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

November 04, 2010 | About:
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10qk

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Charles River Laboratories International (CRL) filed Quarterly Report for the period ended 2010-09-25.

Charles River Laboratories International has a market cap of $2.16 billion; its shares were traded at around $32.92 with a P/E ratio of 15.6 and P/S ratio of 1.8. 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, Westport Asset Management, Robert Olstein of Olstein Financial Alert Fund, Arnold Van Den Berg of Century Management, David Dreman of Dreman Value Management, Paul Tudor Jones of The Tudor Group, Steven Cohen of SAC Capital Advisors, PRIMECAP Management, George Soros of Soros Fund Management LLC, Jean-Marie Eveillard of First Eagle Investment Management, LLC, First Pacific Advisors of First Pacific Advisors, LLC.

Highlight of Business Operations:

On July 29, 2010, our Board of Directors authorized a $500.0 million stock repurchase program. Our Board of Directors increased the stock repurchase program by $250.0 million to $750.0 million on October 20, 2010. In order to enable us to facilitate, on a more timely and cost efficient basis, the repurchase of a substantial number of our shares pursuant to that stock repurchase authorization, on August 26, 2010, we entered into an agreement with a third party investment banker to implement an accelerated stock repurchase (ASR) program to repurchase $300.0 million of common stock. Under the ASR, we paid a purchase price of $300.0 million on August 27, 2010 from cash on hand and available liquidity, including funds borrowed by us under our new amended and restated $750.0 million credit facility. We received an initial delivery on August 27, 2010 of 6.0 million shares of our common stock. The ASR program was recorded as two transactions allocated between the initial purchase of treasury shares and a forward contract indexed to our common stock. We received an additional 750,000 shares under the ASR on September 23, 2010. Through the end of the third quarter, we repurchased a total of 6,750,000 shares under the ASR. The actual number of shares that we will repurchase under the ASR will be determined based on a discount to the daily volume-weighted average prices of our common stock over the course of the calculation period. The calculation period is scheduled to extend for approximately six months, but it may conclude earlier at our banker's option. If the actual number of shares repurchased exceeds the number of shares initially delivered, we will receive from our banker a number of additional shares equal to such excess following conclusion of the calculation period. If the actual number of shares repurchased is less than the number of shares initially delivered, we will be required, at its election, to either (1) deliver a number of shares approximately equal to the difference or (2) make a cash payment equal to the value of such shares, in either case following conclusion of the calculation period. Our banker has purchased and will continue to trade shares of our common stock in the open market over the life of the ASR. The treasury shares will result in an immediate reduction of shares on our statement of financial position and in our EPS calculation. While the ASR is in effect, we will generally not be permitted to repurchase its common stock in the open market. In addition to shares repurchased under the ASR, during the third quarter we repurchased 1,759,857 shares on the open market at a total cost of $52.9 million.

During the third quarter of 2010, we executed an agreement to implement an accelerated share repurchase (ASR) program to repurchase $300.0 million of common stock. The ASR resulted in a cash need in the United States that was previously unforeseen. In accordance with our policy with respect to the unremitted earnings of our non-U.S. subsidiaries, we evaluated whether a portion of the foreign earnings could be repatriated in order to fund the ASR. We determined that approximately $205.4 million of earnings that were previously indefinitely reinvested and approximately $59.0 million in basis in our non-U.S. subsidiaries could be repatriated in a substantially tax-free manner. As such, during the third quarter, we changed our indefinite reinvestment assertion with respect to these earnings and accrued the cost to repatriate of $7.3 million, of which $12.1 million is reflected as Income Tax Expense, with an offset of a benefit of $4.8 million recorded in the Cumulative Translation Adjustment account. During the third quarter of 2010, we repatriated approximately $292.0 million to the U.S. to partially fund the ASR and the $30.0 million termination fee. In accordance with our policy, the remaining undistributed earnings of our non-U.S. subsidiaries remain indefinitely reinvested as of the end of the third quarter of 2010 as they are required to fund needs outside the U.S. and cannot be repatriated in a manner that is substantially tax free.

