Charles River Laboratories Announces Second-Quarter 2005 Results

- Sales Increase 57.3% to $283 million -

- GAAP Earnings Per Share of $0.44 and $0.59 on a Non-GAAP Basis -

- Company Reaffirms Guidance for 2005 on Continuing Strong Demandfor Outsourced Services -

- Board of Directors Approves $50 Million Stock Repurchase Plan -

Charles River Laboratories International, Inc. (NYSE:CRL) todayreported second-quarter 2005 financial results. Net sales for thesecond quarter of 2005 increased 57.3% to $283.4 million, compared to$180.2 million reported in the second quarter of 2004. The increasewas due primarily to the acquisition of Inveresk Research Group, andalso to continuing strong demand for research models and outsourcedpreclinical services. The impact of the stronger U.S. Dollar relativeto foreign currencies reduced the second-quarter net sales growth rateby approximately 2.0% compared to the Company's earlier guidance.

Net income on a GAAP basis was $31.9 million, or $0.44 per dilutedshare, in the second quarter of 2005, compared to $26.3 million, or$0.52 per diluted share, in the second quarter of 2004. On a non-GAAPbasis, net income for the second quarter increased 61.7% to $42.5million, compared to $26.3 million in the second quarter of 2004.Non-GAAP earnings per diluted share were $0.59, compared to $0.52 perdiluted share in the second quarter of 2004, an increase of 13.5%.Non-GAAP results in the second quarter of 2005 exclude amortization ofintangibles of $13.1 million, or $0.12 per diluted share, andcompensation charges of $2.8 million, or $0.03 per diluted share,related to the acquisition of Inveresk.

James C. Foster, Chairman, President and Chief Executive Officersaid, "We were very pleased with our second-quarter results. Strongdemand for products and services across our broad portfolio drove oursecond-quarter net sales increase. We benefited from our customers'continued focus on development of new drugs and therapies, as theylooked to us to support those efforts more extensively than in thepast. As a result of higher net sales, our continued focus onoperating efficiencies, and the success of our integration efforts, weachieved excellent sequential operating margin improvement in thePreclinical and Clinical business segments. Based on our continuingdiscussions with customers, we expect demand for our extensiveportfolio of value-added, essential products and services to continuein the second half of 2005, and expect to achieve our sales andearnings goals."

For the first six months of 2005, net sales increased 57.9% to$557.1 million from $352.8 million in the first half of 2004. Netincome on a GAAP basis was $59.5 million, or $0.84 per diluted sharein the first half of 2005, compared to $43.9 million, or $0.88 perdiluted share, in the first half of 2004. On a non-GAAP basis, netincome for the first six months was $81.2 million, compared to $49.7million in the same period in 2004. Non-GAAP earning per diluted sharewere $1.14, compared to $0.99 per diluted share in the same period in2004. Non-GAAP results in the first half of 2005 exclude amortizationof intangibles of $26.5 million, or $0.25 per diluted share, andcompensation charges of $5.8 million, or $0.05 per diluted share,related to the acquisition of Inveresk. Non-GAAP results in the firsthalf of 2004 exclude a net charge of $5.8 million, or $0.11 perdiluted share, related to the write-off of a deferred tax asset andrelease of a related tax valuation allowance in connection with theCompany's reorganization of its European operations.

Business Segments Results

Research Models and Services

Second-quarter 2005 net sales for the Research Models and Servicessegment of the business were $130.8 million compared to $120.1 millionlast year, an increase of 8.9%. Growth was due primarily to theresearch model business, partially offset by lower sales of TransgenicServices and of Vaccine Products. The gross margin was 44.2%, slightlylower than the 45.2% reported in the second quarter of last year. Theoperating margin was 32.9% compared to 34.2% in the same period lastyear. The decrease in gross and operating margins was due to lowerTransgenic Services and Vaccine Products sales.

For the six-month period, net sales were $258.7 million, anincrease of 8.0% from the $239.6 million reported in the first half of2004. The gross margin was 44.2% compared to 44.7% in the same periodin 2004, and the operating margin was 33.0% compared to 33.3% in thefirst half of 2004.

