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UNITED STATES
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): November 22, 2002
COMMISSION FILE NUMBER 333-92383
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
(Exact Name of Registrant as specified in its Charter)
| DELAWARE (State of Incorporation) |
06-1397316 (I.R.S. Employer Identification No.) |
|
251 BALLARDVALE STREET, WILMINGTON, MASSACHUSETTS 01887 (Address of Principal Executive Offices) (Zip Code) |
||
978-658-6000
(Registrant's Telephone Number, Including Area Code)
ITEM 9. REGULATION FD DISCLOSURE
On November 22, 2002, Charles River Laboratories, Inc., wholly-owned subsidiary of the Registrant, posted to its company website an updated investor presentation, a copy of which is filed herewith as Exhibit 99.1.
EXHIBIT 99.1
Investor Presentation
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, we have duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | |||
Dated: November 26, 2002 |
By: |
/s/ DENNIS R. SHAUGHNESSY Dennis R. Shaughnessy, Sr. Vice President, Corporate Development, General Counsel and Secretary |
|
ITEM 9. REGULATION FD DISCLOSURE
SIGNATURES
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SAFE HARBOR STATEMENT
This presentation includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as "anticipate," "believe," "expect," "estimate," "plan," and "project" and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These statements are based on management's current expectations, and involve a number of risks and uncertainties that could cause actual results to differ materially from those stated or implied by the forward-looking statements, and the company expressly does not undertake any duty to update forward- looking statements, which speak only as of the date of this document. Those risks and uncertainties include, but are not limited to: acquisition integration risks; special interest groups; contaminations; industry trends; new displacement technologies; outsourcing trends; USDA and FDA regulation; changes in law; continued availability of products and supplies; loss of key personnel; interest rate and foreign currency exchange rate fluctuations; and changes in generally accepted accounting principles. A further description of these risks, uncertainties, and other matters can be found in the Risk Factors detailed in the Company's registration statement on Form S-3 as filed on April 9, 2002, with the Securities and Exchange Commission.
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CONTRIBUTING TO THE SEARCH FOR HEALTHIER LIVES
Leading provider of products and services that facilitate drug discovery and development
A unique focus on the pre-clinical space
3
INVESTMENT HIGHLIGHTS
- •
- Predictable and consistent financial performance
- •
- Leading market shares
- •
- Longstanding customers
- •
- Acquisition track record
- •
- Experienced management team
- •
- Growth
driven by pharma R&D spending
- •
- Preclinical outsourcing
4
- •
- 55
years in business
- •
- More
than 3 decades of consistent growth and profitability
- •
- 2001
financial results
- •
- Revenues—$466 million
- •
- Operating margin—19.4%
- •
- 5000 employees worldwide
- •
- 20%
have been with Charles River 10 years or more
- •
- Management team average experience—20 years
5
76 production and laboratory facilities in 16 countries
28 contract staffing locations
6
CRITICAL PATH TO DRUG DEVELOPMENT
7
GROWTH IN PHARMA R&D SPENDING
Source: 2001 PhRMA Annual Survey—U.S. Pharma R&D spending, domestic and abroad.
8
BUSINESS SEGMENTS
Research Models
Biomedical Products & Services
9
2001 Sales: $466 million
- •
- Customers
include all major pharmaceutical and biotech companies
- •
- No commercial customer accounts for > 3% of revenues
10
ANIMAL RESEARCH MODELS:
42% OF REVENUES
- •
- More
than 130 genetically and virally defined research models
- •
- Movement
towards disease models—Diabetes, Alzheimer's, Cardiovascular
- •
- Mandated by FDA and global regulatory agencies
11
UNIQUE COMPETITIVE ADVANTAGES
- •
- Global
reach
- •
- Long-standing
customer relationships
- •
- Scientific
depth
- •
- Biosecurity
12
MARKET SHARE LEADER
2001 Worldwide Market Opportunity: $475+ million
Charles River is 4x Larger than its Next Competitor
Source: Company estimates
13
STRATEGIC PARTNERSHIP WITH THE JACKSON LABORATORIES
- •
- Premier
mammalian genetic research institution
- •
- Hundreds
of unique mouse models
- •
- Exclusive distribution in Europe and Japan
14
CAPACITY EXPANSION
- •
- Canada
production facility
- •
- Added 25% more space
- •
- Massachusetts
production facility
- •
- Added 40% more space
- •
- California
production facility
- •
- Added 33% more space
15
BIOMEDICAL PRODUCTS AND SERVICES:
58% OF REVENUES
- •
- Focus
on high-growth areas of drug discovery and development
- •
- Discovery Services
- •
- Development Services
- •
- in vitro Technologies
- •
- Vaccine Support Services
- •
- Enables customers to outsource required drug development procedures
16
WORLDWIDE MARKET OPPORTUNITY
$2 billion +
Charles River is #1 in all major markets
17
DISCOVERY SERVICES
