Cover Page
Cover Page - shares | 6 Months Ended | |
Jul. 01, 2023 | Jul. 28, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jul. 01, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-15943 | |
Entity Registrant Name | CHARLES RIVER LABORATORIES INTERNATIONAL, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 06-1397316 | |
Entity Address, Address Line One | 251 Ballardvale Street | |
Entity Address, City or Town | Wilmington | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 01887 | |
City Area Code | 781 | |
Local Phone Number | 222-6000 | |
Title of 12(b) Security | Common stock, $0.01 par value | |
Trading Symbol | CRL | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Smaller Reporting Company | false | |
Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 51,271,357 | |
Entity Central Index Key | 0001100682 | |
Current Fiscal Year End Date | --12-30 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2023 | Jun. 25, 2022 | Jul. 01, 2023 | Jun. 25, 2022 | |
Total revenue | $ 1,059,937 | $ 973,131 | $ 2,089,310 | $ 1,887,060 |
Costs and expenses: | ||||
Selling, general and administrative | 199,758 | 131,711 | 374,604 | 281,744 |
Amortization of intangible assets | 34,274 | 37,604 | 69,190 | 75,611 |
Operating income | 164,945 | 187,411 | 332,837 | 336,189 |
Other income (expense): | ||||
Interest income | 1,426 | 188 | 2,232 | 315 |
Interest expense | (35,044) | (3,703) | (69,424) | (13,137) |
Other expense, net | (2,663) | (39,783) | (5,940) | (68,408) |
Income before income taxes | 128,664 | 144,113 | 259,705 | 254,959 |
Provision for income taxes | 29,221 | 33,449 | 56,308 | 49,069 |
Net income | 99,443 | 110,664 | 203,397 | 205,890 |
Less: Net income attributable to noncontrolling interests | 2,423 | 1,343 | 3,246 | 3,547 |
Net income attributable to common shareholders | $ 97,020 | $ 109,321 | $ 200,151 | $ 202,343 |
Earnings per common share | ||||
Basic (in dollars per share) | $ 1.89 | $ 2.15 | $ 3.91 | $ 3.99 |
Diluted (in dollars per share) | $ 1.89 | $ 2.13 | $ 3.90 | $ 3.94 |
Weighted-average number of common shares outstanding: | ||||
Basic (in shares) | 51,216 | 50,823 | 51,157 | 50,732 |
Diluted (in shares) | 51,467 | 51,283 | 51,382 | 51,293 |
Service | ||||
Total revenue | $ 874,891 | $ 782,827 | $ 1,732,257 | $ 1,503,312 |
Costs and expenses: | ||||
Cost of services provided and products sold (excluding amortization of intangible assets) | 578,099 | 522,623 | 1,143,576 | 1,009,487 |
Product | ||||
Total revenue | 185,046 | 190,304 | 357,053 | 383,748 |
Costs and expenses: | ||||
Cost of services provided and products sold (excluding amortization of intangible assets) | $ 82,861 | $ 93,782 | $ 169,103 | $ 184,029 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2023 | Jun. 25, 2022 | Jul. 01, 2023 | Jun. 25, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 99,443 | $ 110,664 | $ 203,397 | $ 205,890 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment and other | 23,227 | (93,857) | 46,540 | (106,809) |
Amortization of net loss, settlement losses, and prior service benefit included in total cost for pension and other post-retirement benefit plans | 174 | 741 | 344 | 1,487 |
Unrealized gains on hedging instruments | 6,046 | 0 | 4,644 | 0 |
Other comprehensive income (loss), before income taxes | 29,447 | (93,116) | 51,528 | (105,322) |
Less: Income tax expense (benefit) related to items of other comprehensive income | 937 | (6,876) | (101) | (8,894) |
Comprehensive income, net of income taxes | 127,953 | 24,424 | 255,026 | 109,462 |
Less: Comprehensive income (loss) related to noncontrolling interests, net of income taxes | 78 | (1,275) | 1,087 | 934 |
Comprehensive income attributable to common shareholders, net of income taxes | $ 127,875 | $ 25,699 | $ 253,939 | $ 108,528 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands | Jul. 01, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 200,445 | $ 233,912 |
Trade receivables and contract assets, net of allowances for credit losses of $18,040 and $11,278, respectively | 800,646 | 752,390 |
Inventories | 285,280 | 255,809 |
Prepaid assets | 105,020 | 89,341 |
Other current assets | 113,389 | 107,580 |
Total current assets | 1,504,780 | 1,439,032 |
Property, plant and equipment, net | 1,529,640 | 1,465,655 |
Venture capital and strategic equity investments | 300,281 | 311,602 |
Operating lease right-of-use assets, net | 397,192 | 391,762 |
Goodwill | 2,916,593 | 2,849,903 |
Intangible assets, net | 929,890 | 955,275 |
Deferred tax assets | 38,540 | 41,262 |
Other assets | 155,465 | 148,279 |
Total assets | 7,772,381 | 7,602,770 |
Current liabilities: | ||
Accounts payable | 140,204 | 205,915 |
Accrued compensation | 190,802 | 197,078 |
Deferred revenue | 257,396 | 264,259 |
Accrued liabilities | 220,704 | 219,758 |
Other current liabilities | 198,517 | 204,575 |
Total current liabilities | 1,007,623 | 1,091,585 |
Long-term debt, net and finance leases | 2,678,472 | 2,707,531 |
Operating lease right-of-use liabilities | 401,628 | 389,745 |
Deferred tax liabilities | 207,404 | 215,582 |
Other long-term liabilities | 177,252 | 174,822 |
Total liabilities | 4,472,379 | 4,579,265 |
Commitments and contingencies (Notes 2, 8, 10, and 12) | ||
Redeemable noncontrolling interest | 42,447 | 42,427 |
Equity: | ||
Preferred stock, $0.01 par value; 20,000 shares authorized; no shares issued and outstanding | 0 | 0 |
Common stock, $0.01 par value; 120,000 shares authorized; 51,370 shares issued and 51,266 shares outstanding as of July 1, 2023, and 50,944 shares issued and outstanding as of December 31, 2022 | 513 | 509 |
Additional paid-in capital | 1,850,385 | 1,804,940 |
Retained earnings | 1,633,052 | 1,432,901 |
Treasury stock, at cost, 104 and zero shares, as of July 1, 2023 and December 31, 2022, respectively | (23,978) | 0 |
Accumulated other comprehensive loss | (208,269) | (262,057) |
Total equity attributable to common shareholders | 3,251,703 | 2,976,293 |
Noncontrolling interests (nonredeemable) | 5,852 | 4,785 |
Total equity | 3,257,555 | 2,981,078 |
Total liabilities, redeemable noncontrolling interests and equity | $ 7,772,381 | $ 7,602,770 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands | Jul. 01, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Less: Allowance for credit losses | $ 18,040 | $ 11,278 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 120,000,000 | 120,000,000 |
Common stock, shares issued (in shares) | 51,370,000 | 50,944,000 |
Common stock, shares outstanding (in shares) | 51,266,000 | 50,944,000 |
Treasury stock, shares (in shares) | 104,000 | 0 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 01, 2023 | Jun. 25, 2022 | |
Cash flows relating to operating activities | ||
Net income | $ 203,397 | $ 205,890 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 154,740 | 151,720 |
Stock-based compensation | 29,730 | 29,549 |
Loss on debt extinguishment and amortization of other financing costs | 0 | 1,987 |
Deferred income taxes | (16,555) | (14,684) |
Loss on venture capital and strategic equity investments, net | 5,176 | 23,515 |
Loss on divestitures, net | 563 | 0 |
Changes in fair value of contingent consideration arrangements | 1,810 | (15,420) |
Other, net | 21,721 | 13,520 |
Changes in assets and liabilities: | ||
Trade receivables and contract assets, net | (48,249) | (117,642) |
Inventories | (32,671) | (63,725) |
Accounts payable | (24,985) | 31,466 |
Accrued compensation | (7,648) | (38,173) |
Deferred revenue | (6,796) | 27,641 |
Customer contract deposits | (17,519) | 16,100 |
Other assets and liabilities, net | (5,209) | 360 |
Net cash provided by operating activities | 257,505 | 252,104 |
Cash flows relating to investing activities | ||
Acquisition of businesses and assets, net of cash acquired | (50,166) | (283,392) |
Capital expenditures | (174,258) | (163,316) |
Purchases of investments and contributions to venture capital investments | (22,689) | (108,842) |
Proceeds from sale of investments | 2,943 | 205 |
Other, net | (1,057) | (4,774) |
Net cash used in investing activities | (245,227) | (560,119) |
Cash flows relating to financing activities | ||
Proceeds from long-term debt and revolving credit facility | 281,796 | 2,180,511 |
Proceeds from exercises of stock options | 15,719 | 15,571 |
Payments on long-term debt, revolving credit facility, and finance lease obligations | (317,049) | (1,856,262) |
Purchase of treasury stock | (23,978) | (38,468) |
Payments of contingent consideration | (2,711) | (10,356) |
Purchases of additional equity interests, net | 0 | (15,438) |
Other, net | 0 | (17,405) |
Net cash (used in) provided by financing activities | (46,223) | 258,153 |
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 1,508 | 10,756 |
Net change in cash, cash equivalents, and restricted cash | (32,437) | (39,106) |
Cash, cash equivalents, and restricted cash, beginning of period | 241,214 | 246,314 |
Cash, cash equivalents, and restricted cash, end of period | $ 208,777 | $ 207,208 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total Equity Attributable to Common Shareholders | Noncontrolling Interest |
Beginning balance (in shares) at Dec. 25, 2021 | 50,480 | |||||||
Beginning balance (in shares) at Dec. 25, 2021 | 0 | |||||||
Beginning balance at Dec. 25, 2021 | $ 2,538,982 | $ 505 | $ 1,718,304 | $ 980,751 | $ (164,740) | $ 0 | $ 2,534,820 | $ 4,162 |
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income | 93,582 | 93,022 | 93,022 | 560 | ||||
Other comprehensive income (loss) | (10,193) | (10,193) | (10,193) | |||||
Adjustment of redeemable noncontrolling interest to redemption value | (1,161) | (1,161) | (1,161) | |||||
Issuance of stock under employee compensation plans (in shares) | 431 | |||||||
Issuance of stock under employee compensation plans | 13,071 | $ 4 | 13,067 | 13,071 | ||||
Purchase of treasury shares (in shares) | 111 | |||||||
Purchase of treasury shares | (33,994) | $ (33,994) | (33,994) | |||||
Stock-based compensation | 14,619 | 14,619 | 14,619 | |||||
Ending balance (in shares) at Mar. 26, 2022 | 50,911 | |||||||
Ending balance (in shares) at Mar. 26, 2022 | 111 | |||||||
Ending balance at Mar. 26, 2022 | 2,614,906 | $ 509 | 1,744,829 | 1,073,773 | (174,933) | $ (33,994) | 2,610,184 | 4,722 |
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income | 109,820 | 109,321 | 109,321 | 499 | ||||
Other comprehensive income (loss) | (83,622) | (83,622) | (83,622) | |||||
Adjustment of redeemable noncontrolling interest to redemption value | (1,132) | (1,132) | (1,132) | |||||
Issuance of stock under employee compensation plans (in shares) | 79 | |||||||
Issuance of stock under employee compensation plans | 2,499 | $ 1 | 2,498 | 2,499 | ||||
Purchase of treasury shares (in shares) | 18 | |||||||
Purchase of treasury shares | (4,474) | $ (4,474) | (4,474) | |||||
Stock-based compensation | 14,930 | 14,930 | 14,930 | |||||
Ending balance (in shares) at Jun. 25, 2022 | 50,990 | |||||||
Ending balance (in shares) at Jun. 25, 2022 | 129 | |||||||
Ending balance at Jun. 25, 2022 | $ 2,652,927 | $ 510 | 1,761,125 | 1,183,094 | (258,555) | $ (38,468) | 2,647,706 | 5,221 |
Beginning balance (in shares) at Dec. 31, 2022 | 50,944 | 50,944 | ||||||
Beginning balance (in shares) at Dec. 31, 2022 | 0 | 0 | ||||||
Beginning balance at Dec. 31, 2022 | $ 2,981,078 | $ 509 | 1,804,940 | 1,432,901 | (262,057) | $ 0 | 2,976,293 | 4,785 |
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income | 103,632 | 103,131 | 103,131 | 501 | ||||
Other comprehensive income (loss) | 22,933 | 22,933 | 22,933 | |||||
Issuance of stock under employee compensation plans (in shares) | 316 | |||||||
Issuance of stock under employee compensation plans | 11,792 | $ 3 | 11,789 | 11,792 | ||||
Purchase of treasury shares (in shares) | 78 | |||||||
Purchase of treasury shares | (19,012) | $ (19,012) | (19,012) | |||||
Stock-based compensation | 13,460 | 13,460 | 13,460 | |||||
Ending balance (in shares) at Apr. 01, 2023 | 51,260 | |||||||
Ending balance (in shares) at Apr. 01, 2023 | 78 | |||||||
Ending balance at Apr. 01, 2023 | 3,113,883 | $ 512 | 1,830,189 | 1,536,032 | (239,124) | $ (19,012) | 3,108,597 | 5,286 |
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income | 97,586 | 97,020 | 97,020 | 566 | ||||
Other comprehensive income (loss) | 30,855 | 30,855 | 30,855 | |||||
Issuance of stock under employee compensation plans (in shares) | 110 | |||||||
Issuance of stock under employee compensation plans | 3,927 | $ 1 | 3,926 | 3,927 | ||||
Purchase of treasury shares (in shares) | 26 | |||||||
Purchase of treasury shares | (4,966) | $ (4,966) | (4,966) | |||||
Stock-based compensation | $ 16,270 | 16,270 | 16,270 | |||||
Ending balance (in shares) at Jul. 01, 2023 | 51,266 | 51,370 | ||||||
Ending balance (in shares) at Jul. 01, 2023 | 104 | 104 | ||||||
