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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One) 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED September 25, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
Commission File No. 001-15943
crl-20210925_g1.jpg
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 06-1397316
(State or Other Jurisdiction of
Incorporation or Organization)
 (I.R.S. Employer
Identification No.)
251 Ballardvale StreetWilmingtonMassachusetts01887
(Address of Principal Executive Offices)(Zip Code)
(Registrant’s telephone number, including area code): (781222-6000
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTicker symbol(s)Name of each exchange on which registered
Common stock, $0.01 par valueCRLNew York Stock Exchange
    Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 
    Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files. Yes  No 
    Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
    If an emerging growth company, indicate by a check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.



    Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 
    As of October 22, 2021, there were 50,464,399 shares of the Registrant’s common stock outstanding.



CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 25, 2021

TABLE OF CONTENTS
Item Page
PART I - FINANCIAL INFORMATION
1Financial Statements
Condensed Consolidated Statements of Income (Unaudited) for the three and nine months ended September 25, 2021 and September 26, 2020
Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the three and nine months ended September 25, 2021 and September 26, 2020
Condensed Consolidated Balance Sheets (Unaudited) as of September 25, 2021 and December 26, 2020
Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 25, 2021 and September 26, 2020
Condensed Consolidated Statements of Changes in Equity (Unaudited) for the three and nine months ended September 25, 2021 and September 26, 2020
Notes to Unaudited Condensed Consolidated Financial Statements
2Management’s Discussion and Analysis of Financial Condition and Results of Operations
3Quantitative and Qualitative Disclosure About Market Risk
4Controls and Procedures
PART II - OTHER INFORMATION
1Legal Proceedings
1ARisk Factors
2Unregistered Sales of Equity Securities and Use of Proceeds
6Exhibits
Signatures

1


Special Note on Factors Affecting Future Results
This Quarterly Report on Form 10-Q contains forward-looking statements regarding future events and the future results of Charles River Laboratories International, Inc. that are based on our current expectations, estimates, forecasts and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as “expect,” “anticipate,” “target,” “goal,” “project,” “intend,” “plan,” “believe,” “seek,” “estimate,” “will,” “likely,” “may,” “designed,” “would,” “future,” “can,” “could,” and other similar expressions which are predictions of, indicate future events and trends or which do not relate to historical matters, are intended to identify such forward-looking statements. These statements are based on our current expectations and beliefs and involve a number of risks, uncertainties and assumptions that are difficult to predict.
For example, we may use forward-looking statements when addressing topics such as: the COVID-19 pandemic, its duration, its impact on our business, results of operations, financial condition, liquidity, use of our borrowings, business practices, operations, suppliers, third party service providers, customers, employees, industry, ability to meet future performance obligations, ability to efficiently implement advisable safety precautions, and internal controls over financial reporting; the COVID-19 pandemic’s impact on demand, the global economy and financial markets; changes and uncertainties in the global economy; future demand for drug discovery and development products and services, including the outsourcing of these services; our expectations regarding stock repurchases, including the number of shares to be repurchased, expected timing and duration, the amount of capital that may be expended and the treatment of repurchased shares; the impact of unauthorized access into our information systems, including the timing and effectiveness of any enhanced security and monitoring; present spending trends and other cost reduction activities by our clients; future actions by our management; the outcome of contingencies; changes in our business strategy, business practices and methods of generating revenue; the development and performance of our services and products; market and industry conditions, including competitive and pricing trends; our strategic relationships with leading pharmaceutical and biotechnology companies, venture capital investments, and opportunities for future similar arrangements; our cost structure; the impact of acquisitions and divestitures; our expectations with respect to revenue growth and operating synergies (including the impact of specific actions intended to cause related improvements); the impact of specific actions intended to improve overall operating efficiencies and profitability (and our ability to accommodate future demand with our infrastructure), including gains and losses attributable to businesses we plan to close, consolidate, divest or repurpose; changes in our expectations regarding future stock option, restricted stock, performance share units, and other equity grants to employees and directors; expectations with respect to foreign currency exchange; assessing (or changing our assessment of) our tax positions for financial statement purposes; and our liquidity. In addition, these statements include the impact of economic and market conditions on us and our clients; the effects of our cost saving actions and the steps to optimize returns to shareholders on an effective and timely basis; and our ability to withstand the current market conditions.
Forward-looking statements are predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document, or in the case of statements incorporated by reference, on the date of the document incorporated by reference.
Factors that might cause or contribute to such differences include, but are not limited to, those discussed in our Annual Report on Form 10-K for the year ended December 26, 2020, under the sections entitled “Our Strategy,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in this Quarterly Report on Form 10-Q, under the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors,” in our press releases, and other financial filings with the Securities and Exchange Commission. We have no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or risks. New information, future events, or risks may cause the forward-looking events we discuss in this report not to occur.



