Charles River Laboratories International, Inc. · NYSE:CRL
Charles River Laboratories International — Investor Presentation (May 2003)
42 slides from Charles River Laboratories International's investor presentation, May 6, 2003
Slide 1: Charles River Laboratories Company Overview
Co CHARLES RIVER LABORATORIES Contributing to the Search for Healthier Lives” COMPANY OVERVIEW Loa = , —_ &
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT This presentation includes "forward-looking statements" within the meaning of the Private Securities Litigation Retorm Act of 1995, Forward-looking statements may be identified by the use of words such as “anticipate,” "believe," "exp: "project" and other similar expressions th
Slide 3: Contributing to the Search for Healthier Lives
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 en ha 3 ==
Slide 4: Investment Highlights
INVESTMENT HIGHLIGHTS « 55 years in business + More than 3 decades of consistent growth and profitability * 2002 financial results — Revenues - $555 million — Operating margin - 22% + 5000 employees worldwide — 20% have been with Charles River 10 years or more — Management team average experience —
Slide 5: Investment Highlights
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 en ha ° a
Slide 6: Production and laboratory facilities worldwide
80 production and laboratory facilities in 16 countries 46 contract staffing locations worldwide Se Aa ‘
Slide 7: Critical Path to Drug Development
CRITICAL PATH TO DRUG DEVELOPMENT ee ae =
Slide 8: Growth in Pharma R&D Spending
GROWTH IN PHARMA R&D SPENDING Worldwide Pharmaceutical R&D Spending (B inbillions) ‘er8 $403 16 2001 ame Re
Slide 9: Growth in Pharma R&D Spending (cont'd)
GROWTH IN PHARMA R&D SPENDING (conro) Worldwide Pre-Clinical R&D Spending (8 in billions) $33.8 3134 1996 2001 2002 2003E Sources: PHRMA Annual Survey 2002; Hanbrectt & Oust -Beter, Faster Werduide Too: Update On Pharmaceutal Contract Support Organizations, January 1999; Company estimates en ha , a
Slide 10: Business Segments
BUSINESS SEGMENTS Research Models Biomedical Products & Services Lia 4 10 — ey
Slide 11: Revenue Composition
REVENUE COMPOSITION 2002 Sales: $555 million sa Governet Pramaceutioal esderio sri Blotech 18 Companies ie Product » Customers include all major pharmaceutical and biotech companies > No commercial customer accounts for > 3% of revenues en ha f ==
Slide 12: Animal Research Models: 40% of Revenues
ANIMAL RESEARCH MODELS: 40% OF REVENUES * More than 165 genetically and virally defined research models + Movement towards disease models -- Diabetes, Alzheimer’s, Cardiovascular * Mandated by FDA and global regulatory agencies
Slide 13: Unique Competitive Advantages
UNIQUE COMPETITIVE ADVANTAGES + Global reach + Long-standing customer relationships * Scientific depth + Biosecurity Py: 2B —_
Slide 14: Market Share Leader
MARKET SHARE LEADER 2002 Worldwide Market Opportunity: $475+ million Charles River Laboratories 28 Taccnie Farme a6 Hartan 11% The Jackson Laboratory 7% Charles River is 4x larger than its next competitor Source: Company estimates en ha i
Slide 15: New Developments: Strategic Partnership with The Jackson Laboratory
NEW DEVELOPMENTS STRATEGIC PARTNERSHIP WITH THE JACKSON LABORATORIES ¢ Premier mammalian genetic research institution « Hundreds of unique mouse models + Exclusive distribution in Europe and Japan
Slide 16: New Developments: Capacity Expansion
NEW DEVELOPMENTS CAPACITY EXPANSION + New production facility in Canada - Added 25% more space * Massachusetts production facility — Added 40% more space * California production facility — Added 33% more space
Slide 17: Biomedical Products and Services: 60% of Revenues
BIOMEDICAL PRODUCTS AND SERVICES: 60% 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 oufsource required drug development procedures
Slide 18: Worldwide Market Opportunity
WORLDWIDE MARKET OPPORTUNITY $4+ billion ‘ro Teehnlogit vacaine support Daslopment serwcet serucer Charles River is #1 in all major markets Sources: PHRMA Annual Survey 2002; Hanbrectt & Oust -Beter, Faster Werduide Too: Update On Pharmaceutal Contract Support Organizations, January 1999; Company es
Slide 19: Discovery Services
DISCOVERY SERVICES « Transgenic Services - Facilities in US, France, Japan « Laboratory and Research Services — Genetic testing — Infectious disease testing — Drug efficacy testing + Contract Site Management — Approximately 800 employees in the US and Europe en ha aa a
Slide 20: New Developments: Discovery Services