Ending balance at Jul. 01, 2023 | $ 3,257,555 | $ 513 | $ 1,850,385 | $ 1,633,052 | $ (208,269) | $ (23,978) | $ 3,251,703 | $ 5,852 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Jul. 01, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The accompanying condensed consolidated financial statements are unaudited and have been prepared by Charles River Laboratories International, Inc. (the Company) in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). The year-end condensed consolidated balance sheet data was derived from the Company’s audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for fiscal year 2022. The unaudited condensed consolidated financial statements, in the opinion of management, reflect all normal and recurring adjustments necessary for a fair statement of the Company’s financial position and results of operations. Use of Estimates The preparation of unaudited condensed consolidated financial statements in accordance with U.S. GAAP requires that the Company make estimates and judgments that may affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, judgments, and methodologies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. Changes in estimates are reflected in reported results in the period in which they become known. Newly Adopted Accounting Pronouncements In September 2022, the FASB issued ASU 2022-04, “Liabilities – Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” ASU 2022-04 requires quantitative and qualitative disclosures about the use of supplier finance programs. The ASU is effective for fiscal years beginning after December 15, 2022, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years for selected disclosures, and will be applied on a prospective basis. The Company participates in certain supplier finance programs that are immaterial to the unaudited condensed consolidated financial statements and related disclosures. Summary of Significant Accounting Policies The Company’s significant accounting policies are described in Note 1, “Description of Business and Summary of Significant Accounting Policies” in the Company’s Annual Report on Form 10-K for fiscal year 2022. Consolidation The Company’s unaudited condensed consolidated financial statements reflect its financial statements and those of its subsidiaries in which the Company holds a controlling financial interest. For consolidated entities in which the Company owns or is exposed to less than 100% of the economics, the Company records net income (loss) attributable to noncontrolling interests in its unaudited condensed consolidated statements of income equal to the percentage of the economic or ownership interest retained in such entities by the respective noncontrolling parties. Redeemable noncontrolling interests, where the noncontrolling interest holders have the ability to sell the remaining interests, are classified in the mezzanine section of the unaudited condensed consolidated balance sheets, which is presented above the equity section and below liabilities. Intercompany balances and transactions are eliminated in consolidation. The Company’s fiscal year is typically based on 52-weeks, with each quarter composed of 13 weeks ending on the last Saturday on, or closest to, March 31, June 30, September 30, and December 31. A 53rd week in the fourth quarter of the fiscal year is occasionally necessary to align with a December 31 calendar year-end, which occurred in fiscal year 2022. Segment Reporting The Company reports its results in three reportable segments: Research Models and Services (RMS), Discovery and Safety Assessment (DSA), and Manufacturing Solutions (Manufacturing). The Company’s RMS reportable segment includes the Research Models, Research Model Services, and Cell Solutions businesses. Research Models includes the commercial production and sale of small research models, as well as the supply of large research models. Research Model Services includes: Genetically Engineered Models and Services (GEMS), which performs contract breeding and other services associated with genetically engineered models; Research Animal Diagnostic Services (RADS), which provides health monitoring and diagnostics services related to research models; Insourcing Solutions (IS), which provides colony management of its clients’ research operations (including recruitment, training, staffing, and management services) within our clients’ facilities and utilizing both our Charles River Accelerator and Development Lab (CRADL™) and our Explora BioLabs options, in which we provide vivarium space to our clients; and Cell Solutions, which supplies controlled, consistent, customized primary cells and blood components derived from normal and mobilized peripheral blood, bone marrow, and cord blood. The Company’s DSA reportable segment includes two businesses: Discovery Services and Safety Assessment. The Company provides regulated and non-regulated DSA services to support the research, development, and regulatory-required safety testing of potential new drugs, including therapeutic discovery and optimization plus in vitro and in vivo studies, laboratory support services, and strategic non-clinical consulting and program management to support product development. The Company’s Manufacturing reportable segment includes Microbial Solutions, which provides in vitro (non-animal) lot-release testing products, microbial detection products, and species identification services and Biologics Solutions (Biologics), which performs specialized testing of biologics (Biologics Testing Solutions) as well as contract development and manufacturing products and services (CDMO). In December of 2022, the Company sold the Avian Vaccine Services business (Avian), previously reported in the Manufacturing segment, which supplied specific-pathogen-free chicken eggs and chickens. |
ACQUISITIONS AND DIVESTITURES
ACQUISITIONS AND DIVESTITURES | 6 Months Ended |
Jul. 01, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
ACQUISITIONS AND DIVESTITURES | ACQUISITIONS AND DIVESTITURES Fiscal 2023 Acquisition SAMDI Tech, Inc. On January 27, 2023, the Company acquired SAMDI Tech, Inc., (SAMDI), a leading provider of high-quality, label-free high-throughput screening (HTS) solutions for drug discovery research. The acquisition of SAMDI will provide clients with seamless access to the premier, label-free HTS MS platform and create a comprehensive, library of drug discovery solutions. The preliminary purchase price of SAMDI was $62.8 million, net of $0.4 million in cash, inclusive of a 20% strategic equity interest previously owned by the Company of $12.6 million. The acquisition was funded through a combination of available cash and proceeds from the Company’s Credit Facility. This business is reported as part of the Company’s DSA reportable segment. Fiscal 2022 Acquisition Explora BioLabs Holdings, Inc. On April 5, 2022, the Company acquired Explora BioLabs Holdings, Inc. (Explora BioLabs), a provider of contract vivarium research services, providing biopharmaceutical clients with turnkey in vivo vivarium facilities, management and related services to efficiently conduct their early-stage research activities. The acquisition of Explora BioLabs complements the Company’s existing Insourcing Solutions business, specifically the CRADL (Charles River Accelerator and Development Lab) footprint, and offers incremental opportunities to partner with an emerging client base, many of which are engaged in cell and gene therapy development. The purchase price of Explora BioLabs was $284.5 million, net of $6.6 million in cash. The acquisition was funded through proceeds from the Company’s credit facility (Credit Facility). This business is reported as part of the Company’s RMS reportable segment. Purchase price information The purchase price allocation was as follows: SAMDI (1) Explora BioLabs January 27, 2023 April 5, 2022 (in thousands) Trade receivables $ 513 $ 7,679 Other current assets (excluding cash) 75 1,067 Property, plant and equipment 593 37,369 Operating lease right-of-use asset, net — 48,613 Goodwill (2) 37,129 215,752 Definite-lived intangible assets 33,070 70,100 Other long-term assets 6 556 Deferred revenue (43) (3,507) Other current liabilities (351) (15,507) Operating lease right-of-use liabilities (Long-term) — (57,193) Deferred tax liabilities (8,191) (18,601) Other long-term liabilities — (1,807) Total purchase price allocation $ 62,801 $ 284,521 (1) Purchase price allocation is preliminary and subject to change as additional information becomes available concerning the fair value and tax basis of the assets acquired and liabilities assumed, including certain contracts and obligations. Any additional adjustments to the purchase price allocation will be made as soon as practicable but no later than one year from the date of acquisition. (2) The goodwill resulting from these transactions is primarily attributable to the potential growth of the Company’s segments from new customers introduced to the acquired businesses and the assembled workforce of the acquirees, thus is not deductible for tax purposes. Explora BioLabs had $5.0 million of goodwill due to a prior asset acquisition that is deductible for tax purposes. The definite-lived intangible assets acquired were as follows: SAMDI Explora BioLabs Definite-Lived Intangible Assets (in thousands) Client relationships $ 23,400 $ 64,000 Other intangible assets 9,670 6,100 Total definite-lived intangible assets $ 33,070 $ 70,100 Weighted Average Amortization Life (in years) Client relationships 15 13 Other intangible assets 7 4 Total definite-lived intangible assets 12 12 Three Months Ended Six Months Ended July 1, 2023 June 25, 2022 July 1, 2023 June 25, 2022 (in thousands) Transaction and Integration Costs Selling, general and administrative expenses $ 1,224 $ 4,426 $ 2,288 $ 11,539 Divestitures The Company routinely evaluates the strategic fit and fundamental performance of its global businesses, divesting operations that do not meet key business criteria. As part of this ongoing assessment, the Company determined that certain capital could be better deployed in other long-term growth opportunities. Avian Vaccine Services On December 20, 2022, the Company sold its Avian Vaccine Services business (Avian) to a private investor group for a preliminary purchase price of $167.3 million in cash, subject to certain customary closing adjustments. The Company may also earn up to $30.0 million of contingent payments, which are tied to certain annual results of the Avian business from January 2024 through December 2027. The contingent payments have been fair valued at $10.3 million using a discounted probability weighted model. The Avian business was reported in the Company’s Manufacturing reportable segment. During fiscal year 2022, the Company recorded a gain on the divestiture of Avian of $123.4 million within Other income (expense) on the Company’s condensed consolidated statements of income. The carrying amounts of the major classes of assets and liabilities associated with the divestitures of the businesses were as follows: December 19, 2022 Avian (in thousands) Assets Current assets $ 30,545 Property, plant, and equipment, net 24,602 Operating lease right-of-use assets, net 611 Goodwill 3,168 Intangible assets, net 1,629 Other assets 10 Total assets $ 60,565 Liabilities Current liabilities $ 8,139 Operating lease right-of-use liabilities 331 Total liabilities $ 8,470 |
REVENUE FROM CONTRACTS WITH CUS
REVENUE FROM CONTRACTS WITH CUSTOMERS | 6 Months Ended |
Jul. 01, 2023 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | REVENUE FROM CONTRACTS WITH CUSTOMERS Disaggregation of Revenue The following table disaggregates the Company’s revenue by major business line and timing of transfer of products or services: Three Months Ended Six Months Ended July 1, 2023 June 25, 2022 July 1, 2023 June 25, 2022 (in thousands) Timing of Revenue Recognition: RMS Services and products transferred over time $ 94,458 $ 85,803 $ 188,097 $ 155,727 Services and products transferred at a point in time 115,490 100,607 221,617 207,225 Total RMS revenue 209,948 186,410 409,714 362,952 DSA Services and products transferred over time 662,653 589,371 1,324,489 1,131,707 Services and products transferred at a point in time 804 2,546 1,321 4,469 Total DSA revenue 663,457 591,917 1,325,810 1,136,176 Manufacturing Services and products transferred over time 100,460 92,811 186,546 187,820 Services and products transferred at a point in time 86,072 101,993 167,240 200,112 Total Manufacturing revenue 186,532 194,804 353,786 387,932 Total revenue $ 1,059,937 $ 973,131 $ 2,089,310 $ 1,887,060 Contract Balances from Contracts with Customers The following table provides information about client receivables, contract assets, and contract liabilities from contracts with customers: July 1, 2023 December 31, 2022 (in thousands) Assets from contracts with customers Client receivables $ 591,006 $ 559,410 Unbilled revenue 227,680 204,258 Total 818,686 763,668 Less: Allowance for credit losses (18,040) (11,278) Trade receivables and contract assets, net $ 800,646 $ 752,390 Liabilities from contracts with customers Current deferred revenue $ 257,396 $ 264,259 Long-term deferred revenue (included in Other long-term liabilities) 29,533 25,795 Customer contract deposits (included in Other current-liabilities) 77,422 91,640 A pproximately 85% of unbilled revenue as of December 31, 2022, which was $204 million, was billed during the six months ended July 1, 2023. Approximately 75% of unbilled revenue as of December 25, 2021, which was $161 million, was billed during the six months ended June 25, 2022. Approximately 75% of contract liabilities as of December 31, 2022, which was $290 million, were recognized as revenue during the six months ended July 1, 2023. Approximately 75% of contract liabilities as of December 25, 2021, which was $240 million, were recognized as revenue during the six months ended June 25, 2022. When the Company does not have the unconditional right to advanced billings, both advanced client payments and unpaid advanced client billings are excluded from deferred revenue, with the advanced billings also being excluded from client receivables. The Company excluded approximately $42 million and $54 million of unpaid advanced client billings from both client receivables and deferred revenue in the accompanying unaudited condensed consolidated balance sheets as of July 1, 2023 and December 31, 2022, respectively. Net provisions of $9.1 million and $0.4 million were recorded to the allowance for credit losses for the six months ended July 1, 2023 and June 25, 2022, respectively. Transaction Price Allocated to Future Performance Obligations The Company discloses the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied as of July 1, 2023. Excluded from the disclosure is the value of unsatisfied performance obligations for contracts with an original expected length of one year or less, contracts for which revenue is recognized at the amount to which the Company has the right to invoice for services performed, and service revenue recognized in accordance with ASC 842, “Leases”. The aggregate amount of transaction price allocated to the remaining performance obligations for all open customer contracts as of July 1, 2023 was $1,029.1 million. The Company will recognize revenues for these performance obligations as they are satisfied, approximately 50% of which is expected to occur within the next twelve months and the remainder recognized thereafter during the remaining contract term. Other Performance Obligation s As part of the Company’s service offerings, the Company has identified performance obligations related to leasing Company owned assets. In certain arrangements, customers obtain substantially all of the economic benefits of the identified assets, which may include manufacturing suites and related equipment, and have the right to direct the assets’ use over the term of the contract. The associated revenue is recognized on a straight-line basis over the term of the lease, which is generally less than one year. Three Months Ended Six Months Ended July 1, 2023 June 25, 2022 July 1, 2023 June 25, 2022 (in thousands) Affected Line Item in the Unaudited Condensed Consolidated Statements of Income Lease revenue $ 23,891 $ 13,912 $ 47,981 $ 21,768 Service revenue |
