CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

Previous wording

Our client base includes major global pharmaceutical companies, many biotechnology companies; agricultural and industrial chemical, life science, veterinary medicine, medical device, diagnostic and consumer product companies; contract research and contract manufacturing organizations; and other commercial entities, as well as leading hospitals, academic institutions, and government agencies around the world. We currently operate in over 130 sites and in over 20 countries worldwide, which numbers exclude certain Insourcing Solutions (IS) sites.

Current wording

Our client base includes major global pharmaceutical companies, many biotechnology companies; agricultural and industrial chemical, life science, veterinary medicine, medical device, diagnostic and consumer product companies; contract research and contract manufacturing organizations; and other commercial entities, as well as leading hospitals, academic institutions, and government agencies around the world. We currently operate in over 120 sites and in over 20 countries worldwide, which numbers exclude certain Insourcing Solutions (IS) sites.

Previous wording

Our RMS reportable segment includes the products and services offered within Research Models, Research Model Services, and Cell Solutions. 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: Insourcing Solutions (IS), which provides colony management of our clients’ research operations (including recruitment, training, staffing, and management services) within our clients’ facilities as well as our own vivarium space, utilizing our Charles River Accelerator and Development Lab (CRADL™) offerings, Genetically Engineered Models and Services (GEMS), which performs contract breeding and other services associated with genetically engineered models; and Research Animal Diagnostic Services (RADS), which provides health monitoring and diagnostics services related to research models; and Cell Solutions provides controlled, consistent, customized primary cells and blood components derived from normal and mobilized peripheral blood and bone marrow as well as cells from disease state donors.

Current wording

Our RMS reportable segment includes the products and services offered within Research Models, Research Model Services, and Cell Solutions. 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: Insourcing Solutions (IS), which provides colony management of our clients’ research operations (including recruitment, training, staffing, and management services) within our clients’ facilities as well as our own vivarium space, utilizing our Charles River Accelerator and Development Lab (CRADL™) offerings, Genetically Engineered Models and Services (GEMS), which performs contract breeding and other services associated with genetically engineered models; and Research Animal Diagnostic Services (RADS), which provides health monitoring and diagnostics services related to research models; and Cell Solutions, which provides controlled, consistent, customized primary cells and blood components derived from normal and mobilized peripheral blood and bone marrow as well as cells from disease state donors.

Previous wording

Our Manufacturing reportable segment includes Microbial Solutions, which providesin vitro 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, we sold the Avian Vaccine Services (Avian) business, reported in the Manufacturing segment, which supplied specific-pathogen-free chicken eggs and chickens.

Current wording

Our Manufacturing reportable segment includes Microbial Solutions, which providesin vitro lot-release testing products, microbial detection products, and species identification services and Biologics Solutions (Biologics), which performs specialized testing of biologics (Biologics Testing) as well as contract development and manufacturing products and services (CDMO).

Previous wording

Despite the current, challenging market environment, many of our pharmaceutical and biotechnology clients continued to benefit from the long-term value of strategic outsourcing to improve their operating efficiency and to access capabilities that they do not maintain internally. Many of our large biopharmaceutical clients have continued to rely on relationships with outsourced partners like Charles River to enhance their drug discovery and early-stage development efforts, and biotechnology companies to assist them in bringing new drugs to market. However, because of their more cautious view with regard to early-stage R&D spending, revenue due to both large biopharmaceutical clients and small and mid-sized biotechnology client declined in fiscal year 2024. However, our ability to continue to deliver our leading suite of research, non-clinical development, and clinical bioanalytical solutions has endeavored our clients to continue to choose to partner with us for our flexible and efficient outsourcing solutions, broad scientific capabilities, and global scale.

Current wording

Despite the current, challenging market environment, many of our pharmaceutical and biotechnology clients continued to benefit from the long-term value of strategic outsourcing to improve their operating efficiency and to access capabilities that they do not maintain internally. Many of our large biopharmaceutical clients have continued to rely on relationships with outsourced partners like Charles River to enhance their drug discovery and early-stage development efforts, and biotechnology companies to assist them in bringing new drugs to market. Because of a continued cautious view with regard to early-stage R&D spending, revenue to both large biopharmaceutical clients and small and mid-sized biotechnology clients declined in fiscal year 2025. However, our ability to continue to deliver our leading suite of research, non-clinical development, and clinical bioanalytical solutions has endeavored our clients to continue to choose to partner with us for our flexible and efficient outsourcing solutions, broad scientific capabilities, and global scale.