NEW DEVELOPMENTS DISCOVERY SERVICES « Growth of Transgenic Services business — New facility in Wilmington, MA added 70,000 sq ft — 50% occupied, 50% expansion space — Expansion in San Diego, CA — Growth in + Lyon, France + Tokyo, Japan
Slide 21: Full Range of Development Services
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 Pathology Services a —_
Slide 22: New Developments: Development Services
NEW DEVELOPMENTS DEVELOPMENT SERVICES + Lower demand for drug safety testing — Pharma’s “barbell” focus — Biotech’s clinical focus — Pharma budgets solidified end of Q1 — Some potential outsourcing business staying in-house — Waiting until last minute to commit to expensive studies — Increased capac
Slide 23: New Developments: Major Acquisitions - Biolabs
NEW DEVELOPMENTS 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
Slide 24: New Developments: Major Acquisitions - Springborn Laboratories
NEW DEVELOPMENTS MAJOR ACQUISITIONS 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 Accretive
Slide 25: New Developments: Joint Venture - Charles River Proteomics Services
NEW DEVELOPMENTS JOINT VENTURE CHARLES RIVER PROTEOMICS SERVICES — Opened April 2003 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 targ
Slide 26: In Vitro (Non-Animal) Technologies
IN VITRO (NON-ANIMAL) TECHNOLOGIES * Only FDA-approved alternative to animal testing * Endotoxin testing for injectable drug / medical device lot release 26
Slide 27: New Developments: Expanded Market Opportunities
NEW DEVELOPMENTS EXPANDED MARKET OPPORTUNITIES + In Vitro Pyrogen Test - Aimed at $50 million market for lot-release testing of products derived from human blood and biologicals
Slide 28: New Developments: Expanded Market Opportunities
NEW DEVELOPMENTS EXPANDED MARKET OPPORTUNITIES + Portable LAL Device — Allows endotoxin testing in the workplace in real time — Developed in house — Technology leader — FDA approval in process — Once approved, doubles the market opportunity
Slide 29: Vaccine Support Products
VACCINE SUPPORT PRODUCTS + SPF Chicken Eggs + Poultry and Human Vaccine Production
Slide 30: Growth - More Sales to Same Customers
GROWTH - MORE SALES TO SAME CUSTOMERS 1995 2000 2002 | 2003E & , Note: Results are not eal = ES 30
Slide 31: Growth Through Strategic Acquisitions
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
Slide 32: Financial Review
FINANCIAL REVIEW eo = 4 32 Li</
Slide 33: Financial Highlights
FINANCIAL HIGHLIGHTS Net Sales Research Models 4-Year CAGR: 12% Biomedical Products & Services 4-Year CAGR: 39% in mitions) es ssl oe y . 1999 ©2000 2001 2002 Mi Research Models lj Biomedical Products & Services 33
Slide 34: Financial Highlights (cont'd)
FINANCIAL HIGHLIGHTS cont) Net Sales 12002 Q1 2003 I Research Models. lj Biomedical Products & Services
Slide 35: Financial Highlights (cont'd)
FINANCIAL HIGHLIGHTS cont) Operating Income «1 $38.2 Margins: 01 2002 @4 2003 Segments: 25.4% 25.16 Corpersta 212% 223% Ml Research Models lJ Biomedical Products & Services (1) Excludes unallocated corporate overhead eS a ha os
Slide 36: Financial Highlights (cont'd)
FINANCIAL HIGHLIGHTS cont) EBITDA $33.8 12002 Q1 2003 Margin: 253% 268% Cap Ex $45 $52
Slide 37: Return on Invested Capital
FINANCIAL HIGHLIGHTS cont) Return on Invested Capital 13.5% 12.6% Dec-00 Dec-04 Dec-02,
Slide 38: Return on Net Operating Assets
FINANCIAL HIGHLIGHTS cont) Return on Net Operating Assets 223% 22.2% fi ; | | Dec-00 Dec-04 Dec-02 Mar-03, on ha
Slide 39: Solid Financial Performance
SOLID FINANCIAL PERFORMANCE Adjusted Earnings per Share 2001 = 2002 = 2003 en ha 30 —_
Slide 40: Strong Capitalization
STRONG CAPITALIZATION (8 in mitions) As of As of Mar. 29, 2003 Dec. 28, 2002 Actual Actual Cash & Cash Equivalents $ 119.0 $ 127.5 Other Debt 7.6 10.8 Senior Convertible Debentures 185.0 185.0 Total Debt $ 192.6 $ 195.8 Shareholder's Equity 380.3 357.4 Total Capitalization $ 5729 $ 553.2 Net Debt /
Slide 41: 2003 Guidance
2003 GUIDANCE 2003 a2 Net Sales Research Madels 11-14% Biomedical Products & Services 11-14% Total 11-14% 12-14% Diluted EPS $1.63-$1.68 $0.40-$0.42 Operating Cash Flow $110-$115 M CAPEX $40 M Free Cash Flow $70-$75 M 41
Slide 42: Searchable text section of graphics shown above
Searchable text section of graphics shown above Exhibit 99.1 [CHARLES RIVER LABORATORIES LOGO] Contributing to the Search for Healthier Lives TM COMPANY OVERVIEW [GRAPHIC] [LOGO] SAFE HARB OR STATEMENT This presentation includes “forward-looking statements” within the meaning of the Private Securiti
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