SEGMENT AND GEOGRAPHIC INFORMAT
SEGMENT AND GEOGRAPHIC INFORMATION | 6 Months Ended |
Jul. 01, 2023 | |
Segment Reporting [Abstract] | |
SEGMENT AND GEOGRAPHIC INFORMATION | SEGMENT AND GEOGRAPHIC INFORMATION The following table presents revenue and other financial information by reportable segment: Three Months Ended Six Months Ended July 1, 2023 June 25, 2022 July 1, 2023 June 25, 2022 (in thousands) RMS Revenue $ 209,948 $ 186,410 $ 409,714 $ 362,952 Operating income 48,918 39,526 89,327 87,408 Depreciation and amortization 13,949 13,228 27,438 22,697 Capital expenditures 7,493 13,850 26,577 22,496 DSA Revenue $ 663,457 $ 591,917 $ 1,325,810 $ 1,136,176 Operating income 161,538 128,793 332,969 233,779 Depreciation and amortization 43,124 44,626 85,574 91,415 Capital expenditures 48,326 41,578 113,510 90,508 Manufacturing Revenue $ 186,532 $ 194,804 $ 353,786 $ 387,932 Operating income 24,403 62,503 26,509 108,871 Depreciation and amortization 19,523 18,000 39,607 36,482 Capital expenditures 10,862 24,431 32,600 47,259 Unallocated Corporate Operating income (1) (69,914) (43,411) $ (115,968) $ (93,869) Depreciation and amortization 1,075 567 2,121 1,126 Capital expenditures 702 2,993 1,571 3,053 Consolidated Revenue 1,059,937 973,131 $ 2,089,310 $ 1,887,060 Operating income 164,945 187,411 332,837 336,189 Depreciation and amortization 77,671 76,421 154,740 151,720 Capital expenditures 67,383 82,852 174,258 163,316 (1) Operating income for unallocated corporate expense consists of costs associated with departments such as senior executives, corporate accounting, legal, tax, human resources, treasury, and investor relations. Revenue by geographic area is as follows: U.S. Europe Canada Asia Pacific Other Consolidated (in thousands) Three Months Ended: July 1, 2023 $ 606,775 $ 272,976 $ 117,647 $ 59,864 $ 2,675 $ 1,059,937 June 25, 2022 566,917 263,584 93,694 46,239 2,697 973,131 Six Months Ended: July 1, 2023 $ 1,212,216 $ 540,679 $ 228,253 $ 102,677 $ 5,485 $ 2,089,310 June 25, 2022 1,093,466 514,671 178,940 95,185 4,798 1,887,060 Included in the Other category above are operations located in Brazil and Israel. Revenue represents sales originating in entities physically located in the identified geographic area. |
INVENTORY
INVENTORY | 6 Months Ended |
Jul. 01, 2023 | |
Inventory Disclosure [Abstract] | |
INVENTORY | INVENTORY Inventories The composition of inventories is as follows: July 1, 2023 December 31, 2022 (in thousands) Raw materials and supplies $ 42,130 $ 38,892 Work in process 40,396 48,367 Finished products 202,754 168,550 Inventories $ 285,280 $ 255,809 |
VENTURE CAPITAL AND STRATEGIC E
VENTURE CAPITAL AND STRATEGIC EQUITY INVESTMENTS | 6 Months Ended |
Jul. 01, 2023 | |
Equity Method Investments and Joint Ventures [Abstract] | |
VENTURE CAPITAL AND STRATEGIC EQUITY INVESTMENTS | VENTURE CAPITAL AND STRATEGIC EQUITY INVESTMENTS Venture capital investments are summarized below: Six Months Ended July 1, 2023 June 25, 2022 (in thousands) Beginning balance $ 129,012 $ 149,640 Capital contributions 8,702 6,384 Distributions (9,679) (4,042) Losses (8,429) (23,050) Foreign currency translation 466 (1,065) Ending balance $ 120,072 $ 127,867 The Company also invests, with minority positions, directly in equity of predominantly privately held companies. Strategic investments are summarized below: Six Months Ended July 1, 2023 June 25, 2022 (in thousands) Beginning balance $ 182,590 $ 51,712 Purchase of investments 13,710 102,220 Distributions (4,146) (151) Gain (loss) 3,253 (465) Reduction for acquisition of entity (12,635) — Foreign currency translation (2,563) (2,112) Ending balance $ 180,209 $ 151,204 In April 2022, the Company acquired a 49% equity interest in a supplier supporting the DSA reportable segment (the Investee) for $90.0 million up front and an additional future contingent payment of up to $5.0 million based upon the Investee’s future performance. The total allocable basis of the investment exceeds the proportional interest in the Investee’s underlying net assets by $86.7 million, which has been allocated primarily to goodwill, intangible assets (client relationships and backlog), and deferred tax liabilities in the amount of $26.2 million, $71.2 million, and $10.7 million respectively. On July 28, 2023, the Company signed an agreement to acquire an additional 41% equity stake in the supplier, which upon closing, will result in ownership of 90%. The preliminary purchase price for the 41% equity is $143 million in cash, subject to customary closing adjustments, with additional contingent payments of up to $55 million based on future performance over a 3-year period. The Company will have the call option right to purchase the remaining 10% equity up until one month after the sixth anniversary of closing. On the first anniversary of the expiration of the call option, a 12-month put option will be triggered giving the seller the right to require the Company to acquire shares of the Investee from the seller. The consummation of the acquisition of the additional 41% equity is subject to regulatory approval and closing conditions being satisfied. Accordingly, the timing of close is uncertain. |
FAIR VALUE
FAIR VALUE | 6 Months Ended |
Jul. 01, 2023 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE | FAIR VALUE Assets and liabilities measured at fair value on a recurring basis are summarized below: July 1, 2023 Level 1 Level 2 Level 3 Total Current assets measured at fair value: (in thousands) Cash equivalents $ — $ 28 $ — $ 28 Other assets: Life insurance policies — 38,308 — 38,308 Interest rate swap — 3,121 — 3,121 Total assets measured at fair value $ — $ 41,457 $ — $ 41,457 The Company recognizes transfers between levels within the fair value hierarchy, if any, at the end of each quarter. During the six months ended July 1, 2023, there were no transfers between levels. December 31, 2022 Level 1 Level 2 Level 3 Total Current assets measured at fair value: (in thousands) Cash equivalents $ — $ 78 $ — $ 78 Other assets: Life insurance policies — 34,527 — 34,527 Total assets measured at fair value $ — $ 34,605 $ — $ 34,605 Accrued liabilities measured at fair value: Contingent consideration $ — $ — $ 13,431 $ 13,431 Other long-term liabilities measured at fair value: Interest rate swap — 1,523 — 1,523 Total liabilities measured at fair value $ — $ 1,523 $ 13,431 $ 14,954 During the year ended December 31, 2022, there were no transfers between levels. Contingent Consideration The following table provides a rollforward of the contingent consideration related to the Company’s acquisitions. Six Months Ended July 1, 2023 June 25, 2022 (in thousands) Beginning balance $ 13,431 $ 37,244 Payments (15,130) (11,476) Total gains or losses (realized/unrealized): Adjustment of previously recorded contingent liability 1,810 (15,340) Foreign currency translation (111) (878) Ending balance $ — $ 9,550 The Company estimates the fair value of contingent consideration obligations through valuation models, such as probability-weighted and option pricing models, that incorporate probability adjusted assumptions and simulations related to the achievement of the milestones and the likelihood of making related payments. The unobservable inputs used in the fair value measurements include the probabilities of successful achievement of certain financial targets, forecasted results or targets, volatility, and discount rates. The remaining maximum potential payments are approximately $43 million, of which the value accrued as of July 1, 2023 is zero as the probability of achieving the maximum target is estimated to be 0%. The volatility and weighted average cost of capital is approximately 40% and 16%, respectively. Increases or decreases in these assumptions may result in a higher or lower fair value measurement, respectively. Cash Flow Hedge The Company is exposed to market fluctuations in interest rates as well as variability in foreign exchange rates. In November 2022, the Company entered into an interest rate swap with a notional amount of $500 million to manage interest rate fluctuation related to floating rate borrowings under the Credit Facility, at a fixed rate of 4.700%. In March 2023 and in conjunction with an amendment of the Credit Agreement (Second Amendment), the Company modified the variable rate on its interest rate swap from 1-month LIBOR to 1-month adjusted term SOFR. Effective with the modification, the Company will pay a fixed rate of 4.65% on its swap maturing November 2, 2024. The Company elected to apply the optional expedient in ASC 848, Reference Rate Reform , in connection with modifying its interest rate swap from LIBOR to SOFR that enabled it to consider the modification a continuation of the existing contract. As a result, the transition did not have an impact on the Company’s hedge accounting or a material impact to the Company’s financial statements. Debt Instruments The book value of the Company’s revolving loans, which are variable rate loans carried at amortized cost, approximates the fair value based on current market pricing of similar debt. As the fair value is based on significant other observable inputs, including current interest and foreign currency exchange rates, it is deemed to be Level 2 within the fair value hierarchy. The book value of the Company’s Senior Notes are fixed rate obligations carried at amortized cost. Fair value is based on quoted market prices as well as borrowing rates available to the Company. As the fair value is based on significant other observable outputs, it is deemed to be Level 2 within the fair value hierarchy. The book value and fair value of the Company’s Senior Notes is summarized below: July 1, 2023 December 31, 2022 Book Value Fair Value Book Value Fair Value (in thousands) 4.25% Senior Notes due 2028 $ 500,000 $ 457,500 $ 500,000 $ 460,450 3.75% Senior Notes due 2029 500,000 440,000 500,000 442,200 4.00% Senior Notes due 2031 500,000 433,750 500,000 432,500 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 6 Months Ended |
Jul. 01, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS Goodwill The following table provides a rollforward of the Company’s goodwill: RMS DSA (1) Manufacturing Total (in thousands) December 31, 2022 $ 497,710 $ 1,433,601 $ 918,592 $ 2,849,903 Acquisitions — 37,129 — 37,129 Foreign exchange (656) 14,969 15,248 29,561 July 1, 2023 $ 497,054 $ 1,485,699 $ 933,840 $ 2,916,593 (1) DSA includes accumulated impairment losses of $1 billion, which were recognized in fiscal years 2008 and 2010. The increase in goodwill during the six months ended July 1, 2023 related to the acquisition of SAMDI in the DSA reportable segment. Intangible Assets, Net The following table displays intangible assets, net by major class: July 1, 2023 December 31, 2022 Gross Accumulated Amortization Net Gross Accumulated Amortization Net (in thousands) Client relationships $ 1,534,069 $ (659,955) $ 874,114 $ 1,491,926 $ (591,417) $ 900,509 Technology 141,716 (107,312) 34,404 129,626 (101,655) 27,971 Backlog 15,441 (13,903) 1,538 15,236 (12,512) 2,724 Trademarks and trade names 12,835 (5,021) 7,814 12,617 (4,410) 8,207 Other 38,079 (26,059) 12,020 37,985 (22,121) 15,864 Intangible assets $ 1,742,140 $ (812,250) $ 929,890 $ 1,687,390 $ (732,115) $ 955,275 |
DEBT AND OTHER FINANCING ARRANG
DEBT AND OTHER FINANCING ARRANGEMENTS | 6 Months Ended |
Jul. 01, 2023 | |
Debt Disclosure [Abstract] | |
