

 

 

 

Shares Oustanding

 

 

 

 

 

 

 

 

 

Basic

 

49,601,021

 

 

 

 

 

49,601,021

 

Diluted

 

56,045,848

 

 

 

 

 

56,045,848

 


(1)             As reported in Charles River Laboratories International, Inc.’s annual report on Form 10-K for the fiscal year ended December 25, 2004.

6




 

NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.     Basis of Presentation

On May 9, 2006, the Company announced that it entered into a definitive agreement to sell Phase II-IV of the Clinical Services business for $215,000 in cash as part of a portfolio realignment which would allow the Company to capitalize on core competencies.  In addition, during the second quarter of 2006 the Company made a decision to close its Interventional and Surgical Services (ISS) business, which was formerly included in its Preclinical Services segment.  Effective in the second quarter of 2006, the Company reported the assets and liabilities of Phase II-IV of the Clinical Services business and the ISS business as held for sale and reported the results of operations for Phase II-IV of the Clinical Services business and the ISS business as discontinued operations in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”  The current assets being disposed of include accounts receivable, deferred income taxes and other current assets. Non-current assets include property, plant and equipment, goodwill and other intangible assets and deferred income taxes. Current liabilities consist of accounts payable, deferred income and accrued expenses. Non-current liabilities consist of lease obligations.

The unaudited pro forma condensed consolidated balance sheet reflects the disposition of Phase II-IV of the Clinical Services business and the ISS business as if it had occurred on July 1, 2006.  The unaudited pro forma condensed consolidated statements of operations for the fiscal years ended December 25, 2004 and December 31, 2005 give effect to the disposition of Phase II-IV of the Clinical Services business and the ISS business as if it had occurred at the beginning of each of the periods presented.  Phase II-IV of the Clinical Services business was acquired by the Company on October 20, 2004, as part of a merger agreement with Inveresk Research Group; accordingly, the pro forma financial statements included herein do not include activity for Phase II-IV of the Clinical Services business prior to October 20, 2004.

The pro forma information related to the sale of Phase II-IV of the Clinical Services business is based on the net book value of net assets sold as of July 1, 2006. Accordingly, the Company’s actual recording of the disposition, including the final sale proceeds, may differ from the pro forma financial information based on the net book value of net assets as of the closing date. The pro forma financial information does not purport to indicate the future financial position or future results of the Company’s operations.

2.     Pro Forma Adjustments

The pro forma financial statements have been adjusted as follows ($ in thousands):

a.     To segregate the operations of Phase II-IV of the Clinical Services business which exclude corporate expense allocations for corporate management and administrative costs and include income tax allocations for activities in each tax

7




 

jurisdiction.  All intercompany transactions and balances have been eliminated.

b.     To segregate the operations of the ISS business, which management has committed to abandoning, for comparability to the Company’s publicly filed financial statements included in its quarterly report on Form 10-Q dated July 1, 2006.

c.     To include cash proceeds from the sale of Phase II-IV of the Clinical Services business.

d.     To include estimated taxes due on sale of Phase II-IV of the Clinical Services business.

e.     To include the estimated loss on sale of net assets of Phase II-IV of the Clinical Services business of $3,199 plus $40,000 estimated taxes due on sale.

f.      Represents outstanding net assets of the ISS business that will be realized in the process of discontinuing the operations.

8



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