Preclinical Services

Net sales for the Preclinical Services segment were $119.1 millionin the second quarter of 2005, an increase of 98.2% from the $60.1million reported in the second quarter of 2004. The increase was dueprimarily to the acquisition of Inveresk, and to continuing strongdemand for outsourced development services. Robust net sales of globaltoxicology services were partially offset by interventional andsurgical services sales, which declined from the second quarter of2004. The segment's gross margin increased to 36.1% from 33.8% in thesecond quarter of 2004. Operating income was $17.7 million in thesecond quarter of 2005, compared to $11.4 million last year. Theoperating margin was 14.9% compared to 19.0% in the second quarter of2004, with the decrease due to amortization of intangibles related tothe acquisition of Inveresk. On a non-GAAP basis, when excludingamortization of $10.1 million related to the Inveresk acquisition,second-quarter operating income rose to $27.9 million from $11.4million in the second quarter of last year and the operating marginincreased to 23.4% from 19.0% in the second quarter of last year,reflecting higher sales and operating efficiencies.

For the first six months of 2005, Preclinical net sales were$233.2 million compared to $113.3 million in the same period lastyear, an increase of 105.9%. The gross margin for the first half of2005 rose to 34.8% from 32.1% in the same period last year, and theoperating margin was 13.0% compared to 16.7% in the first half of2004. On a non-GAAP basis, when excluding amortization of $20.5million related to the Inveresk acquisition, operating income for thefirst half of 2005 rose to $50.7 million from $19.0 million in thefirst half of last year and the operating margin increased to 21.7%from 16.7% in the same period last year.

Clinical Services

For the second quarter of 2005, net sales for the ClinicalServices segment were $33.5 million. The gross margin was 33.0%,operating income was $1.9 million and the operating margin was 5.8%.On a non-GAAP basis, when excluding amortization of $3.0 millionrelated to the Inveresk acquisition, operating income was $4.9 millionand the operating margin was 14.8%.

For the first six months of 2005, Clinical net sales were $65.3million and the gross margin was 32.0%. Operating income was $2.8million and the operating margin was 4.3%. On a non-GAAP basis, whenexcluding amortization of $6.0 million related to the Invereskacquisition, operating income was $8.8 million and the operatingmargin was 13.5%.

Backlog

The backlog for Preclinical and Clinical Services at June 25,2005, was $421 million, which includes a reduction of $10 million inthe second quarter attributable to foreign currency translation.

The Company does not report backlog for the RMS business segmentbecause turnaround time from placement to completion of orders, bothfor products and services, is rapid.

Board Authorizes Stock Repurchase Plan

Charles River's Board of Directors has authorized the repurchaseof up to $50 million of its common stock. The stock purchases will bemade from time to time on the open market, through block trades orotherwise in compliance with Rule 10b-18 of the federal securitieslaws. Depending on market conditions and other factors, theserepurchases may be commenced or suspended at any time or from time totime without prior notice. Funds for the repurchases are expected tocome from cash on hand or cash generated by operations. There arecurrently no specific plans for the shares that may be purchased underthe program.

As of July 20, 2005, Charles River had approximately 71.8 millionshares of common stock outstanding.

2005 Outlook

The following forward-looking guidance is based on current foreignexchange rates. Full-year 2005 net sales guidance includes a negativeeffect from foreign currency translation of approximately 2.0%compared to the Company's earlier guidance. However, stronger thanexpected operating results are expected to offset the negative foreigncurrency translation effect on both net sales and diluted earnings pershare.

Including the effect of foreign currency, the Company reaffirmsits prior guidance for 2005 of revenue growth in a range of 48% to52%, which reflects the acquisition of Inveresk as well as continuedstrength in the market for outsourced drug discovery and developmentservices. The Company also reaffirms its prior guidance that strongsales growth, efficiency improvements and operating synergies areexpected to result in GAAP earnings per diluted share in a range of$1.70 to $1.80. Non-GAAP earnings, which exclude acquisition-relatedamortization of intangible assets of $53.6 million and compensationcharges of $7.8 million, are expected to be in a range of $2.30 to$2.40 per diluted share, as the Company previously stated.

For the third quarter of 2005, the Company expects net sales toincrease between 58% and 61%, and GAAP earnings per diluted share tobe in a range of $0.44 to $0.46. Non-GAAP earnings per diluted share,which exclude acquisition-related amortization of intangible assets of$13.1 million and compensation charges of $1.3 million, are expectedto be in a range of $0.58 to $0.60.

Webcast

Charles River Laboratories has scheduled a live webcast on Friday,July 29, at 8:30 a.m. ET to discuss matters relating to this pressrelease. To participate, please go to ir.criver.com and select thewebcast link. The webcast will be available until 5:00 p.m. ET onAugust 5, 2005.