DEBT AND OTHER FINANCING ARRANGEMENTS | DEBT AND OTHER FINANCING ARRANGEMENTS Long-term debt, net and finance leases consists of the following: July 1, 2023 December 31, 2022 (in thousands) Revolving facility $ 1,168,052 $ 1,197,586 4.25% Senior Notes due 2028 500,000 500,000 3.75% Senior Notes due 2029 500,000 500,000 4.00% Senior Notes due 2031 500,000 500,000 Other debt 1,423 1,594 Finance leases 29,354 30,646 Total debt and finance leases 2,698,829 2,729,826 Less: Current portion of long-term debt 1,188 1,347 Current portion of finance leases 2,535 2,330 Current portion of long-term debt and finance leases 3,723 3,677 Long-term debt and finance leases 2,695,106 2,726,149 Debt discount and debt issuance costs (16,634) (18,618) Long-term debt, net and finance leases $ 2,678,472 $ 2,707,531 As of July 1, 2023 and December 31, 2022, the weighted average interest rate on the Company’s debt was 4.89% and 4.58%, respectively. During the three and six months ended June 25, 2022, the Company had multiple U.S. dollar denominated loans borrowed by a non-U.S. Euro functional currency entity under the Credit Facility, which were approximately $400 million each. To limit this foreign currency exposure, the Company entered into foreign exchange forward contracts, which are not designated as hedging instruments. The Company did not have any U.S. dollar denominated loans borrowed by a non-U.S. Euro functional currency entity under the Credit Facility during the three and six months ended July 1, 2023. The gains and losses incurred on these transactions were as follows: Three Months Ended Six Months Ended June 25, 2022 June 25, 2022 Affected Line Item in the Unaudited Condensed Consolidated Statements of Income (in thousands) Loss on foreign debt remeasurement (19,423) (30,523) Other expense, net Gain on foreign exchange forward contract 20,522 32,306 Interest expense |
EQUITY AND NONCONTROLLING INTER
EQUITY AND NONCONTROLLING INTERESTS | 6 Months Ended |
Jul. 01, 2023 | |
Equity [Abstract] | |
EQUITY AND NONCONTROLLING INTERESTS | EQUITY AND NONCONTROLLING INTERESTS Earnings Per Share The following table reconciles the numerator and denominator in the computations of basic and diluted earnings per share: Three Months Ended Six Months Ended July 1, 2023 June 25, 2022 July 1, 2023 June 25, 2022 (in thousands) Numerator: Net income $ 99,443 $ 110,664 $ 203,397 $ 205,890 Less: Net income attributable to noncontrolling interests 2,423 1,343 3,246 3,547 Net income attributable to common shareholders $ 97,020 $ 109,321 $ 200,151 $ 202,343 Denominator: Weighted-average shares outstanding - Basic 51,216 50,823 51,157 50,732 Effect of dilutive securities: Stock options, restricted stock units and performance share units 251 460 225 561 Weighted-average shares outstanding - Diluted 51,467 51,283 51,382 51,293 Anti-dilutive common stock equivalents (1) 594 597 589 550 (1) These common stock equivalents were outstanding for the periods presented, but were not included in the computation of diluted EPS for those periods because their inclusion would have had an anti-dilutive effect. Treasury Shares The Company’s Board of Directors has authorized a $1.3 billion stock repurchase program. As of July 1, 2023, the Company had $129.1 million remaining on the authorized stock repurchase program. The Company’s stock-based compensation plans permit the netting of common stock upon vesting of RSUs and PSUs in order to satisfy individual statutory tax withholding requirements. The Company acquired shares of 0.1 million in the six months ended July 1, 2023 and six months ended June 25, 2022, for $24.0 million and $38.5 million, respectively, from such netting. Accumulated Other Comprehensive Income (Loss) Changes to each component of accumulated other comprehensive income (loss), net of income taxes, are as follows: Foreign Currency Translation Adjustment Pension and Other Post-Retirement Benefit Plans Net Unrealized (Loss) Gain on Cash Flow Hedge Total (in thousands) December 31, 2022 $ (217,785) $ (43,114) $ (1,158) $ (262,057) Other comprehensive income before reclassifications 48,699 344 4,644 53,687 Net current period other comprehensive income 48,699 344 4,644 53,687 Income tax expense (benefit) 807 209 (1,117) (101) July 1, 2023 $ (169,893) $ (42,979) $ 4,603 $ (208,269) Nonredeemable Noncontrolling Interest The Company has an investment in an entity whose financial results are consolidated in the Company’s unaudited condensed consolidated financial statements, as it has the ability to exercise control over this entity. The interest of the noncontrolling party in this entity has been recorded as noncontrolling interest within Equity in the accompanying unaudited condensed consolidated balance sheets. The activity within the nonredeemable noncontrolling interest was not significant during the three and six months ended July 1, 2023 and June 25, 2022. Redeemable Noncontrolling Interests The Company holds a 92% ownership interest in Vital River, a commercial provider of research models and related services in China as of July 1, 2023 . The company has the right to purchase, and the noncontrolling interest holders have the right to sell, the remaining 8% equity interest at a contractually defined redemption value, subject to a redemption floor, which represents a derivative embedded within the equity instrument. The redeemable noncontrolling interest is measured at the greater of the amount that would be paid if settlement occurred as of the balance sheet date based on the contractually defined redemption value ($24.4 million) as of July 1, 2023 and the carrying amount adjusted for net income (loss) attributable to the noncontrolling interest. The amount that the Company could be required to pay to purchase the remaining 8% equity interest is not limited. During the fourth quarter of fiscal 2022, the Company exercised its option to acquire the remaining 8%, which is subject to customary closing conditions. The Company expects the transaction to close prior to the end of fiscal year 2023. In 2019, the Company acquired an 80% equity interest in a subsidiary that is fully consolidated under the voting interest model, which includes a 20% redeemable noncontrolling interest. In June 2022, the Company purchased an additional 10% interest in the subsidiary for $15.0 million, resulting in a remaining noncontrolling interest of 10%. Beginning in 2024, the Company has the right to purchase, and the noncontrolling interest holders have the right to sell (Put/call option), the remaining 10% equity interest at its appraised value ($17.0 million as of July 1, 2023). The redeemable noncontrolling interest is measured at the greater of the amount that would be paid if settlement occurred as of the balance sheet date based on the appraised value and the carrying amount adjusted for net income (loss) attributable to the noncontrolling interest or a predetermined floor value. The amount that the Company could be required to pay to purchase the remaining 10% equity interest is not limited. The following table provides a rollforward of the activity related to the Company’s redeemable noncontrolling interests: Six Months Ended July 1, 2023 June 25, 2022 (in thousands) Beginning balance $ 42,427 $ 53,010 Adjustments to redemption value — 2,293 Additional purchases — (15,000) Net income (loss) 2,179 2,487 Foreign currency translation (2,159) (2,613) Ending balance $ 42,447 $ 40,177 |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jul. 01, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company’s effective tax rates remained relatively consistent for the three months ended July 1, 2023 and June 25, 2022 at 22.7% and 23.2%, respectively. The Company’s effective tax rates for the six months ended July 1, 2023 and June 25, 2022 were 21.7% and 19.2%, respectively. The increase in the six month effective tax rates from the prior year period was primarily attributable to a decreased tax benefit from stock-based compensation deductions in the six months ended July 1, 2023. For the three months ended July 1, 2023, the Company’s unrecognized tax benefits increased by $1.1 million to $25.6 million, primarily due to increases in research and development tax credit reserves. For the three months ended July 1, 2023, the amount of unrecognized income tax benefits that would impact the effective tax rate increased by $0.6 million to $21.8 million for the same reasons discussed above. The accrued interest on unrecognized tax benefits was $1.0 million as of July 1, 2023. The Company estimates that it is reasonably possible that the unrecognized tax benefits will decrease by approximately $4 million over the next twelve-month period, primarily due to audit settlements and expiring statutes of limitations. The Company’s prepaid and accrued tax positions are as follows: July 1, 2023 December 31, 2022 Affected Line Item in the Unaudited Condensed Consolidated Balance Sheets (in thousands) Prepaid income tax $ 87,718 $ 88,550 Other current assets Accrued income taxes 44,813 39,854 Other current liabilities The Company conducts business in a number of tax jurisdictions. As a result, it is subject to tax audits on a regular basis including, but not limited to, such major jurisdictions as the U.S., the U.K., China, France, Germany, and Canada. With few exceptions, the Company is no longer subject to U.S. and international income tax examinations for years before 2019. The Company and certain of its subsidiaries have ongoing tax controversies in the U.S., Canada, the U.K., Germany, and India. The Company does not anticipate resolution of these audits will have a material impact on its consolidated financial statements. |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 6 Months Ended |
Jul. 01, 2023 | |
Supplemental Cash Flow Information [Abstract] | |
SUPPLEMENTAL CASH FLOW INFORMATION | SUPPLEMENTAL CASH FLOW INFORMATION Six Months Ended July 1, 2023 June 25, 2022 (in thousands) Non-cash investing activities: Purchases of Property, plant and equipment included in Accounts payable and Accrued liabilities $ 47,850 $ 51,776 Cash, cash equivalents and restricted cash is included in the accompanying unaudited balance sheet as follows: July 1, 2023 December 31, 2022 (in thousands) Supplemental cash flow information: Cash and cash equivalents $ 200,445 $ 233,912 Restricted cash included in Other current assets 7,136 6,192 Restricted cash included in Other assets 1,196 1,110 Cash, cash equivalents, and restricted cash, end of period $ 208,777 $ 241,214 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jul. 01, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Litigation On February 16, 2023, the Company was informed by the U.S. Department of Justice (DOJ) that in conjunction with the U.S. Fish and Wildlife Service (USFWS), it had commenced an investigation into the Company’s conduct regarding several shipments of non-human primates from Cambodia. On February 17, 2023 the Company received a grand jury subpoena requesting certain documents related to such investigation. The Company is aware of a parallel civil investigation being undertaken by the DOJ and USFWS. The Company is cooperating with the DOJ and the USFWS and believes that the concerns raised with respect to the Company’s conduct are without merit. The Company maintains a global supplier onboarding and oversight program incorporating risk-based due diligence, auditing, and monitoring practices to help ensure the quality of our supplier relationships and compliance with applicable U.S. and international laws and regulations, and has operated under the belief that all shipments of non-human primates it received satisfied the material requirements, documentation and related processes and procedures of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) documentation and related processes and procedures, which guides the release of each import by USFWS. Notwithstanding our efforts and good-faith belief, in connection with the civil investigation, the Company has voluntarily suspended future shipments of non-human primates from Cambodia to the United States until such time that the Company and USFWS can agree upon and implement additional procedures to reasonably ensure that non-human primates imported from Cambodia are purpose-bred. The Company continues to care for the Cambodia-sourced non-human primates from certain recent shipments in the United States. The carrying value of the inventory related to these shipments is approximately $20 million. On May 16, 2023, the Company received an inquiry from the Enforcement Division of the U.S. Securities and Exchange Commission (SEC) requesting it to voluntarily provide information primarily related to the sourcing of non-human primates in Asia, and the Company is cooperating with the request. The Company is not able to predict what action, if any, might be taken in the future by the DOJ, USFWS, SEC or other governmental authorities as a result of the investigations. None of the DOJ, USFWS or SEC has provided the Company with any specific timeline or indication as to when these investigations or, specific to the DOJ and USFWS, discussions regarding future processes and procedures, will be concluded or resolved. The Company cannot predict the timing, outcome or possible impact of the investigations, including without limitation any potential fines, penalties or liabilities. A putative securities class action was filed on May 19, 2023 against the Company and three of its current/former officers (James Foster, the Chief Executive Officer; David R. Smith, the former Chief Financial Officer; and Flavia Pease, the current Chief Financial Officer) in the United States District Court for the District of Massachusetts. The case, which is captioned Coleman v. Charles River Laboratories International, Inc., et al., Case No. 23-cv-11132 , asserts claims under §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") on behalf of a putative class of purchasers of Company securities from May 5, 2020 through February 21, 2023. The Complaint alleges that certain of the Company’s disclosures about its practices with respect to the importation of non-human primates made during the putative class period were materially false or misleading. A lead plaintiff has yet to be appointed and the Company intends to file a motion to dismiss. While the Company cannot predict the outcome of this matter, it believes the class action to be without merit and plans to vigorously defend against it. The Company cannot reasonably estimate the maximum potential exposure or the range of possible loss in excess of amounts accrued for this matter. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2023 | Jun. 25, 2022 | Jul. 01, 2023 | Jun. 25, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ 97,020 | $ 109,321 | $ 200,151 | $ 202,343 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Jul. 01, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 6 Months Ended |
