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Charles River Laboratories International Reports Operating Results (10-Q)

August 03, 2010 | About:

10qk

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Charles River Laboratories International (CRL) filed Quarterly Report for the period ended 2010-06-26.

Charles River Laboratories International has a market cap of $1.98 billion; its shares were traded at around $29.87 with a P/E ratio of 13.3 and P/S ratio of 1.6. Charles River Laboratories International had an annual average earning growth of 6.4% over the past 10 years.CRL is in the portfolios of Westport Asset Management, Robert Olstein of Olstein Financial Alert Fund, Ron Baron of Baron Funds, First Pacific Advisors of First Pacific Advisors, LLC, Richard Pzena of Pzena Investment Management LLC, Arnold Van Den Berg of Century Management, Columbia Wanger of Columbia Wanger Asset Management, PRIMECAP Management, Steven Cohen of SAC Capital Advisors, Bruce Kovner of Caxton Associates, George Soros of Soros Fund Management LLC.

Highlight of Business Operations:

Net income attributable to common shareholders was $31.8 million for the six months ended June 26, 2010 compared to $59.6 million for the six months ended June 27, 2009. Diluted earnings per share from continuing operations for the first six months of 2010 were $0.48 compared to $0.91 for the first six months of 2009.

Income Taxes. Income tax expense for the three months ended June 26, 2010 was $6.5 million, a decrease of $7.1 million compared to $13.6 million for the three months ended June 27, 2009. Our effective tax rate was 31.7% for the second quarter of 2010, compared to 28.8% for the second quarter of 2009. The increase in the effective tax rate for the three months ended June 26, 2010 was primarily due to the cost accrued in the second quarter of 2010 to repatriate approximately $27 million of non-U.S. earnings that were previously considered to be permanently reinvested. This cost was partially offset by benefits resulting from changes in the mix of earnings from operations, transaction costs deducted in the second quarter of 2010, and an increase in tax rate benefits from Canadian tax credits.

Income Taxes. Income tax expense for the six months ended June 26, 2010 was $13.0 million, a decrease of $10.8 million compared to $23.8 million for the six months ended June 27, 2009. Our effective tax rate was 29.5% for the six months ended June 26, 2010, compared to 28.9% for the six months ended June 27, 2009. The increase in the effective tax rate for the six months ended June 26, 2010 was primarily due to the cost accrued in the first six months of 2010 to repatriate approximately $27 million of non-U.S. earnings that were previously considered to be permanently reinvested. This cost was partially offset by benefits resulting from changes in mix of earnings from operations, transaction costs deducted in the first six months of 2010, and an increase in tax rate benefits from Canadian tax credits.

As of June 26, 2010, we had $28.3 million in marketable securities with $11.7 million in time deposits and $16.5 million in auction rate securities rated AAA by a major credit rating agency. Our auction rate securities are guaranteed by U.S. federal agencies. In June, we received notice of a full call on certain of our auction rate securities at par value of $5.5 million and received the proceeds in early July. The current overall credit concerns in the capital markets as well as the failed auction status of these securities have impacted our ability to liquidate our auction rate securities. If the auctions for the securities we own continue to fail, the investment may not be readily convertible to cash until a future auction of these investments is successful. Based on our ability to access our cash and other short-term investments, our expected operating cash flows and other sources of cash, we do not anticipate the current lack of liquidity on these investments will affect our ability to operate our business as usual.

Net cash provided by operating activities for the six months ending June 26, 2010 and June 27, 2009 was $83.8 million and $107.3 million, respectively. The decrease in cash provided by operations was primarily due to changes in accounts receivable and lower earnings. Our days sales outstanding (DSO) increased to 51 days as of June 26, 2010 compared to 43 days as of December 26, 2009, and 41 days as of June 27, 2009. The increase in our DSO was primarily driven by slower collections and decreased deferred revenue. Our allowance for doubtful accounts was $5.2 million as of June 26, 2010 compared to $5.0 million as of December 27, 2009 and $4.6 million as of June 27, 2009. Our DSO includes deferred revenue as an offset to accounts receivable in the calculation.

Net cash provided by (used in) investing activities for the six months ending June 26, 2010 and June 27, 2009 was $23.5 million and ($149.0) million, respectively. Our capital expenditures during the first six months of 2010 were $17.7 million, of which $11.2 million was related to RMS and $6.5 million to PCS. For 2010, we project capital expenditures to be in the range of $60-$70 million. We anticipate that future capital expenditures will be funded by operating activities, marketable securities and existing credit facilities. During the first half of 2010, we sold $56.5 million of marketable securities.

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