Use of Non-GAAP Financial Measures

This press release contains non-GAAP financial measures whichexclude, among other items, amortization of intangible assets andother charges related to the Inveresk acquisition. We exclude theseitems from the non-GAAP financial measures because they are outsideour normal operations. We believe that the inclusion of non-GAAPfinancial measures in this press release helps investors to gain ameaningful understanding of our core operating results and futureprospects, and is consistent with how management measures andforecasts the Company's performance, especially when comparing suchresults to prior periods or forecasts. Non-GAAP results also allowinvestors to compare the Company's operations against the financialresults of other companies in the industry who similarly providenon-GAAP results. The non-GAAP financial measures included in thispress release are not meant to be considered superior to or asubstitute for results of operations prepared in accordance with GAAP.Reconciliations of the non-GAAP financial measures used in this pressrelease to the most directly comparable GAAP financial measures areset forth in the text of, and the accompanying exhibits to, this pressrelease, and can also be found on the Company's website atir.criver.com.

Caution Concerning Forward-Looking Statements. This news releaseincludes forward-looking statements within the meaning of the PrivateSecurities Litigation Reform Act of 1995. Forward-looking statementsmay be identified by the use of words such as "anticipate," "believe,""expect," "estimate," "plan," "outlook," and "project" and othersimilar expressions that predict or indicate future events or trendsor that are not statements of historical matters. Forward-lookingstatements are based on Charles River's current expectations andbeliefs, and involve a number of risks and uncertainties that couldcause actual results to differ materially from those stated or impliedby the forward-looking statements. Those risks and uncertaintiesinclude, but are not limited to: challenges arising from theacquisition and integration of Inveresk Research Group; a decrease inresearch and development spending or a decrease in the level ofoutsourced services; acquisition integration risks; the ability toconvert backlog to sales; special interest groups; contaminations;industry trends; new displacement technologies; USDA and FDAregulations; changes in law; continued availability of products andsupplies; loss of key personnel; interest rate and foreign currencyexchange rate fluctuations; changes in tax regulation and laws;changes in generally accepted accounting principles; and any changesin business, political, or economic conditions due to the threat offuture terrorist activity in the U.S. and other parts of the world,and related U.S. military action overseas. A further description ofthese risks, uncertainties, and other matters can be found in the RiskFactors detailed in Charles River's Annual Report on Form 10-K asfiled on March 9, 2005, with the Securities and Exchange Commission.Because forward-looking statements involve risks and uncertainties,actual results and events may differ materially from results andevents currently expected by Charles River, and Charles River assumesno obligation and expressly disclaims any duty to update informationcontained in this news release except as required by law.

About Charles River Laboratories

Charles River Laboratories, based in Wilmington, Massachusetts, isa global provider of solutions that advance the drug discovery anddevelopment process. Our leading-edge products and services aredesigned to enable our clients to bring drugs to market faster andmore efficiently. Backed by our rigorous, best-in-class procedures andour proven data collection, analysis and reporting capabilities, ourproducts and services are organized into three categories spanningevery step of the drug development pipeline: Research Models andServices, Preclinical Services, and Clinical Services. Charles River'scustomer base includes all of the major pharmaceutical companies andmany biotechnology companies, government agencies and leadinghospitals and academic institutions. Charles River's 8,000 employeesserve clients in more than 50 countries. For more information onCharles River, visit our website at www.criver.com.
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(dollars in thousands, except for per share data)

Three Months Ended Six Months Ended
------------------------ -----------------------
June 25, June 26, June 25, June 26,
2005 2004 2005 2004

Total net sales $ 283,413 $ 180,193 $ 557,135 $ 352,830
Cost of products sold
and services provided 171,627 105,572 340,738 209,381
----------- ----------- ----------- -----------
Gross margin 111,786 74,621 216,397 143,449
Selling, general and
administrative 47,615 29,220 92,467 57,340
Amortization of
intangibles 14,318 1,198 28,681 2,389
----------- ----------- ----------- -----------
Operating income 49,853 44,203 95,249 83,720
Interest income
(expense) (4,771) (1,310) (11,030) (2,725)
Other, net (340) (73) (484) 127
----------- ----------- ----------- -----------
Income before income
taxes and minority
interests 44,742 42,820 83,735 81,122
Provision for income
taxes 12,460 16,058 23,320 36,210
----------- ----------- ----------- -----------
Income before minority
interests 32,282 26,762 60,415 44,912
Minority interests (422) (462) (907) (1,018)
----------- ----------- ----------- -----------
Net income $ 31,860 $ 26,300 $ 59,508 $ 43,894
=========== =========== =========== ===========