Jul. 01, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The accompanying condensed consolidated financial statements are unaudited and have been prepared by Charles River Laboratories International, Inc. (the Company) in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). The year-end condensed consolidated balance sheet data was derived from the Company’s audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for fiscal year 2022. The unaudited condensed consolidated financial statements, in the opinion of management, reflect all normal and recurring adjustments necessary for a fair statement of the Company’s financial position and results of operations. |
Use of Estimates | The preparation of unaudited condensed consolidated financial statements in accordance with U.S. GAAP requires that the Company make estimates and judgments that may affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, judgments, and methodologies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. Changes in estimates are reflected in reported results in the period in which they become known. |
Newly Adopted Accounting Pronouncements | In September 2022, the FASB issued ASU 2022-04, “Liabilities – Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” ASU 2022-04 requires quantitative and qualitative disclosures about the use of supplier finance programs. The ASU is effective for fiscal years beginning after December 15, 2022, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years for selected disclosures, and will be applied on a prospective basis. The Company participates in certain supplier finance programs that are immaterial to the unaudited condensed consolidated financial statements and related disclosures. |
Consolidation | The Company’s unaudited condensed consolidated financial statements reflect its financial statements and those of its subsidiaries in which the Company holds a controlling financial interest. For consolidated entities in which the Company owns or is exposed to less than 100% of the economics, the Company records net income (loss) attributable to noncontrolling interests in its unaudited condensed consolidated statements of income equal to the percentage of the economic or ownership interest retained in such entities by the respective noncontrolling parties. Redeemable noncontrolling interests, where the noncontrolling interest holders have the ability to sell the remaining interests, are classified in the mezzanine section of the unaudited condensed consolidated balance sheets, which is presented above the equity section and below liabilities. Intercompany balances and transactions are eliminated in consolidation. |
Fiscal Period | The Company’s fiscal year is typically based on 52-weeks, with each quarter composed of 13 weeks ending on the last Saturday on, or closest to, March 31, June 30, September 30, and December 31. A 53rd week in the fourth quarter of the fiscal year is occasionally necessary to align with a December 31 calendar year-end, which occurred in fiscal year 2022. |
Segment Reporting | The Company reports its results in three reportable segments: Research Models and Services (RMS), Discovery and Safety Assessment (DSA), and Manufacturing Solutions (Manufacturing). The Company’s RMS reportable segment includes the Research Models, Research Model Services, and Cell Solutions businesses. Research Models includes the commercial production and sale of small research models, as well as the supply of large research models. Research Model Services includes: Genetically Engineered Models and Services (GEMS), which performs contract breeding and other services associated with genetically engineered models; Research Animal Diagnostic Services (RADS), which provides health monitoring and diagnostics services related to research models; Insourcing Solutions (IS), which provides colony management of its clients’ research operations (including recruitment, training, staffing, and management services) within our clients’ facilities and utilizing both our Charles River Accelerator and Development Lab (CRADL™) and our Explora BioLabs options, in which we provide vivarium space to our clients; and Cell Solutions, which supplies controlled, consistent, customized primary cells and blood components derived from normal and mobilized peripheral blood, bone marrow, and cord blood. The Company’s DSA reportable segment includes two businesses: Discovery Services and Safety Assessment. The Company provides regulated and non-regulated DSA services to support the research, development, and regulatory-required safety testing of potential new drugs, including therapeutic discovery and optimization plus in vitro and in vivo studies, laboratory support services, and strategic non-clinical consulting and program management to support product development. The Company’s Manufacturing reportable segment includes Microbial Solutions, which provides in vitro (non-animal) lot-release testing products, microbial detection products, and species identification services and Biologics Solutions (Biologics), which performs specialized testing of biologics (Biologics Testing Solutions) as well as contract development and manufacturing products and services (CDMO). In December of 2022, the Company sold the Avian Vaccine Services business (Avian), previously reported in the Manufacturing segment, which supplied specific-pathogen-free chicken eggs and chickens. |
ACQUISITIONS AND DIVESTITURES (
ACQUISITIONS AND DIVESTITURES (Tables) | 6 Months Ended |
Jul. 01, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Purchase Price Allocation and Transaction and Integration Costs | The purchase price allocation was as follows: SAMDI (1) Explora BioLabs January 27, 2023 April 5, 2022 (in thousands) Trade receivables $ 513 $ 7,679 Other current assets (excluding cash) 75 1,067 Property, plant and equipment 593 37,369 Operating lease right-of-use asset, net — 48,613 Goodwill (2) 37,129 215,752 Definite-lived intangible assets 33,070 70,100 Other long-term assets 6 556 Deferred revenue (43) (3,507) Other current liabilities (351) (15,507) Operating lease right-of-use liabilities (Long-term) — (57,193) Deferred tax liabilities (8,191) (18,601) Other long-term liabilities — (1,807) Total purchase price allocation $ 62,801 $ 284,521 (1) Purchase price allocation is preliminary and subject to change as additional information becomes available concerning the fair value and tax basis of the assets acquired and liabilities assumed, including certain contracts and obligations. Any additional adjustments to the purchase price allocation will be made as soon as practicable but no later than one year from the date of acquisition. (2) The goodwill resulting from these transactions is primarily attributable to the potential growth of the Company’s segments from new customers introduced to the acquired businesses and the assembled workforce of the acquirees, thus is not deductible for tax purposes. Explora BioLabs had $5.0 million of goodwill due to a prior asset acquisition that is deductible for tax purposes. |
Schedule of Definite-Lived Intangible Assets Acquired as Part of Business Combination | The definite-lived intangible assets acquired were as follows: SAMDI Explora BioLabs Definite-Lived Intangible Assets (in thousands) Client relationships $ 23,400 $ 64,000 Other intangible assets 9,670 6,100 Total definite-lived intangible assets $ 33,070 $ 70,100 Weighted Average Amortization Life (in years) Client relationships 15 13 Other intangible assets 7 4 Total definite-lived intangible assets 12 12 Three Months Ended Six Months Ended July 1, 2023 June 25, 2022 July 1, 2023 June 25, 2022 (in thousands) Transaction and Integration Costs Selling, general and administrative expenses $ 1,224 $ 4,426 $ 2,288 $ 11,539 |
Schedule of Major Classes of Assets and Liabilities Associated with Divestitures | The carrying amounts of the major classes of assets and liabilities associated with the divestitures of the businesses were as follows: December 19, 2022 Avian (in thousands) Assets Current assets $ 30,545 Property, plant, and equipment, net 24,602 Operating lease right-of-use assets, net 611 Goodwill 3,168 Intangible assets, net 1,629 Other assets 10 Total assets $ 60,565 Liabilities Current liabilities $ 8,139 Operating lease right-of-use liabilities 331 Total liabilities $ 8,470 |
REVENUE FROM CONTRACTS WITH C_2
REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) | 6 Months Ended |
Jul. 01, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | The following table disaggregates the Company’s revenue by major business line and timing of transfer of products or services: Three Months Ended Six Months Ended July 1, 2023 June 25, 2022 July 1, 2023 June 25, 2022 (in thousands) Timing of Revenue Recognition: RMS Services and products transferred over time $ 94,458 $ 85,803 $ 188,097 $ 155,727 Services and products transferred at a point in time 115,490 100,607 221,617 207,225 Total RMS revenue 209,948 186,410 409,714 362,952 DSA Services and products transferred over time 662,653 589,371 1,324,489 1,131,707 Services and products transferred at a point in time 804 2,546 1,321 4,469 Total DSA revenue 663,457 591,917 1,325,810 1,136,176 Manufacturing Services and products transferred over time 100,460 92,811 186,546 187,820 Services and products transferred at a point in time 86,072 101,993 167,240 200,112 Total Manufacturing revenue 186,532 194,804 353,786 387,932 Total revenue $ 1,059,937 $ 973,131 $ 2,089,310 $ 1,887,060 Revenue by geographic area is as follows: U.S. Europe Canada Asia Pacific Other Consolidated (in thousands) Three Months Ended: July 1, 2023 $ 606,775 $ 272,976 $ 117,647 $ 59,864 $ 2,675 $ 1,059,937 June 25, 2022 566,917 263,584 93,694 46,239 2,697 973,131 Six Months Ended: July 1, 2023 $ 1,212,216 $ 540,679 $ 228,253 $ 102,677 $ 5,485 $ 2,089,310 June 25, 2022 1,093,466 514,671 178,940 95,185 4,798 1,887,060 |
Schedule of Client Receivables, Contract Assets and Contract Liabilities | The following table provides information about client receivables, contract assets, and contract liabilities from contracts with customers: July 1, 2023 December 31, 2022 (in thousands) Assets from contracts with customers Client receivables $ 591,006 $ 559,410 Unbilled revenue 227,680 204,258 Total 818,686 763,668 Less: Allowance for credit losses (18,040) (11,278) Trade receivables and contract assets, net $ 800,646 $ 752,390 Liabilities from contracts with customers Current deferred revenue $ 257,396 $ 264,259 Long-term deferred revenue (included in Other long-term liabilities) 29,533 25,795 Customer contract deposits (included in Other current-liabilities) 77,422 91,640 Three Months Ended Six Months Ended July 1, 2023 June 25, 2022 July 1, 2023 June 25, 2022 (in thousands) Affected Line Item in the Unaudited Condensed Consolidated Statements of Income Lease revenue $ 23,891 $ 13,912 $ 47,981 $ 21,768 Service revenue |
SEGMENT AND GEOGRAPHIC INFORM_2
SEGMENT AND GEOGRAPHIC INFORMATION (Tables) | 6 Months Ended |
Jul. 01, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Revenue and Other Financial Information by Business Segment | The following table presents revenue and other financial information by reportable segment: Three Months Ended Six Months Ended July 1, 2023 June 25, 2022 July 1, 2023 June 25, 2022 (in thousands) RMS Revenue $ 209,948 $ 186,410 $ 409,714 $ 362,952 Operating income 48,918 39,526 89,327 87,408 Depreciation and amortization 13,949 13,228 27,438 22,697 Capital expenditures 7,493 13,850 26,577 22,496 DSA Revenue $ 663,457 $ 591,917 $ 1,325,810 $ 1,136,176 Operating income 161,538 128,793 332,969 233,779 Depreciation and amortization 43,124 44,626 85,574 91,415 Capital expenditures 48,326 41,578 113,510 90,508 Manufacturing Revenue $ 186,532 $ 194,804 $ 353,786 $ 387,932 Operating income 24,403 62,503 26,509 108,871 Depreciation and amortization 19,523 18,000 39,607 36,482 Capital expenditures 10,862 24,431 32,600 47,259 Unallocated Corporate Operating income (1) (69,914) (43,411) $ (115,968) $ (93,869) Depreciation and amortization 1,075 567 2,121 1,126 Capital expenditures 702 2,993 1,571 3,053 Consolidated Revenue 1,059,937 973,131 $ 2,089,310 $ 1,887,060 Operating income 164,945 187,411 332,837 336,189 Depreciation and amortization 77,671 76,421 154,740 151,720 Capital expenditures 67,383 82,852 174,258 163,316 (1) Operating income for unallocated corporate expense consists of costs associated with departments such as senior executives, corporate accounting, legal, tax, human resources, treasury, and investor relations. |