Previous wording

Revenue for RMS increased in fiscal year 2024 due largely to revenue contributions from the acquisition of a controlling interest in Noveprim, as well as increased pricing for small research models. Offsetting this growth, the challenging biopharmaceutical demand environment led to lower revenue for research model services, including Insourcing Solution’s CRADLTM operations. However, CRADLTM continues to be an attractive business model as a cost-effective and flexible solution for clients allowing access to vivarium space without having to invest in internal infrastructure. This flexibility is particularly valuable in the current environment, where organizations are seeking to optimize their research budgets and minimize operational costs. We are confident that research models and services will remain essential tools for our clients’ drug discovery and early-stage development efforts.

Current wording

Revenue for RMS increased in fiscal year 2025 due largely to higher revenue from large research models and increased pricing for small research models. Additionally, revenue from research model services improved modestly driven by the IS and GEMS businesses. Despite pressures from early-stage biotechnology and government funding in North America, as well as a focus on alternative methodologies, we are confident that research models and services will remain essential tools for our clients’ drug discovery and early-stage development efforts.

Previous wording

In response to recent trends observed across each of our businesses, we have undertaken and will continue to implement restructuring actions at various locations across North America, Europe, and Asia. This includes workforce right-sizing actions, resulting in severance and transition costs; and costs related to the consolidation of facilities to optimize our global footprint and drive greater operating efficiency across the Company, resulting in asset impairment, accelerated depreciation, and other site consolidation charges. During fiscal 2023, the Company began to take restructuring actions as a result of these emerging business trends. The Company incurred restructuring charges of $107.0 million and $29.7 million during the fiscal years 2024 and 2023, respectively. We expect that these effectuated actions, as well as other upcoming planned actions designed to optimize our global footprint to drive greater operating efficiency, will result in approximately $225 million of cost savings on an annualized basis, of which approximately $100 million impacted fiscal 2024.

Current wording

In response to recent trends, we continue to implement cost savings initiatives focused on driving greater efficiencies, as well as restructuring actions that have been implemented over the past three years that were focused on workforce right-sizing and site optimization. More recently, additional efficiency initiatives have targeted incremental savings through process improvement, procurement synergies, and implementation of a global business services model. Collectively, these actions are expected to generate approximately $300 million in cumulative, annualized cost savings by the end of 2026, of which more than $175 million benefitted fiscal 2025. Workforce right-sizing actions resulted in severance and transition costs while costs related to the consolidation of facilities to optimize our global footprint and drive greater operating efficiency across the company resulted in asset impairments, accelerated depreciation, and other site consolidation charges. We incurred restructuring charges of $99.8 million and $107.0 million during the fiscal years 2025 and 2024, respectively.

Previous wording

Despite the near-term market pressures, we believe clients will continue to benefit from the long-term value of strategic outsourcing to improve their operating efficiency and to access capabilities that they do not maintain internally. We believe that our comprehensive scientific capabilities and global scale, as well as the breadth and depth of our scientific expertise, quality, and responsiveness remain key criteria when our clients make the decision to outsource to us. As the scientific partner of choice to accelerate biomedical research, we are committed to driving greater efficiency and speed while providing exceptional service to our clients.

Current wording

Despite the near-term market pressures that led to a modest revenue decline in fiscal year 2025, we believe clients will continue to benefit from the long-term value of strategic outsourcing to improve their operating efficiency and to access capabilities that they do not maintain internally. We believe that our comprehensive scientific capabilities and global scale, as well as the breadth and depth of our scientific expertise, quality, and responsiveness remain key criteria when our clients make the decision to outsource to us. As the scientific partner of choice to accelerate biomedical research, we are committed to driving greater efficiency and speed while providing exceptional service to our clients.