Earnings per common
share
Basic $ 0.46 $ 0.57 $ 0.88 $ 0.96
Diluted $ 0.44 $ 0.52 $ 0.84 $ 0.88
Weighted average number
of common shares
outstanding
Basic 69,738,107 46,046,675 67,807,103 45,950,897
Diluted 72,916,234 52,586,287 72,734,098 52,342,036


CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(dollars in thousands)



June 25, December 25,
2005 2004
Assets
Current assets
Cash and cash equivalents $ 166,549 $ 207,566
Trade receivables, net 210,308 201,794
Inventories 60,373 61,914
Other current assets 42,049 39,032
----------- -----------
Total current assets 479,279 510,306
Property, plant and equipment, net 349,623 357,149
Goodwill, net 1,419,079 1,422,586
Other intangibles, net 226,500 256,294
Deferred tax asset 46,154 50,412
Other assets 27,372 30,088
----------- -----------
Total assets $2,548,007 $2,626,835
=========== ===========

Liabilities and Shareholders' Equity
Current liabilities
Current portion of long-term debt $ 80,521 $ 80,456
Accounts payable 24,347 28,672
Accrued compensation 36,921 46,037
Deferred income 103,850 117,490
Other current liabilities 70,581 76,460
----------- -----------
Total current liabilities 316,220 349,115
Long-term debt 325,263 605,388
Other long-term liabilities 165,650 190,035
----------- -----------
Total liabilities 807,133 1,144,538
----------- -----------
Minority interests 9,191 9,792
Total shareholders' equity 1,731,683 1,472,505
----------- -----------
Total liabilities and shareholders' equity $2,548,007 $2,626,835
=========== ===========


CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED)
(dollars in thousands)

Three Months Ended Six Months Ended
------------------- ------------------
June 25, June 26, June 25, June 26,
2005 2004 2005 2004
Research Models and Services
Net sales $130,771 $120,085 $258,683 $239,562
Gross margin 57,755 54,277 114,341 107,048
Gross margin as a % of net
sales 44.2% 45.2% 44.2% 44.7%
Operating income 43,050 41,041 85,358 79,792
Operating income as a % of
net sales 32.9% 34.2% 33.0% 33.3%
Depreciation and amortization 5,047 4,296 9,776 8,605
Capital expenditures 6,516 4,952 11,791 8,395

Preclinical Services
Net sales $119,107 $ 60,108 $233,179 $113,268
Gross margin 42,962 20,344 81,150 36,401
Gross margin as a % of net
sales 36.1% 33.8% 34.8% 32.1%
Operating income 17,717 11,397 30,233 18,971
Operating income as a % of
net sales 14.9% 19.0% 13.0% 16.7%
Depreciation and amortization 16,596 3,400 33,589 6,928
Capital expenditures 5,176 2,390 12,199 3,472

Clinical Services
Net sales $ 33,535 $ - $ 65,273 $ -
Gross margin 11,069 - 20,906 -
Gross margin as a % of net
sales 33.0% - 32.0% -
Operating income 1,948 - 2,781 -
Operating income as a % of
net sales 5.8% - 4.3% -
Depreciation and amortization 3,714 - 7,418 -
Capital expenditures 159 - 259 -


Unallocated Corporate Overhead $(12,862) $ (8,235) $(23,123) $(15,043)


Total
Net sales $283,413 $180,193 $557,135 $352,830
Gross margin 111,786 74,621 216,397 143,449
Gross margin as a % of net
sales 39.4% 41.4% 38.8% 40.7%
Operating income 49,853 44,203 95,249 83,720
Operating income as a % of
net sales 17.6% 24.5% 17.1% 23.7%
Depreciation and amortization 25,357 7,696 50,783 15,533
Capital expenditures 11,851 7,342 24,249 11,867



CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
RECONCILIATION OF GAAP TO NON-GAAP
SELECTED BUSINESS SEGMENT INFORMATION (UNAUDITED)
(dollars in thousands)

Three Months Ended Six Months Ended
------------------ ------------------
June 25, June 26, June 25, June 26,
2005 2004 2005 2004
Research Models and Services
Net sales $130,771 $120,085 $258,683 $239,562
Operating income 43,050 41,041 85,358 79,792
Operating income as a % of net
sales 32.9% 34.2% 33.0% 33.3%

Preclinical Services
Net sales $119,107 $ 60,108 $233,179 $113,268
Operating income 17,717 11,397 30,233 18,971
Operating income as a % of net
sales 14.9% 19.0% 13.0% 16.7%
Add back:
Amortization related to
acquisition 10,146 - 20,463 -
-------- -------- -------- --------
Operating income, excluding
specified charges (Non-GAAP) 27,863 11,397 50,696 18,971
Non-GAAP operating income as a
% of net sales 23.4% 19.0% 21.7% 16.7%