Revenue Disaggregated by Products and Services and Geographic Area | The following table disaggregates the Company’s revenue by major business line and timing of transfer of products or services: Three Months Ended Six Months Ended July 1, 2023 June 25, 2022 July 1, 2023 June 25, 2022 (in thousands) Timing of Revenue Recognition: RMS Services and products transferred over time $ 94,458 $ 85,803 $ 188,097 $ 155,727 Services and products transferred at a point in time 115,490 100,607 221,617 207,225 Total RMS revenue 209,948 186,410 409,714 362,952 DSA Services and products transferred over time 662,653 589,371 1,324,489 1,131,707 Services and products transferred at a point in time 804 2,546 1,321 4,469 Total DSA revenue 663,457 591,917 1,325,810 1,136,176 Manufacturing Services and products transferred over time 100,460 92,811 186,546 187,820 Services and products transferred at a point in time 86,072 101,993 167,240 200,112 Total Manufacturing revenue 186,532 194,804 353,786 387,932 Total revenue $ 1,059,937 $ 973,131 $ 2,089,310 $ 1,887,060 Revenue by geographic area is as follows: U.S. Europe Canada Asia Pacific Other Consolidated (in thousands) Three Months Ended: July 1, 2023 $ 606,775 $ 272,976 $ 117,647 $ 59,864 $ 2,675 $ 1,059,937 June 25, 2022 566,917 263,584 93,694 46,239 2,697 973,131 Six Months Ended: July 1, 2023 $ 1,212,216 $ 540,679 $ 228,253 $ 102,677 $ 5,485 $ 2,089,310 June 25, 2022 1,093,466 514,671 178,940 95,185 4,798 1,887,060 |
INVENTORY (Tables)
INVENTORY (Tables) | 6 Months Ended |
Jul. 01, 2023 | |
Inventory Disclosure [Abstract] | |
Composition of Inventories | The composition of inventories is as follows: July 1, 2023 December 31, 2022 (in thousands) Raw materials and supplies $ 42,130 $ 38,892 Work in process 40,396 48,367 Finished products 202,754 168,550 Inventories $ 285,280 $ 255,809 |
VENTURE CAPITAL AND STRATEGIC_2
VENTURE CAPITAL AND STRATEGIC EQUITY INVESTMENTS - (Tables) | 6 Months Ended |
Jul. 01, 2023 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | Venture capital investments are summarized below: Six Months Ended July 1, 2023 June 25, 2022 (in thousands) Beginning balance $ 129,012 $ 149,640 Capital contributions 8,702 6,384 Distributions (9,679) (4,042) Losses (8,429) (23,050) Foreign currency translation 466 (1,065) Ending balance $ 120,072 $ 127,867 The Company also invests, with minority positions, directly in equity of predominantly privately held companies. Strategic investments are summarized below: Six Months Ended July 1, 2023 June 25, 2022 (in thousands) Beginning balance $ 182,590 $ 51,712 Purchase of investments 13,710 102,220 Distributions (4,146) (151) Gain (loss) 3,253 (465) Reduction for acquisition of entity (12,635) — Foreign currency translation (2,563) (2,112) Ending balance $ 180,209 $ 151,204 |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 6 Months Ended |
Jul. 01, 2023 | |
Fair Value Disclosures [Abstract] | |
Summary of Assets and Liabilities Measured at Fair Value on a Recurring Basis | Assets and liabilities measured at fair value on a recurring basis are summarized below: July 1, 2023 Level 1 Level 2 Level 3 Total Current assets measured at fair value: (in thousands) Cash equivalents $ — $ 28 $ — $ 28 Other assets: Life insurance policies — 38,308 — 38,308 Interest rate swap — 3,121 — 3,121 Total assets measured at fair value $ — $ 41,457 $ — $ 41,457 December 31, 2022 Level 1 Level 2 Level 3 Total Current assets measured at fair value: (in thousands) Cash equivalents $ — $ 78 $ — $ 78 Other assets: Life insurance policies — 34,527 — 34,527 Total assets measured at fair value $ — $ 34,605 $ — $ 34,605 Accrued liabilities measured at fair value: Contingent consideration $ — $ — $ 13,431 $ 13,431 Other long-term liabilities measured at fair value: Interest rate swap — 1,523 — 1,523 Total liabilities measured at fair value $ — $ 1,523 $ 13,431 $ 14,954 July 1, 2023 December 31, 2022 Book Value Fair Value Book Value Fair Value (in thousands) 4.25% Senior Notes due 2028 $ 500,000 $ 457,500 $ 500,000 $ 460,450 3.75% Senior Notes due 2029 500,000 440,000 500,000 442,200 4.00% Senior Notes due 2031 500,000 433,750 500,000 432,500 |
Rollforward of Contingent Consideration Related to Previous Acquisitions | The following table provides a rollforward of the contingent consideration related to the Company’s acquisitions. Six Months Ended July 1, 2023 June 25, 2022 (in thousands) Beginning balance $ 13,431 $ 37,244 Payments (15,130) (11,476) Total gains or losses (realized/unrealized): Adjustment of previously recorded contingent liability 1,810 (15,340) Foreign currency translation (111) (878) Ending balance $ — $ 9,550 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jul. 01, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The following table provides a rollforward of the Company’s goodwill: RMS DSA (1) Manufacturing Total (in thousands) December 31, 2022 $ 497,710 $ 1,433,601 $ 918,592 $ 2,849,903 Acquisitions — 37,129 — 37,129 Foreign exchange (656) 14,969 15,248 29,561 July 1, 2023 $ 497,054 $ 1,485,699 $ 933,840 $ 2,916,593 (1) DSA includes accumulated impairment losses of $1 billion, which were recognized in fiscal years 2008 and 2010. |
Schedule of Intangible Assets | The following table displays intangible assets, net by major class: July 1, 2023 December 31, 2022 Gross Accumulated Amortization Net Gross Accumulated Amortization Net (in thousands) Client relationships $ 1,534,069 $ (659,955) $ 874,114 $ 1,491,926 $ (591,417) $ 900,509 Technology 141,716 (107,312) 34,404 129,626 (101,655) 27,971 Backlog 15,441 (13,903) 1,538 15,236 (12,512) 2,724 Trademarks and trade names 12,835 (5,021) 7,814 12,617 (4,410) 8,207 Other 38,079 (26,059) 12,020 37,985 (22,121) 15,864 Intangible assets $ 1,742,140 $ (812,250) $ 929,890 $ 1,687,390 $ (732,115) $ 955,275 |
DEBT AND OTHER FINANCING ARRA_2
DEBT AND OTHER FINANCING ARRANGEMENTS (Tables) | 6 Months Ended |
Jul. 01, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt and Finance Lease Obligations | Long-term debt, net and finance leases consists of the following: July 1, 2023 December 31, 2022 (in thousands) Revolving facility $ 1,168,052 $ 1,197,586 4.25% Senior Notes due 2028 500,000 500,000 3.75% Senior Notes due 2029 500,000 500,000 4.00% Senior Notes due 2031 500,000 500,000 Other debt 1,423 1,594 Finance leases 29,354 30,646 Total debt and finance leases 2,698,829 2,729,826 Less: Current portion of long-term debt 1,188 1,347 Current portion of finance leases 2,535 2,330 Current portion of long-term debt and finance leases 3,723 3,677 Long-term debt and finance leases 2,695,106 2,726,149 Debt discount and debt issuance costs (16,634) (18,618) Long-term debt, net and finance leases $ 2,678,472 $ 2,707,531 |
Schedule of Cross Currency Loans | The gains and losses incurred on these transactions were as follows: Three Months Ended Six Months Ended June 25, 2022 June 25, 2022 Affected Line Item in the Unaudited Condensed Consolidated Statements of Income (in thousands) Loss on foreign debt remeasurement (19,423) (30,523) Other expense, net Gain on foreign exchange forward contract 20,522 32,306 Interest expense |
EQUITY AND NONCONTROLLING INT_2
EQUITY AND NONCONTROLLING INTERESTS (Tables) | 6 Months Ended |
Jul. 01, 2023 | |
Equity [Abstract] | |
Reconciliation of the Numerator and Denominator in the Computations of the Basic and Diluted Earnings Per Share | The following table reconciles the numerator and denominator in the computations of basic and diluted earnings per share: Three Months Ended Six Months Ended July 1, 2023 June 25, 2022 July 1, 2023 June 25, 2022 (in thousands) Numerator: Net income $ 99,443 $ 110,664 $ 203,397 $ 205,890 Less: Net income attributable to noncontrolling interests 2,423 1,343 3,246 3,547 Net income attributable to common shareholders $ 97,020 $ 109,321 $ 200,151 $ 202,343 Denominator: Weighted-average shares outstanding - Basic 51,216 50,823 51,157 50,732 Effect of dilutive securities: Stock options, restricted stock units and performance share units 251 460 225 561 Weighted-average shares outstanding - Diluted 51,467 51,283 51,382 51,293 Anti-dilutive common stock equivalents (1) 594 597 589 550 (1) These common stock equivalents were outstanding for the periods presented, but were not included in the computation of diluted EPS for those periods because their inclusion would have had an anti-dilutive effect. |
Schedule of Accumulated Other Comprehensive Income (Loss) | Changes to each component of accumulated other comprehensive income (loss), net of income taxes, are as follows: Foreign Currency Translation Adjustment Pension and Other Post-Retirement Benefit Plans Net Unrealized (Loss) Gain on Cash Flow Hedge Total (in thousands) December 31, 2022 $ (217,785) $ (43,114) $ (1,158) $ (262,057) Other comprehensive income before reclassifications 48,699 344 4,644 53,687 Net current period other comprehensive income 48,699 344 4,644 53,687 Income tax expense (benefit) 807 209 (1,117) (101) July 1, 2023 $ (169,893) $ (42,979) $ 4,603 $ (208,269) |
Rollforward Redeemable Noncontrolling Interest | The following table provides a rollforward of the activity related to the Company’s redeemable noncontrolling interests: Six Months Ended July 1, 2023 June 25, 2022 (in thousands) Beginning balance $ 42,427 $ 53,010 Adjustments to redemption value — 2,293 Additional purchases — (15,000) Net income (loss) 2,179 2,487 Foreign currency translation (2,159) (2,613) Ending balance $ 42,447 $ 40,177 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 6 Months Ended |
Jul. 01, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of Prepaid and Accrued Tax Positions | The Company’s prepaid and accrued tax positions are as follows: July 1, 2023 December 31, 2022 Affected Line Item in the Unaudited Condensed Consolidated Balance Sheets (in thousands) Prepaid income tax $ 87,718 $ 88,550 Other current assets Accrued income taxes 44,813 39,854 Other current liabilities |
SUPPLEMENTAL CASH FLOW INFORM_2
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 6 Months Ended |
Jul. 01, 2023 | |
Supplemental Cash Flow Information [Abstract] | |
Schedule of Supplemental Cash Flow Information | Six Months Ended July 1, 2023 June 25, 2022 (in thousands) Non-cash investing activities: Purchases of Property, plant and equipment included in Accounts payable and Accrued liabilities $ 47,850 $ 51,776 Cash, cash equivalents and restricted cash is included in the accompanying unaudited balance sheet as follows: July 1, 2023 December 31, 2022 (in thousands) Supplemental cash flow information: Cash and cash equivalents $ 200,445 $ 233,912 Restricted cash included in Other current assets 7,136 6,192 Restricted cash included in Other assets 1,196 1,110 Cash, cash equivalents, and restricted cash, end of period $ 208,777 $ 241,214 |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) | 6 Months Ended |
Jul. 01, 2023 segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable segments | 3 |
ACQUISITIONS AND DIVESTITURES -
ACQUISITIONS AND DIVESTITURES - Narrative (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | ||||
Jan. 27, 2023 | Apr. 05, 2022 | Jul. 01, 2023 | Jun. 25, 2022 | Dec. 31, 2022 | Dec. 20, 2022 | |
Business Acquisition [Line Items] | ||||||
Gain (Loss) on Disposition of Business | $ (563) | $ 0 | ||||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Avian | ||||||
Business Acquisition [Line Items] | ||||||
Consideration received from divestiture | $ 167,300 | |||||
Contingent consideration | $ 10,300 | $ 30,000 | ||||
Gain (Loss) on Disposition of Business | $ 123,400 | |||||
SAMDI Tech, Inc | ||||||
Business Acquisition [Line Items] | ||||||
Purchase price | $ 62,800 | |||||
Cash acquired | $ 400 | |||||
Business combination, step acquisition, equity interest in acquiree, percentage | 20% | |||||
Value of previously owned interest in acquiree | $ 12,600 | |||||
Explora BioLabs | ||||||
Business Acquisition [Line Items] | ||||||
Purchase price | $ 284,500 | |||||
Cash acquired | $ 6,600 |
ACQUISITIONS AND DIVESTITURES_2
ACQUISITIONS AND DIVESTITURES - Purchase Price Allocation (Details) - USD ($) $ in Thousands | Jul. 01, 2023 | Jan. 27, 2023 | Dec. 31, 2022 | Apr. 05, 2022 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 2,916,593 | $ 2,849,903 | ||
SAMDI Tech, Inc | ||||
Business Acquisition [Line Items] | ||||
Trade receivables | $ 513 | |||
Other current assets (excluding cash) | 75 | |||
Property, plant and equipment | 593 | |||
Operating lease right-of-use assets, net | 0 | |||
Goodwill | 37,129 | |||
Definite-lived intangible assets | 33,070 | |||
Other long-term assets | 6 | |||
Deferred revenue | (43) | |||
Other current liabilities | (351) | |||
Operating lease right-of-use liabilities (Long-term) | 0 | |||
Deferred tax liabilities | (8,191) | |||
Other long-term liabilities | 0 | |||
Total purchase price allocation | $ 62,801 | |||
Explora BioLabs | ||||
Business Acquisition [Line Items] | ||||
Trade receivables | $ 7,679 | |||
Other current assets (excluding cash) | 1,067 | |||
Property, plant and equipment | 37,369 | |||
Operating lease right-of-use assets, net | 48,613 | |||
Goodwill | 215,752 | |||
Definite-lived intangible assets | 70,100 | |||
Other long-term assets | 556 | |||
Deferred revenue | (3,507) | |||
Other current liabilities | (15,507) | |||
Operating lease right-of-use liabilities (Long-term) | (57,193) | |||