2


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except per share amounts)
 Three Months EndedNine Months Ended
 September 25, 2021September 26, 2020September 25, 2021September 26, 2020
Service revenue$703,859 $580,774 $2,045,760 $1,677,927 
Product revenue192,078 162,526 589,350 455,016 
Total revenue895,937 743,300 2,635,110 2,132,943 
Costs and expenses:  
Cost of services provided (excluding amortization of intangible assets) 468,659 377,226 1,369,396 1,124,988 
Cost of products sold (excluding amortization of intangible assets)90,051 76,800 278,188 234,382 
Selling, general and administrative148,573 128,289 475,807 385,902 
Amortization of intangible assets32,852 28,232 94,664 83,869 
Operating income155,802 132,753 417,055 303,802 
Other income (expense): 
Interest income137 179 343 771 
Interest expense(16,455)(18,867)(62,364)(53,286)
Other (expense) income, net(16,214)21,211 (37,966)23,400 
Income before income taxes123,270 135,276 317,068 274,687 
Provision for income taxes18,111 32,665 58,058 53,571 
Net income105,159 102,611 259,010 221,116 
Less: Net income (expense) attributable to noncontrolling interests1,733 (298)5,606 3 
Net income attributable to common shareholders$103,426 $102,909 $253,404 $221,113 
Earnings per common share  
Net income attributable to common shareholders:
Basic$2.05 $2.07 $5.04 $4.47 
Diluted$2.01 $2.03 $4.93 $4.39 
Weighted-average number of common shares outstanding:
Basic50,425 49,703 50,234 49,482 
Diluted51,558 50,702 51,360 50,371 
See Notes to Unaudited Condensed Consolidated Financial Statements.

3


CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(in thousands)
Three Months EndedNine Months Ended
September 25, 2021September 26, 2020September 25, 2021September 26, 2020
Net income$105,159 $102,611 $259,010 $221,116 
Other comprehensive income (loss):
Foreign currency translation adjustment(28,909)20,112 1,747 (17,993)
Amortization of net loss and prior service benefit included in net periodic cost for pension and other post-retirement benefit plans991 1,411 2,972 4,150 
Comprehensive income, before income taxes related to items of other comprehensive income
77,241 124,134 263,729 207,273 
Less: Income tax (benefit) expense related to items of other comprehensive income(3,140)3,201 (1,716)3,024 
Comprehensive income, net of income taxes80,381 120,933 265,445 204,249 
Less: Comprehensive income related to noncontrolling interests, net of income taxes1,713 591 5,946 399 
Comprehensive income attributable to common shareholders, net of income taxes$78,668 $120,342 $259,499 $203,850 
See Notes to Unaudited Condensed Consolidated Financial Statements.
4


CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except per share amounts)
September 25, 2021December 26, 2020
Assets 
Current assets:  
Cash and cash equivalents$212,539 $228,424 
Trade receivables and contract assets, net of allowances for doubtful accounts of $7,024 and $6,702, respectively
660,452 617,740 
Inventories181,694 185,695 
Prepaid assets77,527 96,712 
Other current assets246,828 72,560 
Total current assets1,379,040 1,201,131 
Property, plant and equipment, net1,175,911 1,124,358 
Operating lease right-of-use assets, net284,722 178,220 
Goodwill2,736,322 1,809,168 
Client relationships, net1,012,606 721,505 
Other intangible assets, net87,274 66,094 
Deferred tax assets41,117 37,729 
Other assets341,445 352,626 
Total assets$7,058,437 $5,490,831 
Liabilities, Redeemable Noncontrolling Interests and Equity  
Current liabilities:  
Current portion of long-term debt and finance leases$2,275 $50,214 
Accounts payable127,913 122,475 
Accrued compensation223,045 206,823 
Deferred revenue221,731 207,942 
Accrued liabilities244,790 149,820 
Other current liabilities163,997 102,477 
Total current liabilities983,751 839,751 
Long-term debt, net and finance leases2,892,676 1,929,571 
Operating lease right-of-use liabilities244,012 155,595 
Deferred tax liabilities259,119 217,031 
Other long-term liabilities214,258 205,215 
Total liabilities4,593,816 3,347,163 
Commitments and contingencies (Notes 2, 9, 11, 12, 16 and 17)
Redeemable noncontrolling interests 32,556 25,499 
Equity:  
Preferred stock, $0.01 par value; 20,000 shares authorized; no shares issued and outstanding
  
Common stock, $0.01 par value; 120,000 shares authorized; 50,607 shares issued and 50,460 shares outstanding as of September 25, 2021, and 49,767 shares issued and outstanding as of December 26, 2020
506 498 
Additional paid-in capital1,720,461 1,627,564 
Retained earnings878,818 625,414 
Treasury stock, at cost, 147 and 0 shares, as of September 25, 2021 and December 26, 2020, respectively
(40,440) 
Accumulated other comprehensive loss(132,779)(138,874)
Total equity attributable to common shareholders2,426,566 2,114,602 
Noncontrolling interest5,499 3,567 
Total equity2,432,065 2,118,169 
Total liabilities, redeemable noncontrolling interests and equity$7,058,437 $5,490,831 
See Notes to Unaudited Condensed Consolidated Financial Statements.
5


CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
 Nine Months Ended
 September 25, 2021September 26, 2020
Cash flows relating to operating activities  
Net income$259,010 $221,116 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization198,299 174,048 
Stock-based compensation52,289 40,973 
Debt extinguishment and financing costs28,972 2,759 
Deferred income taxes(13,757)(3,131)
Loss (gain) on venture capital and strategic equity investments, net17,277 (32,226)
Other, net(9,432)14,143 
Changes in assets and liabilities:  
Trade receivables and contract assets, net(35,592)(51,456)
Inventories(5,639)(14,055)
Accounts payable11,431 (12,327)
Accrued compensation18,210 29,438 
Deferred revenue(9,394)(1,308)
Customer contract deposits4,850 9,887 
Other assets and liabilities, net15,017 30,335 
Net cash provided by operating activities531,541 408,196 
Cash flows relating to investing activities  
Acquisition of businesses and assets, net of cash acquired(1,292,093)(419,146)
Capital expenditures(129,997)(78,706)
Purchases of investments and contributions to venture capital investments(31,963)(19,887)
Proceeds from sale of investments5,960 5,810 
Other, net854 (1,192)
Net cash used in investing activities(1,447,239)(513,121)
Cash flows relating to financing activities  
Proceeds from long-term debt and revolving credit facility6,119,671 1,411,954 
Proceeds from exercises of stock options43,314 43,806 
Payments on long-term debt, revolving credit facility, and finance lease obligations(5,190,394)(1,320,961)
Purchase of treasury stock(40,440)(23,905)
Payment of debt extinguishment and financing costs(38,253) 
Other, net(2,328)(4,417)
Net cash provided by financing activities891,570 106,477 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash17,514 5,825 
Net change in cash, cash equivalents, and restricted cash(6,614)7,377 
Cash, cash equivalents, and restricted cash, beginning of period233,119 240,046 
Cash, cash equivalents, and restricted cash, end of period$226,505 $247,423 
Supplemental cash flow information:
Cash and cash equivalents$212,539 $242,879 
Cash classified within current assets held for sale8,612  
Restricted cash included in Other current assets4,275 2,968 
Restricted cash included in Other assets1,079 1,576 
Cash, cash equivalents, and restricted cash, end of period$226,505 $247,423 
See Notes to Unaudited Condensed Consolidated Financial Statements.
6


CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)
    (in thousands)
Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury StockTotal Equity Attributable to Common ShareholdersNoncontrolling InterestTotal Equity
SharesAmountSharesAmount
December 26, 202049,767 $498 $1,627,564 $625,414 $(138,874) $ $2,114,602 $3,567 $2,118,169 
Net income— — — 61,530 — — — 61,530 690 62,220 
Other comprehensive income— — — — 11,857 — — 11,857 — 11,857 
Adjustment of redeemable noncontrolling interest to redemption value— — (835)— — — — (835)— (835)
Issuance of stock under employee compensation plans583 6 19,606 — — — — 19,612 — 19,612 
Acquisition of treasury shares— — — — — 134 (36,028)(36,028)— (36,028)
Stock-based compensation— — 13,189 — — — — 13,189 — 13,189 
March 27, 202150,350 504 1,659,524 686,944 (127,017)134 (36,028)2,183,927 4,257 2,188,184 
Net income— — — 88,448 — — — 88,448 583 89,031 
Other comprehensive income— — — — 18,996 — — 18,996 — 18,996 
Adjustment of redeemable noncontrolling interest to redemption value— — (1,506)— — — — (1,506)— (1,506)
Issuance of stock under employee compensation plans188 1 15,766 — — — — 15,767 — 15,767 
Acquisition of treasury shares— — — — — 13 (4,269)(4,269)— (4,269)
Stock-based compensation— — 17,077 — — — — 17,077 — 17,077 
June 26, 202150,538 505 1,690,861 775,392 (108,021)147 (40,297)2,318,440 4,840 2,323,280 
Net income— — — 103,426 — — — 103,426 659 104,085 
Other comprehensive loss— — — — (24,758)— — (24,758)— (24,758)
Adjustment of redeemable noncontrolling interest to redemption value— — (702)— — — — (702)— (702)
Issuance of stock under employee compensation plans69 1 8,279 — — — — 8,280 — 8,280 
Acquisition of treasury shares— — — — — — (143)(143)— (143)
Stock-based compensation— — 22,023 — — — — 22,023 — 22,023 
September 25, 202150,607 $506 $1,720,461 $878,818 $(132,779)147 $(40,440)$2,426,566 $5,499 $2,432,065 
7


Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury StockTotal Equity Attributable to Common ShareholdersNoncontrolling InterestTotal Equity
SharesAmountSharesAmount
December 28, 201948,936 $489 $1,531,785 $280,329 $(178,019) $ $1,634,584 $3,244 $1,637,828 
Net income— — — 50,769 — — — 50,769 399 51,168 
Other comprehensive loss— — — — (40,898)— — (40,898)— (40,898)
Purchase of a 10% redeemable noncontrolling interest and recognition of related contingent consideration
— — (2,379)— — — — (2,379)— (2,379)
Issuance of stock under employee compensation plans694 7 22,616 — — — — 22,623 — 22,623 
Acquisition of treasury shares— — — — — 144 (23,675)(23,675)— (23,675)
Stock-based compensation— — 10,960 — — — — 10,960 — 10,960 
March 28, 202049,630 496 1,562,982 331,098 (218,917)144 (23,675)1,651,984 3,643 1,655,627 
Net income— — — 67,435 — — — 67,435 441 67,876 
Other comprehensive income— — — — 6,203 — — 6,203 — 6,203 
Issuance of stock under employee compensation plans174 2 13,992 — — — — 13,994 — 13,994 
Acquisition of treasury shares— — — — — 1 (118)(118)— (118)
Stock-based compensation— — 13,143 — — — — 13,143 — 13,143 
June 27, 202049,804 498 1,590,117 398,533 (212,714)145 (23,793)1,752,641 4,084 1,756,725 
Net income— — — 102,909 — — — 102,909 441 103,350 
Other comprehensive income— — — — 17,433 — — 17,433 — 17,433 
Issuance of stock under employee compensation plans78 1 7,198 — — — — 7,199 — 7,199 
Acquisition of treasury shares— — — — — 1 (112)(112)— (112)
Stock-based compensation— — 16,870 — — — — 16,870 — 16,870 
September 26, 202049,882 $499 $1,614,185 $501,442 $(195,281)146 $(23,905)$1,896,940 $4,525 $1,901,465 
See Notes to Unaudited Condensed Consolidated Financial Statements.
8

CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. 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 2020. 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.
On March 11, 2020, the World Health Organization declared the outbreak of a strain of novel coronavirus disease, COVID-19, a global pandemic. The COVID-19 pandemic is dynamic, and its ultimate scope, duration and effects are uncertain. This pandemic has and continues to result in, and any future epidemic or pandemic crises may potentially result in, direct and indirect adverse effects on the Company’s industry and customers, which in turn has (with respect to COVID-19) and may (with respect to future epidemics or crises) impact the Company’s business, results of operations and financial condition. Further, the COVID-19 pandemic may also affect the Company’s operating and financial results in a manner that is not presently known to the Company or that the Company currently does not expect to present significant risks to its operations or financial results. As of the date of issuance of these unaudited condensed consolidated financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update estimates, judgments or revise the carrying value of any assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the Company’s condensed consolidated financial statements.
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 consolidated statements of income equal to the percentage of the economic or ownership interest retained in such entities by the respective noncontrolling parties. 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.
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 Research Products 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; and Insourcing Solutions (IS), which provides colony management of its clients’ research operations (including recruitment, training, staffing, and management services). Research Products 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 services required to take a drug through the early development process including discovery services, which are non-regulated services to assist clients with the identification, screening, and selection of a lead compound for drug development, and regulated and non-regulated (GLP and non-GLP) safety assessment services. 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
9

CHARLES RIVER LABORATORIES INTERNATIONAL, INC.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
services; Biologics Solutions (Biologics), which performs specialized testing of biologics as well as contract development and manufacturing; and Avian Vaccine Services (Avian), which supplies specific-pathogen-free chicken eggs and chickens.
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 2020.
Newly Adopted Accounting Pronouncements
In January 2020, the Financial Accounting Standards Board (FASB) issued ASU 2020-01, “Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815).” ASU 2020-01 states any equity security transitioning from the alternative method of accounting under Topic 321 to the equity method, or vice versa, due to an observable transaction will be remeasured immediately before the transition. In addition, the ASU clarifies the accounting for certain non-derivative forward contracts or purchased call options to acquire equity securities stating such instruments will be measured using the fair value principles of Topic 321 before settlement or exercise. This standard became effective for the Company in the three months ended March 27, 2021 and did not have a significant impact on the unaudited condensed consolidated financial statements and related disclosures.
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” ASU 2019-12 simplifies the accounting for income taxes by removing exceptions within the general principles of Topic 740 regarding the calculation of deferred tax liabilities, the incremental approach for intraperiod tax allocation, and calculating income taxes in an interim period. In addition, the ASU adds clarifications to the accounting for franchise tax (or similar tax), which is partially based on income, evaluating tax basis of goodwill recognized from a business combination, and reflecting the effect of any enacted changes in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. This standard became effective for the Company in the three months ended March 27, 2021 and did not have a significant impact on the unaudited condensed consolidated financial statements and related disclosures.
Newly Issued Accounting Pronouncements
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The ASU, including subsequently issued updates, offers temporary optional expedients and exceptions for applying U.S. GAAP to modifications to agreements such as loans, debt securities, derivatives, and borrowings which reference LIBOR or another reference rate that will partially discontinue after December 31, 2021 and fully cease by June 30, 2023. The expedients and exceptions provided by the standard do not apply to modifications made and hedging relationships entered into or evaluated after that, except for hedging relationships existing as of the phase-out date that an entity has elected certain optional expedients for and are retained through the end of the hedging relationship. The ASU is effective until the replacement for LIBOR is completed. The interest rate on the Company’s revolving credit facility, which was amended and restated in April 2021 (see Note 9. Long-term debt and finance lease obligations) and matures in fiscal year 2026, is linked to LIBOR and alternative interest rates when LIBOR is discontinued. The Company is currently evaluating the impact this new standard will have on the consolidated financial statements and related disclosures, but does not believe there will be a material impact on the Company’s consolidated financial statements and related disclosures as LIBOR is phased out.
In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”. ASU 2021-08 improves the accounting for acquired revenue contracts with customers in a business combination by addressing the diversity in practice and inconsistency related to the recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer. The amendments in this ASU require acquirers to recognize and measure contract assets and contract liabilities acquired in the business combination in accordance with Topic 606 as if it had originated the contracts. The ASU is effective for public business entities for fiscal years beginning after December 15, 2022 and should be applied prospectively. Early adoption of this amendment is permitted, and the entity should apply retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year. The Company is currently evaluating the impact this new standard will have on the consolidated financial statements and related disclosures, but does not believe there will be a material impact upon adoption.
2. BUSINESS COMBINATIONS
Fiscal 2021 Acquisitions
Vigene Biosciences, Inc.
On June 28, 2021 (third fiscal quarter of 2021), the Company acquired Vigene Biosciences, Inc. (Vigene), a gene therapy contract development and manufacturing organization (CDMO), providing viral vector-based gene delivery solutions. The acquisition enables clients to seamlessly conduct analytical testing, process development, and manufacturing for advanced modalities with the same scientific partner. The preliminary purchase price of Vigene was $326.1 million, net of $2.7 million in cash, subject to certain post-closing adjustments that may change the purchase price. Included in the purchase price are contingent payments fair valued at $34.5 million, which was estimated using a Monte Carlo Simulation model (the maximum
10