Transgenic Services
- •
- Facilities in US, France, Japan
Laboratory and Research Services
- •
- Genetic
testing
- •
- Infectious
disease testing
- •
- Drug efficacy testing
Contract Site Management
- •
- $25 million five-year NCI-Frederick contract
4 year CAGR: 43%
18
DISCOVERY SERVICES
- •
- Growth
of Transgenic Services business
- •
- New facility in Wilmington, MA added 70,000 sq ft—50% occupied, 50% expansion space
19
DISCOVERY & DEVELOPMENT SERVICES
- •
- Contract
site management
- •
- 9
new contracts worldwide
- •
- 10% headcount increase
20
FULL RANGE OF
DEVELOPMENT SERVICES
Entire range of services to take molecule from discovery to FDA filing
- •
- Drug
Safety Assessment
- •
- Pharmacokinetics/Metabolism
- •
- Bioanalytical
Chemistry
- •
- Surgery/Pharmacology
- •
- Biosafety
Testing
- •
- Bioproduction
Services
- •
- Pathology Services
2001 pro forma growth of 20% (4 year CAGR: 156%)
21
MAJOR ACQUISITIONS
BIOLABS —June 2002
| Description | Privately held pre-clinical outsourcing services in western Ireland Performs bioassay, animal health, and medical device support |
|
2001 Revenue |
$10 million |
|
Rationale |
Established a base for expansion of our services portfolio in Europe |
|
EPS Impact |
Accretive in 2002 by $0.01 to $0.02 |
22
SPRINGBORN LABORATORIES —October 2002
| Description | Privately held Ohio-based general and specialty toxicology services |
|
LTM Revenue |
$15 million |
|
Rationale |
Expanded geographic base and customer base to medium and small biopharmaceutical customers |
|
EPS Impact |
Neutral to slightly accretive in 2002 and accretive in 2003 by $0.03 to $0.04 after amortization of intangibles |
23
JOINT VENTURE
CHARLES RIVER PROTEOMICS SERVICES—October 2002
80/20 joint venture between Charles River and Proteome Systems Ltd provides leading-edge proteomics testing and analysis to enable researchers to rapidly identify proteins that may have commercial value as drug targets, biomarkers, or as the basis for diagnostic tests
24
IN VITRO TECHNOLOGIES
- •
- Only FDA-approved alternative to animal testing
- •
- Endotoxin testing for injectable drug / medical device lot release
4 year CAGR: 18%
25
IN VITRO (NON-ANIMAL) TECHNOLOGIES—
EXPANDED MARKET OPPORTUNITIES
- •
- In Vitro Pyrogen Test
- •
- Aimed at $50 million market for lot-release testing of products derived from human blood and biologicals
26
IN VITRO (NON-ANIMAL) TECHNOLOGIES—
EXPANDED MARKET OPPORTUNITIES
- •
- Portable
LAL Device
- •
- Allows
endotoxintesting in the workplace in real time
- •
- Developed
in house
- •
- Technology
leader
- •
- FDA
approval in process
- •
- Once approved, doubles the market opportunity
27
CORPORATE OBJECTIVE:
DELIVER 20% ANNUAL GROWTH *
DRIVERS
- •
- Increased
pharma/biotech R&D spending
- •
- Increased
outsourcing
- •
- Investment
in genomics and proteomics
- •
- Creating
new specialty models
- •
- Expanding in vitro technologies
- •
- Increased
R&D focus
- •
- Acquisitions
- *
- Assumes 12-15% organic growth and 5+% acquisitive growth.
28
GROWTH—MORE SALES TO SAME CUSTOMERS
Note: Results are not to scale.
29
GROWTH THROUGH STRATEGIC ACQUISITIONS
- •
- 21 acquisitions and alliances since 1994
- •
- Stringent
criteria for acquisitions
- •
- Non-dilutive
- •
- 20%
operating margin
- •
- 15%+
top-line growth
- •
- Leading
player
- •
- Scientific
leadership
- •
- Leverage worldwide infrastructure
30
FINANCIAL OVERVIEW
31
FINANCIAL HIGHLIGHTS
32
33
34
SOLID FINANCIAL PERFORMANCE
- •
- Exceeded
Wall Street earnings estimates in all 9 quarters post IPO
- •
- Provided guidance of $1.41 to $1.43 for CY 2002 vs. $0.94 for CY 2001(1)
- (1)
- Excludes $0.02 Q4:01 consolidation charge.
35
| |
As of Dec. 29, 2001 |
As of Sept. 28, 2002 |
||||||
|---|---|---|---|---|---|---|---|---|
| |
Actual |
Actual |
||||||
| |
($ in millions) |
|||||||
| Cash & Cash Equivalents | $ | 58.3 | $ | 117.4 | ||||
Term Loans |
$ |
68.6 |
$ |
0.0 |
||||
| Senior Subordinated Notes | 78.9 | 0.0 | ||||||
| Other Debt | 9.3 | 3.5 | ||||||
| Senior Convertible Debentures | 0.0 | 185.0 | ||||||
| Total Debt | $ | 156.8 | $ | 188.5 | ||||
Shareholder's Equity |
286.1 |
332.8 |
||||||
| Total Capitalization | $ | 442.9 | $ | 521.4 | ||||
| Net Debt/Total Capitalization | 22.2 | % | 13.6 | % | ||||
| Net Debt/EBITDA | 0.8 | x | 0.65 | x | ||||
- (1)
- Adjusted for subsequent retirements of Senior Subordinated Notes and the Senior Convertible Debenture offering.
36
FINANCIAL OBJECTIVES
| |
1997 - 2001 CAGR |
2002 Guidance |
Long-Term Growth Targets(1) |
||||
|---|---|---|---|---|---|---|---|
| Revenue Growth | 27% | 20% | 20+% | ||||
| Research Models | 11% | — | 8% to 10% | ||||
| Biomedical Products & Services | 52% | — | 25% to 30% | ||||
| Operating Income Growth | 42% | — | 20% to 25% | ||||
| Net Income/EPS Growth | NA(2) | 50% | 25+% | ||||
| Operating Margins | Improved from 15% to 20% |
21% to 22% | 22+% | ||||
- (1)
- Includes acquisitions.
- (2)
- Not meaningful due to recapitalization transaction and prior ownership by B&L.
37
Contributing to the Search for Healthier Lives
Ticker: CRL
3rd Quarter 2002 Presentation