Deferred tax liabilities | (18,601) | |||
Other long-term liabilities | (1,807) | |||
Total purchase price allocation | 284,521 | |||
Goodwill acquired but not deductible for tax purposes | $ 5,000 |
ACQUISITIONS AND DIVESTITURES_3
ACQUISITIONS AND DIVESTITURES - Definite-Lived Intangible Assets (Details) - USD ($) $ in Thousands | Jan. 27, 2023 | Apr. 05, 2022 |
Explora BioLabs | ||
Business Acquisition [Line Items] | ||
Definite-Lived Intangible Assets | $ 70,100 | |
Weighted Average Amortization Life | 12 years | |
SAMDI Tech, Inc | ||
Business Acquisition [Line Items] | ||
Definite-Lived Intangible Assets | $ 33,070 | |
Weighted Average Amortization Life | 12 years | |
Client relationships | Explora BioLabs | ||
Business Acquisition [Line Items] | ||
Definite-Lived Intangible Assets | $ 64,000 | |
Weighted Average Amortization Life | 13 years | |
Client relationships | SAMDI Tech, Inc | ||
Business Acquisition [Line Items] | ||
Definite-Lived Intangible Assets | $ 23,400 | |
Weighted Average Amortization Life | 15 years | |
Other intangible assets | Explora BioLabs | ||
Business Acquisition [Line Items] | ||
Definite-Lived Intangible Assets | $ 6,100 | |
Weighted Average Amortization Life | 4 years | |
Other intangible assets | SAMDI Tech, Inc | ||
Business Acquisition [Line Items] | ||
Definite-Lived Intangible Assets | $ 9,670 | |
Weighted Average Amortization Life | 7 years |
ACQUISITIONS AND DIVESTITURES_4
ACQUISITIONS AND DIVESTITURES - Transaction and Integration Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2023 | Jun. 25, 2022 | Jul. 01, 2023 | Jun. 25, 2022 | |
Business Combination and Asset Acquisition [Abstract] | ||||
Selling, general and administrative expenses | $ 1,224 | $ 4,426 | $ 2,288 | $ 11,539 |
ACQUISITIONS AND DIVESTITURES_5
ACQUISITIONS AND DIVESTITURES - Schedule of Divestitures (Details) - Disposal Group, Disposed of by Sale, Not Discontinued Operations - Avian $ in Thousands | Dec. 19, 2022 USD ($) |
Assets | |
Current assets | $ 30,545 |
Property, plant, and equipment, net | 24,602 |
Operating lease right-of-use assets, net | 611 |
Goodwill | 3,168 |
Intangible assets, net | 1,629 |
Other assets | 10 |
Total assets | 60,565 |
Liabilities | |
Current liabilities | 8,139 |
Operating lease right-of-use liabilities | 331 |
Total liabilities | $ 8,470 |
REVENUE FROM CONTRACTS WITH C_3
REVENUE FROM CONTRACTS WITH CUSTOMERS - Disaggregation of Revenues by Major Business Line (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2023 | Jun. 25, 2022 | Jul. 01, 2023 | Jun. 25, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 1,059,937 | $ 973,131 | $ 2,089,310 | $ 1,887,060 |
RMS | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 209,948 | 186,410 | 409,714 | 362,952 |
RMS | Services and products transferred over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 94,458 | 85,803 | 188,097 | 155,727 |
RMS | Services and products transferred at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 115,490 | 100,607 | 221,617 | 207,225 |
DSA | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 663,457 | 591,917 | 1,325,810 | 1,136,176 |
DSA | Services and products transferred over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 662,653 | 589,371 | 1,324,489 | 1,131,707 |
DSA | Services and products transferred at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 804 | 2,546 | 1,321 | 4,469 |
Manufacturing | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 186,532 | 194,804 | 353,786 | 387,932 |
Manufacturing | Services and products transferred over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 100,460 | 92,811 | 186,546 | 187,820 |
Manufacturing | Services and products transferred at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 86,072 | $ 101,993 | $ 167,240 | $ 200,112 |
REVENUE FROM CONTRACTS WITH C_4
REVENUE FROM CONTRACTS WITH CUSTOMERS - Schedule of Client Receivables, Contract Assets and Contract Liabilities (Details) - USD ($) $ in Thousands | Jul. 01, 2023 | Dec. 31, 2022 |
Revenue from Contract with Customer [Abstract] | ||
Client receivables | $ 591,006 | $ 559,410 |
Unbilled revenue | 227,680 | 204,258 |
Total | 818,686 | 763,668 |
Less: Allowance for credit losses | (18,040) | (11,278) |
Trade receivables and contract assets, net | 800,646 | 752,390 |
Current deferred revenue | 257,396 | 264,259 |
Long-term deferred revenue (included in Other long-term liabilities) | 29,533 | 25,795 |
Customer contract deposits (included in Other current-liabilities) | $ 77,422 | $ 91,640 |
REVENUE FROM CONTRACTS WITH C_5
REVENUE FROM CONTRACTS WITH CUSTOMERS - Narrative (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Jul. 01, 2023 | Jun. 25, 2022 | Dec. 31, 2022 | |
Disaggregation of Revenue [Line Items] | |||
Percentage of unbilled revenue billed during period | 85% | 75% | |
Amount of unbilled revenue billed during period | $ 204 | $ 161 | |
Percentage of contract liabilities recognized as revenue during period | 75% | 75% | |
Contract with customer, liability, revenue recognized, including opening balance | $ 290 | ||
Amount of contract liabilities recognized as revenue | $ 240 | ||
Unpaid advanced client billings | 42 | $ 54 | |
Accounts receivable, credit loss expense (reversal) | 9.1 | $ 0.4 | |
Performance obligations expected to be satisfied | $ 1,029.1 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-02 | |||
Disaggregation of Revenue [Line Items] | |||
Revenue, remaining performance obligation, percentage | 50% | ||
Performance obligations expected to be satisfied, expected timing | 12 months |
REVENUE FROM CONTRACTS WITH C_6
REVENUE FROM CONTRACTS WITH CUSTOMERS - Schedule of Lease Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2023 | Jun. 25, 2022 | Jul. 01, 2023 | Jun. 25, 2022 | |
Revenue from Contract with Customer [Abstract] | ||||
Lease revenue | $ 23,891 | $ 13,912 | $ 47,981 | $ 21,768 |
SEGMENT AND GEOGRAPHIC INFORM_3
SEGMENT AND GEOGRAPHIC INFORMATION - Revenue and Other Financial Information by Reportable Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2023 | Jun. 25, 2022 | Jul. 01, 2023 | Jun. 25, 2022 | |
Segment Reporting Information [Line Items] | ||||
Revenue | $ 1,059,937 | $ 973,131 | $ 2,089,310 | $ 1,887,060 |
Operating income | 164,945 | 187,411 | 332,837 | 336,189 |
Depreciation and amortization | 77,671 | 76,421 | 154,740 | 151,720 |
Capital expenditures | 67,383 | 82,852 | 174,258 | 163,316 |
Unallocated Corporate | ||||
Segment Reporting Information [Line Items] | ||||
Operating income | (69,914) | (43,411) | (115,968) | (93,869) |
Depreciation and amortization | 1,075 | 567 | 2,121 | 1,126 |
Capital expenditures | 702 | 2,993 | 1,571 | 3,053 |
RMS | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 209,948 | 186,410 | 409,714 | 362,952 |
RMS | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 209,948 | 186,410 | 409,714 | 362,952 |
Operating income | 48,918 | 39,526 | 89,327 | 87,408 |
Depreciation and amortization | 13,949 | 13,228 | 27,438 | 22,697 |
Capital expenditures | 7,493 | 13,850 | 26,577 | 22,496 |
DSA | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 663,457 | 591,917 | 1,325,810 | 1,136,176 |
DSA | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 663,457 | 591,917 | 1,325,810 | 1,136,176 |
Operating income | 161,538 | 128,793 | 332,969 | 233,779 |
Depreciation and amortization | 43,124 | 44,626 | 85,574 | 91,415 |
Capital expenditures | 48,326 | 41,578 | 113,510 | 90,508 |
Manufacturing | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 186,532 | 194,804 | 353,786 | 387,932 |
Manufacturing | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 186,532 | 194,804 | 353,786 | 387,932 |
Operating income | 24,403 | 62,503 | 26,509 | 108,871 |
Depreciation and amortization | 19,523 | 18,000 | 39,607 | 36,482 |
Capital expenditures | $ 10,862 | $ 24,431 | $ 32,600 | $ 47,259 |
SEGMENT AND GEOGRAPHIC INFORM_4
SEGMENT AND GEOGRAPHIC INFORMATION - Disaggregation of Revenue by Geographic Area (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2023 | Jun. 25, 2022 | Jul. 01, 2023 | Jun. 25, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 1,059,937 | $ 973,131 | $ 2,089,310 | $ 1,887,060 |
U.S. | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 606,775 | 566,917 | 1,212,216 | 1,093,466 |
Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 272,976 | 263,584 | 540,679 | 514,671 |
Canada | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 117,647 | 93,694 | 228,253 | 178,940 |
Asia Pacific | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 59,864 | 46,239 | 102,677 | 95,185 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 2,675 | $ 2,697 | $ 5,485 | $ 4,798 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | Jul. 01, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Raw materials and supplies | $ 42,130 | $ 38,892 |
Work in process | 40,396 | 48,367 |
Finished products | 202,754 | 168,550 |
Inventories | $ 285,280 | $ 255,809 |
VENTURE CAPITAL AND STRATEGIC_3
VENTURE CAPITAL AND STRATEGIC EQUITY INVESTMENTS - Venture Capital Investments (Details) - Venture Capital Funds - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 01, 2023 | Jun. 25, 2022 | |
Equity Method Investment [Roll Forward] | ||
Beginning balance | $ 129,012 | $ 149,640 |
Capital contributions | 8,702 | 6,384 |
Distributions | (9,679) | (4,042) |
Losses | (8,429) | (23,050) |
Foreign currency translation | 466 | (1,065) |
Ending balance | $ 120,072 | $ 127,867 |
VENTURE CAPITAL AND STRATEGIC_4
VENTURE CAPITAL AND STRATEGIC EQUITY INVESTMENTS - Strategic Investments (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 01, 2023 | Jun. 25, 2022 | |
Equity Method Investment [Roll Forward] | ||
Beginning balance | $ 311,602 | |
Ending balance | 300,281 | |
Strategic Investments | ||
Equity Method Investment [Roll Forward] | ||
Beginning balance | 182,590 | $ 51,712 |
Purchases of additional equity interests, net | 13,710 | 102,220 |
Distributions | (4,146) | (151) |
Losses | 3,253 | (465) |
Reduction for acquisition of entity | (12,635) | 0 |
Foreign currency translation | (2,563) | (2,112) |
Ending balance | $ 180,209 | $ 151,204 |
VENTURE CAPITAL AND STRATEGIC_5
VENTURE CAPITAL AND STRATEGIC EQUITY INVESTMENTS - Narrative (Details) - USD ($) $ in Millions | 1 Months Ended | |
Jul. 28, 2023 | Apr. 30, 2022 | |
Subsequent Event | ||
Schedule of Equity Method Investments [Line Items] | ||
Contingent liability, term | 3 years | |
Call option term, period after sixth anniversary | 1 month | |
Put option term, period after first anniversary | 12 months | |
DSA Supplier | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 49% | |
Purchases of additional equity interests, net | $ 90 | |
Contingent payments | 5 | |
Allocable basis of investment in excess of proportional interest in underlying net assets | 86.7 | |
DSA Supplier | Subsequent Event | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 90% | |
Purchases of additional equity interests, net | $ 143 | |
Contingent payments | $ 55 | |
Additional equity stake | 41% | |
Remaining equity to purchase | 10% | |
DSA Supplier | Deferred Tax Liability | ||
Schedule of Equity Method Investments [Line Items] | ||
Allocable basis of investment in excess of proportional interest in underlying net assets | 10.7 | |
DSA Supplier | Goodwill | ||
Schedule of Equity Method Investments [Line Items] | ||
Allocable basis of investment in excess of proportional interest in underlying net assets | 26.2 | |
DSA Supplier | Intangible Assets | ||
Schedule of Equity Method Investments [Line Items] | ||
Allocable basis of investment in excess of proportional interest in underlying net assets | $ 71.2 |
FAIR VALUE - Fair Value of Asse
FAIR VALUE - Fair Value of Assets and Liabilities (Details) - Fair Value, Recurring - USD ($) $ in Thousands | Jul. 01, 2023 | Dec. 31, 2022 |
Current assets measured at fair value: | ||
Cash equivalents | $ 28 | $ 78 |
Other assets: | ||
Life insurance policies | 38,308 | 34,527 |
Interest rate swap | 3,121 | |
Total assets measured at fair value | 41,457 | 34,605 |
Accrued liabilities measured at fair value: | ||
Contingent consideration | 13,431 | |
Other long-term liabilities measured at fair value: | ||
Interest rate swap | 1,523 | |
Total liabilities measured at fair value | 14,954 | |
Level 1 | ||
Current assets measured at fair value: | ||
Cash equivalents | 0 | 0 |
Other assets: | ||
Life insurance policies | 0 | 0 |
Interest rate swap | 0 | |
Total assets measured at fair value | 0 | 0 |
Accrued liabilities measured at fair value: | ||
Contingent consideration | 0 | |
Other long-term liabilities measured at fair value: | ||
Interest rate swap | 0 | |
Total liabilities measured at fair value | 0 | |
Level 2 | ||
Current assets measured at fair value: | ||
Cash equivalents | 28 | 78 |
Other assets: | ||
Life insurance policies | 38,308 | 34,527 |
Interest rate swap | 3,121 | |
Total assets measured at fair value | 41,457 | 34,605 |
Accrued liabilities measured at fair value: | ||
Contingent consideration | 0 | |
Other long-term liabilities measured at fair value: | ||
Interest rate swap | 1,523 | |
Total liabilities measured at fair value | 1,523 | |
Level 3 | ||
Current assets measured at fair value: | ||
Cash equivalents | 0 | 0 |
Other assets: | ||
Life insurance policies | 0 | 0 |
Interest rate swap | 0 | |
Total assets measured at fair value | $ 0 | 0 |
Accrued liabilities measured at fair value: | ||
Contingent consideration | 13,431 | |
Other long-term liabilities measured at fair value: | ||
Interest rate swap | 0 | |
Total liabilities measured at fair value | $ 13,431 |