On August 26, 2010, we amended and restated our $428.0 million credit agreement to (1) pay off loans outstanding under the $428.0 million credit agreement, (2) extend the maturity date under this new $750.0 million credit facility to August 26, 2015 and (3) terminate and payoff the remaining term loan under our $50.0 million credit agreement. The $750.0 million credit agreement, which has a maturity date of August 26, 2015, provides for a $230.0 million U.S. term loan, a 133.8 million Euro term loan and a $350.0 million revolver. Under specified circumstances, we have the ability to increase the term loans and/or revolving line of credit by up to $250.0 million in the aggregate. Deferred financing costs associated with the new $750.0 million credit agreement were $14.1 million, of which

$9.6 million were capitalized and will amortize over 5 years, and $4.5 million which were expensed. Our obligations under the $750.0 million credit agreement are guaranteed by our material domestic subsidiaries and are secured by substantially all of our assets, including a pledge of 100% of the capital stock of our domestic subsidiaries (other than the capital stock of any domestic subsidiary that is treated as a disregarded entity for U.S. federal income tax purposes) and 65% of the capital stock of certain first-tier foreign subsidiaries and domestic disregarded entities, and mortgages on owned real property in the U.S. having a book value in excess of $10 million. The $400 million term loan facility matures in 20 quarterly installments with the last installment due June 30, 2015. The $350 million U.S. revolving facility matures on August 26, 2015 and requires no scheduled payment before that date. The interest rates applicable to term loans and revolving loans under the new $750.0 million credit agreement are higher than the interest rates under the prior facilities reflecting greater leverage and current market conditions. The new $750.0 million credit agreement contains certain customary representations and warranties, affirmative covenants and events of default.

On August 26, 2010, we amended and restated our $428.0 million credit agreement to (1) pay off loans outstanding under the $428.0 million credit agreement, (2) extend the maturity date under this new $750.0 million credit facility to August 26, 2015 and (3) terminate and payoff the remaining term loan under our $50.0 million credit agreement. The $750.0 million credit agreement, which has a maturity date of August 26, 2015, provides for a $230.0 million U.S. term loan, a 133.8 million Euro term loan and a $350.0 million revolver. Under specified circumstances, we have the ability to increase the term loans and/or revolving line of credit by up to $250.0 million in the aggregate. Deferred financing costs associated with the new $750.0 million credit agreement were $14.1 million, of which $9.6 million were capitalized and will amortize over 5 years, and $4.5 million which were expensed. Our obligations under the $750.0 million credit agreement are guaranteed by our material domestic subsidiaries and are secured by substantially all of our assets, including a pledge of 100% of the capital stock of our domestic subsidiaries (other than the capital stock of any domestic subsidiary that is

On July 29, 2010, our Board of Directors authorized a $500.0 million stock repurchase program. Our Board of Directors increased the stock repurchase program by $250.0 million to $750.0 million on October 20, 2010. In order to enable us to facilitate, on a more timely and cost efficient basis, the repurchase of a substantial number of our shares pursuant to that stock repurchase authorization, on August 26, 2010, we entered into an agreement with a third party investment banker to implement an accelerated stock repurchase (ASR) program to repurchase $300.0 million of common stock. Under the ASR, we paid a purchase price of $300.0 million on August 27, 2010 from cash on hand and available liquidity, including funds borrowed by us under our new amended and restated $750 million credit facility. We received an initial delivery on August 27, 2010 of 6.0 million shares of our common stock. The ASR program was recorded as two transactions allocated between the initial purchase of treasury shares and a forward contract indexed to our common stock. We received an additional 750,000 shares under the ASR on September 23, 2010. Through the end of the third quarter, we repurchased a total of 6,750,000 shares under the ASR. The actual number of shares that we will repurchase under the ASR will be determined based on a discount to the daily volume-weighted average prices of our common stock over the course of the calculation period. The calculation period is scheduled to extend for approximately six months, but it may conclude earlier at our banker's option. If the actual number of shares repurchased exceeds the number of shares initially delivered, we will receive from our banker a number of additional shares equal to such excess following conclusion of the calculation period. If the actual number of shares repurchased is less than the number of shares initially delivered, we will be required, at its election, to either (1) deliver a number of shares approximately equal to the difference or (2) make a cash payment equal to the value of such shares, in either case following conclusion of the calculation period. Our banker has purchased and will continue to trade shares of our common stock in the open market over the life of the ASR. The treasury shares will result in an immediate reduction of shares on our statement of financial position and in our EPS calculation. While the ASR is in effect, we will generally not be permitted to repurchase its common stock in the open market. In addition to shareRead the The complete Report

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