Clinical Services
Net sales $ 33,535 $ - $ 65,273 $ -
Operating income 1,948 - 2,781 -
Operating income as a % of net
sales 5.8% - 4.3% -
Add back:
Amortization related to
acquisition 3,000 - 6,014 -
-------- -------- -------- --------
Operating income, excluding
specified charges (Non-GAAP) 4,948 - 8,795 -
Non-GAAP operating income as a
% of net sales 14.8% 13.5%


Unallocated Corporate Overhead $(12,862)$ (8,235) $(23,123)$(15,043)
Add back:
Stock-based compensation
related to acquisition 2,825 - 5,794 -
-------- -------- -------- --------
Unallocated corporate
overhead, excluding
specified charges (Non-
GAAP) (10,037) (8,235) (17,329) (15,043)


Total
Net sales $283,413 $180,193 $557,135 $352,830
Operating income 49,853 44,203 95,249 83,720
Operating income as a % of net
sales 17.6% 24.5% 17.1% 23.7%
Add back:
Amortization related to
acquisition 13,146 - 26,477 -
Stock-based compensation
related to acquisition 2,825 - 5,794 -
-------- -------- -------- --------
Operating income, excluding
specified charges (Non-GAAP) 65,824 44,203 127,520 83,720
Non-GAAP operating income as a
% of net sales 23.2% 24.5% 22.9% 23.7%


Charles River management believes that non-GAAP financial measures
helps investors to gain a meaningful understanding of our core
operating results and future prospects, consistent with the manner in
which management measures and forecasts the Company's performance. The
non-GAAP financial measures included are not meant to be considered
superior to or a substitute for results of operations prepared in
accordance with GAAP.

CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
RECONCILIATION OF GAAP EARNINGS TO NON-GAAP EARNINGS
(dollars in thousands, except for per share data)


Three Months Ended Six Months Ended
------------------------ -----------------------
June 25, June 26, June 25, June 26,
2005 2004 2005 2004

Net income $ 31,860 $ 26,300 $ 59,508 $ 43,894
Add back:
Deferred tax asset
write-off - - - 7,900
Valuation allowance
release - - - (2,111)
Amortization related
to acquisition 13,146 - 26,477 -
Stock-based
compensation
related to
acquisition 2,825 - 5,794 -
Tax effect (5,299) - (10,612) -
----------- ----------- ----------- -----------
Net income, excluding
specified charges
(Non-GAAP) $ 42,532 $ 26,300 $ 81,167 $ 49,683
=========== =========== =========== ===========

Calculation of
earnings per common
share, excluding
specified charges
(Non-GAAP):
Net income for purposes
of calculating
earnings
per share,
excluding specified
charges (Non-GAAP) $ 42,532 $ 26,300 $ 81,167 $ 49,683
After-tax equivalent
interest expense
on 3.5% senior
convertible
debentures 295 995 1,463 1,991
----------- ----------- ----------- -----------
Income for purposes of
calculating
diluted earnings
per share, excluding
specified charges
(Non-GAAP) $ 42,827 $ 27,295 $ 82,630 $ 51,674
=========== =========== =========== ===========

Weighted average
shares outstanding -
Basic 69,738,107 46,046,675 67,807,103 45,950,897
Effect of dilutive
securities:
3.5% senior
convertible
debentures 1,202,939 4,759,455 2,981,197 4,759,455
Stock options and
contingently issued
restricted stock 1,633,092 1,440,297 1,604,147 1,294,509
Warrants 342,096 339,860 341,651 337,175
----------- ----------- ----------- -----------
Weighted average
shares outstanding -
Diluted 72,916,234 52,586,287 72,734,098 52,342,036
=========== =========== =========== ===========

Basic earnings per
share $ 0.46 $ 0.57 $ 0.88 $ 0.96
Diluted earnings per
share $ 0.44 $ 0.52 $ 0.84 $ 0.88

Basic earnings per
share, excluding
specified charges
(Non-GAAP) $ 0.61 $ 0.57 $ 1.20 $ 1.08
Diluted earnings per
share, excluding
specified charges
(Non-GAAP) $ 0.59 $ 0.52 $ 1.14 $ 0.99


Charles River management believes that non-GAAP financial measures
helps investors to gain a meaningful understanding of our core
operating results and future prospects, consistent with the manner in
which management measures and forecasts the Company's performance. The
non-GAAP financial measures included are not meant to be considered
superior to or a substitute for results of operations prepared in
accordance with GAAP.