FAIR VALUE - Contingent Conside
FAIR VALUE - Contingent Consideration (Details) - Contingent Consideration - Level 3 - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 01, 2023 | Jun. 25, 2022 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | $ 13,431 | $ 37,244 |
Payments | (15,130) | (11,476) |
Adjustment of previously recorded contingent liability | 1,810 | (15,340) |
Foreign currency translation | (111) | (878) |
Ending balance | $ 0 | $ 9,550 |
FAIR VALUE - Narrative (Details
FAIR VALUE - Narrative (Details) - USD ($) $ in Thousands | Jul. 01, 2023 | Mar. 30, 2023 | Dec. 31, 2022 | Nov. 30, 2022 | Jun. 25, 2022 | Dec. 25, 2021 |
Designated as Hedging Instrument | Interest Rate Swap | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Notional amount | $ 500,000 | |||||
Derivative, fixed interest rate | 4.65% | 4.70% | ||||
Level 3 | Contingent Consideration | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fair value of contingent consideration | $ 0 | $ 13,431 | $ 9,550 | $ 37,244 | ||
Weighted average probability percentage of achieving maximum target | 0% | |||||
Level 3 | Average Volatility | Contingent Consideration | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Contingent consideration, measurement input | 0.40 | |||||
Level 3 | Weighted Average Cost of Capital | Contingent Consideration | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Contingent consideration, measurement input | 0.16 | |||||
Level 3 | Maximum | Contingent Consideration | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Fair value of contingent consideration | $ 43,000 |
FAIR VALUE - Schedule of Fair V
FAIR VALUE - Schedule of Fair Value of Debt (Details) - Senior Notes - USD ($) $ in Thousands | Jul. 01, 2023 | Dec. 31, 2022 |
4.25% Senior Notes due 2028 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 4.25% | 4.25% |
4.25% Senior Notes due 2028 | Book Value | ||
Debt Instrument [Line Items] | ||
Debt instrument value | $ 500,000 | $ 500,000 |
4.25% Senior Notes due 2028 | Fair Value | ||
Debt Instrument [Line Items] | ||
Debt instrument value | $ 457,500 | $ 460,450 |
3.75% Senior Notes due 2029 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 3.75% | 3.75% |
3.75% Senior Notes due 2029 | Book Value | ||
Debt Instrument [Line Items] | ||
Debt instrument value | $ 500,000 | $ 500,000 |
3.75% Senior Notes due 2029 | Fair Value | ||
Debt Instrument [Line Items] | ||
Debt instrument value | $ 440,000 | $ 442,200 |
4.00% Senior Notes due 2031 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 4% | 4% |
4.00% Senior Notes due 2031 | Book Value | ||
Debt Instrument [Line Items] | ||
Debt instrument value | $ 500,000 | $ 500,000 |
4.00% Senior Notes due 2031 | Fair Value | ||
Debt Instrument [Line Items] | ||
Debt instrument value | $ 433,750 | $ 432,500 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS - Rollforward of Goodwill (Details) $ in Thousands | 6 Months Ended |
Jul. 01, 2023 USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 2,849,903 |
Acquisitions | 37,129 |
Foreign exchange | 29,561 |
Ending balance | 2,916,593 |
RMS | |
Goodwill [Roll Forward] | |
Beginning balance | 497,710 |
Acquisitions | 0 |
Foreign exchange | (656) |
Ending balance | 497,054 |
DSA | |
Goodwill [Roll Forward] | |
Beginning balance | 1,433,601 |
Acquisitions | 37,129 |
Foreign exchange | 14,969 |
Ending balance | 1,485,699 |
Goodwill, impaired, accumulated impairment loss | 1,000,000 |
Manufacturing | |
Goodwill [Roll Forward] | |
Beginning balance | 918,592 |
Acquisitions | 0 |
Foreign exchange | 15,248 |
Ending balance | $ 933,840 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Jul. 01, 2023 | Dec. 31, 2022 |
Other intangible assets | ||
Gross | $ 1,742,140 | $ 1,687,390 |
Accumulated Amortization | (812,250) | (732,115) |
Net | 929,890 | 955,275 |
Client relationships | ||
Other intangible assets | ||
Gross | 1,534,069 | 1,491,926 |
Accumulated Amortization | (659,955) | (591,417) |
Net | 874,114 | 900,509 |
Technology | ||
Other intangible assets | ||
Gross | 141,716 | 129,626 |
Accumulated Amortization | (107,312) | (101,655) |
Net | 34,404 | 27,971 |
Backlog | ||
Other intangible assets | ||
Gross | 15,441 | 15,236 |
Accumulated Amortization | (13,903) | (12,512) |
Net | 1,538 | 2,724 |
Trademarks and trade names | ||
Other intangible assets | ||
Gross | 12,835 | 12,617 |
Accumulated Amortization | (5,021) | (4,410) |
Net | 7,814 | 8,207 |
Other | ||
Other intangible assets | ||
Gross | 38,079 | 37,985 |
Accumulated Amortization | (26,059) | (22,121) |
Net | $ 12,020 | $ 15,864 |
DEBT AND OTHER FINANCING ARRA_3
DEBT AND OTHER FINANCING ARRANGEMENTS - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands | Jul. 01, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Finance leases | $ 29,354 | $ 30,646 |
Total debt and finance leases | 2,698,829 | 2,729,826 |
Current portion of long-term debt | 1,188 | 1,347 |
Current portion of finance leases | 2,535 | 2,330 |
Current portion of long-term debt and finance leases | 3,723 | 3,677 |
Long-term debt and finance leases | 2,695,106 | 2,726,149 |
Debt discount and debt issuance costs | (16,634) | (18,618) |
Long-term debt, net and finance leases | 2,678,472 | 2,707,531 |
Revolving Facility | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 1,168,052 | $ 1,197,586 |
Senior Notes | 4.25% Senior Notes due 2028 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 4.25% | 4.25% |
Long-term debt, gross | $ 500,000 | $ 500,000 |
Senior Notes | 3.75% Senior Notes due 2029 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 3.75% | 3.75% |
Long-term debt, gross | $ 500,000 | $ 500,000 |
Senior Notes | 4.00% Senior Notes due 2031 | ||
Debt Instrument [Line Items] | ||
Stated interest rate | 4% | 4% |
Long-term debt, gross | $ 500,000 | $ 500,000 |
Other Debt | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 1,423 | $ 1,594 |
DEBT AND OTHER FINANCING ARRA_4
DEBT AND OTHER FINANCING ARRANGEMENTS - Narrative (Details) - USD ($) $ in Millions | Jul. 01, 2023 | Dec. 31, 2022 | Jun. 25, 2022 |
Debt Instrument [Line Items] | |||
Weighted average interest rate | 4.89% | 4.58% | |
Foreign Exchange Forward | |||
Debt Instrument [Line Items] | |||
Notional amount | $ 400 | ||
Letter of Credit | |||
Debt Instrument [Line Items] | |||
Letters of credit outstanding | $ 21.6 | $ 18.6 |
DEBT AND OTHER FINANCING ARRA_5
DEBT AND OTHER FINANCING ARRANGEMENTS - Cross Currency Loans (Details) - Foreign Exchange Forward - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 25, 2022 | Jun. 25, 2022 | |
Other expense, net | ||
Derivatives, Fair Value [Line Items] | ||
Gains recognized in interest expense | $ (19,423) | $ (30,523) |
Interest expense | ||
Derivatives, Fair Value [Line Items] | ||
Gains recognized in interest expense | $ 20,522 | $ 32,306 |
EQUITY AND NONCONTROLLING INT_3
EQUITY AND NONCONTROLLING INTERESTS - Earnings Per Share (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2023 | Jun. 25, 2022 | Jul. 01, 2023 | Jun. 25, 2022 | |
Numerator: | ||||
Net income | $ 99,443 | $ 110,664 | $ 203,397 | $ 205,890 |
Less: Net income attributable to noncontrolling interests | 2,423 | 1,343 | 3,246 | 3,547 |
Net income attributable to common shareholders | $ 97,020 | $ 109,321 | $ 200,151 | $ 202,343 |
Denominator: | ||||
Weighted-average shares outstanding—Basic (in shares) | 51,216 | 50,823 | 51,157 | 50,732 |
Effect of dilutive securities: | ||||
Stock options, restricted stock units and performance share units (in shares) | 251 | 460 | 225 | 561 |
Weighted-average shares outstanding—Diluted (in shares) | 51,467 | 51,283 | 51,382 | 51,293 |
Anti-dilutive common stock equivalents (in shares) | 594 | 597 | 589 | 550 |
EQUITY AND NONCONTROLLING INT_4
EQUITY AND NONCONTROLLING INTERESTS - Narrative (Details) - USD ($) shares in Millions | 1 Months Ended | 6 Months Ended | ||||
Jun. 30, 2022 | Jul. 01, 2023 | Jun. 25, 2022 | Dec. 31, 2022 | Dec. 25, 2021 | Dec. 28, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Shares acquired to satisfy minimum individual statutory tax withholdings for vesting of equity instruments (in shares) | 0.1 | 0.1 | ||||
Shares acquired to satisfy minimum individual statutory tax withholdings for vesting of equity instruments | $ 24,000,000 | $ 38,500,000 | ||||
Contractually defined redemption value | 24,400,000 | |||||
Redeemable noncontrolling interest | $ 42,447,000 | $ 40,177,000 | $ 42,427,000 | $ 53,010,000 | ||
Vital River | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Equity interest | 92% | |||||
Noncontrolling interest ownership percentage | 8% | |||||
Supplier | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Equity interest | 80% | |||||
Noncontrolling interest ownership percentage | 10% | 20% | ||||
Additional ownership percentage acquired by parent | 10% | |||||
Purchase of additional equity interest | $ 15,000,000 | |||||
Redeemable noncontrolling interest | $ 17,000,000 | |||||
Authorized Share Repurchase Program | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Aggregate authorization of share repurchase program | 1,300,000,000 | |||||
Remaining authorized repurchase amount | $ 129,100,000 |
EQUITY AND NONCONTROLLING INT_5
EQUITY AND NONCONTROLLING INTERESTS - Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2023 | Jun. 25, 2022 | Jul. 01, 2023 | Jun. 25, 2022 | |
Accumulated Other Comprehensive Income (Loss), before Tax [Roll Forward] | ||||
Beginning balance | $ 3,113,883 | $ 2,614,906 | $ 2,981,078 | $ 2,538,982 |
Income tax expense (benefit) | 937 | (6,876) | (101) | (8,894) |
Ending balance | 3,257,555 | 2,652,927 | 3,257,555 | 2,652,927 |
Foreign Currency Translation Adjustment and Other | ||||
Accumulated Other Comprehensive Income (Loss), before Tax [Roll Forward] | ||||
Beginning balance | (217,785) | |||
Other comprehensive income before reclassifications | 48,699 | |||
Net current period other comprehensive income | 48,699 | |||
Income tax expense (benefit) | 807 | |||
Ending balance | (169,893) | (169,893) | ||
Pension and Other Post-Retirement Benefit Plans | ||||
Accumulated Other Comprehensive Income (Loss), before Tax [Roll Forward] | ||||
Beginning balance | (43,114) | |||
Other comprehensive income before reclassifications | 344 | |||
Net current period other comprehensive income | 344 | |||
Income tax expense (benefit) | 209 | |||
Ending balance | (42,979) | (42,979) | ||
Net Unrealized (Loss) Gain on Cash Flow Hedge | ||||
Accumulated Other Comprehensive Income (Loss), before Tax [Roll Forward] | ||||
Beginning balance | (1,158) | |||
Other comprehensive income before reclassifications | 4,644 | |||
Net current period other comprehensive income | 4,644 | |||
Income tax expense (benefit) | (1,117) | |||
Ending balance | 4,603 | 4,603 | ||
Total | ||||
Accumulated Other Comprehensive Income (Loss), before Tax [Roll Forward] | ||||
Beginning balance | (239,124) | (174,933) | (262,057) | (164,740) |
Other comprehensive income before reclassifications | 53,687 | |||
Net current period other comprehensive income | 53,687 | |||
Income tax expense (benefit) | (101) | |||
Ending balance | $ (208,269) | $ (258,555) | $ (208,269) | $ (258,555) |
EQUITY AND NONCONTROLLING INT_6
EQUITY AND NONCONTROLLING INTERESTS - Rollforward of Redeemable Noncontrolling Interest (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 01, 2023 | Jun. 25, 2022 | |
Increase (Decrease) in Temporary Equity [Roll Forward] | ||
Beginning balance | $ 42,427 | $ 53,010 |
Adjustments to redemption value | 0 | 2,293 |
Additional purchases | 0 | (15,000) |
Net income (loss) | 2,179 | 2,487 |
Foreign currency translation | (2,159) | (2,613) |
Ending balance | $ 42,447 | $ 40,177 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jul. 01, 2023 | Jun. 25, 2022 | Jul. 01, 2023 | Jun. 25, 2022 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |||||
Effective tax rate | 22.70% | 23.20% | 21.70% | 19.20% | |
Increase in unrecognized tax benefits | $ 1,100 | ||||
Unrecognized tax benefits | 25,600 | $ 25,600 | |||
Increase (decrease) in unrecognized tax benefits that would impact effective tax rate | 600 | ||||
Unrecognized tax benefits that would impact effective tax rate | 21,800 | 21,800 | |||
Accrued interest on unrecognized tax benefits | 1,000 | 1,000 | |||
Decrease in unrecognized tax benefits that are reasonably possibly over the next twelve-month period | 4,000 | 4,000 | |||
Prepaid income tax | 87,718 | 87,718 | $ 88,550 | ||
Accrued income taxes | $ 44,813 | $ 44,813 | $ 39,854 |
SUPPLEMENTAL CASH FLOW INFORM_3
SUPPLEMENTAL CASH FLOW INFORMATION - Summary of Non-Cash Investing Activities (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 01, 2023 | Jun. 25, 2022 | |
Supplemental Cash Flow Information [Abstract] | ||
Purchases of Property, plant and equipment included in Accounts payable and Accrued liabilities | $ 47,850 | $ 51,776 |
SUPPLEMENTAL CASH FLOW INFORM_4
SUPPLEMENTAL CASH FLOW INFORMATION - Summary of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Jul. 01, 2023 | Dec. 31, 2022 | Jun. 25, 2022 | Dec. 25, 2021 |
Supplemental Cash Flow Information [Abstract] | ||||
Cash and cash equivalents | $ 200,445 | $ 233,912 | ||
Restricted cash included in Other current assets | 7,136 | 6,192 | ||
Restricted cash included in Other assets | 1,196 | 1,110 | ||
Cash, cash equivalents, and restricted cash, end of period | $ 208,777 | $ 241,214 | $ 207,208 | $ 246,314 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | Jul. 01, 2023 USD ($) |
US Fish and Wildlife Service | Pending Litigation | |
Loss Contingencies [Line Items] | |
Inventory, non-human primates | $ 20 |