CHARLES RIVER LABORATORIES INTERNATIONAL, INC.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
contingent contractual payments are up to $57.5 million based on future performance). 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 Manufacturing reportable segment.
The preliminary purchase price allocation was as follows:
June 28, 2021
(in thousands)
Trade receivables$3,548 
Other current assets (excluding cash)1,657 
Property, plant and equipment7,649 
Operating lease right-of-use asset, net22,507 
Goodwill242,822 
Definite-lived intangible assets93,600 
Other long-term assets694 
Deferred revenue(4,260)
Current liabilities(6,319)
Operating lease right-of-use liabilities(21,220)
Deferred tax liabilities(14,600)
Total purchase price allocation$326,078 
The preliminary purchase price allocation is 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.
The definite-lived intangible assets acquired were as follows:
Definite-Lived Intangible AssetsWeighted Average Amortization Life
(in thousands)(in years)
Client relationships$88,000 12
Backlog2,100 1
Other intangible assets3,500 4
Total definite-lived intangible assets$93,600 11
The goodwill resulting from the transaction is primarily attributable to the potential growth of the Company’s Manufacturing business from new customers introduced to Vigene and the assembled workforce of the acquired business. The goodwill attributable to Vigene is not deductible for tax purposes.
The Company incurred transaction and integration costs in connection with the acquisition of $1.9 million and $4.4 million for the three and nine months ended September 25, 2021, respectively, which were included in Selling, general and administrative expenses within the unaudited condensed consolidated statements of income.
Beginning on June 28, 2021, Vigene has been included in the operating results of the Company. Vigene revenue and operating loss during the three months ended September 25, 2021 was $6.0 million and $2.6 million, respectively.
Pro forma financial information as well as the disclosure of actual revenue and operating income (loss) is presented as if it had occurred as of the beginning of the period immediately preceding the period of acquisition, which is December 29, 2019, after giving effect to certain adjustments. See the bottom of this section for combined pro forma disclosure.
11

CHARLES RIVER LABORATORIES INTERNATIONAL, INC.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Retrogenix Limited
On March 30, 2021, the Company acquired Retrogenix Limited (Retrogenix), an early-stage contract research organization providing specialized bioanalytical services utilizing its proprietary cell microarray technology. The acquisition of Retrogenix enhances the Company’s scientific expertise with additional large molecule and cell therapy discovery capabilities. The purchase price of Retrogenix was $53.9 million, net of $8.5 million in cash. Included in the purchase price are contingent payments fair valued at $6.9 million, which is the maximum potential payout, and was based on a probability-weighted approach. 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.
The preliminary purchase price allocation was as follows:
March 30, 2021
(in thousands)
Trade receivables$2,266 
Other current assets (excluding cash)209 
Property, plant and equipment400 
Goodwill34,489 
Definite-lived intangible assets22,126 
Other long-term assets1,385 
Current liabilities(1,575)
Deferred tax liabilities(4,174)