Previous wording

On November 30, 2023, we completed our acquisition of an additional 41% equity interest of Noveprim Group (Noveprim), a leading supplier of non-human primates (NHPs) located in Mauritius, resulting in a 90% controlling interest. We had previously acquired a 49% equity interest in 2022 for $90.0 million plus additional contingent payments up to $5.0 million based on future performance. The total consideration allocable to the Noveprim acquisition is $392.4 million, which includes $144.6 million additional cash paid for the 41% equity interest, elimination of historical activity and intercompany balances of $209.5 million which includes a remeasurement gain on the 49% equity investment of $113.0 million, contingent consideration of $33.3 million, deferred purchase price of $12.0 million payable from 2024 through 2027, offset by estimated post-closing adjustments for working capital of $7.0 million. The purchase price reflected an agreement with the seller on working capital and debt, which was adjusted from $13.8 million to $7.0 million during fiscal year 2024. As a result of measurement period adjustments to the purchase price, goodwill and remeasurement gains on the previous 49% equity investment during fiscal year 2024, were increased by $17.6 million and $9.8 million, respectively. Remeasurement gains are recorded in Other income (expense), net, within the consolidated statements of income. The contingent consideration fair value is estimated using a Monte Carlo Simulation model and the maximum contingent contractual payments are up to $55.0 million based on future performance and milestone achievements from fiscal years 2023 through 2025. The Company has the call option right to purchase the remaining 10% equity interest up until one month after the sixth anniversary of closing the 41% equity interest. 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 us to acquire the remaining shares of the seller. The redemption price for the call/put is fixed and ranges from $47.0 million to $54.0 million depending on when exercised. The noncontrolling interest is classified as a redeemable noncontrolling interest in the mezzanine section of the consolidated balance sheets. The acquisition was funded through a combination of available cash and proceeds from our Credit Facility. This business is reported as part of our DSA reportable segment for NHPs vertically integrated into the DSA supply chain and the RMS reportable segment for those NHPs sold to third party customers.

Current wording

On November 30, 2023, we completed our acquisition of an additional 41% equity interest of Noveprim Group (Noveprim), a leading supplier of NHPs located in Mauritius, resulting in a 90% controlling interest. We had previously acquired a 49% equity interest in 2022 for $90.0 million plus additional contingent payments up to $5.0 million based on future performance. The total consideration allocable to the Noveprim acquisition is $392.4 million, which includes $144.6 million additional cash paid for the 41% equity interest, elimination of historical activity and intercompany balances of $209.5 million which includes a remeasurement gain on the 49% equity investment of $113.0 million, contingent consideration of $33.3 million, deferred purchase price of $12.0 million payable from 2024 through 2027, offset by estimated post-closing adjustments for working capital of $7.0 million. The acquisition was funded through a combination of available cash and proceeds from our Credit Facility. This business is reported as part of our DSA reportable segment for NHPs vertically integrated into the DSA supply chain and the RMS reportable segment for those NHPs sold to third party customers.

Previous wording

On February 17, 2023, we received a grand jury subpoena requesting certain documents related to an investigation by the U.S. Department of Justice (DOJ) and the U.S. Fish and Wildlife Service (USFWS) into our conduct regarding several shipments of non-human primates from Cambodia. That investigation remains ongoing and we are continuing to cooperate with the investigation. As also previously disclosed, a parallel civil investigation is being undertaken by the DOJ and USFWS. We are also cooperating with that investigation, and although we continue to dispute the merits of certain positions taken by the DOJ and USFWS in the civil investigation, we have discussed a potential resolution of that matter with the DOJ and USFWS. Those discussions are ongoing. Although we maintain 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, including the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), in connection with the civil investigation, we have voluntarily suspended future shipments of non-human primates from Cambodia to the United States until such time that we and USFWS can agree upon and implement additional procedures to reasonably ensure that non-human primates imported from Cambodia are purpose-bred. We continue to care for the Cambodia-sourced non-human primates from certain shipments in the United States. Due to a number of factors, including the age of these NHP’s, during the fourth quarter of fiscal year 2024, we recorded a charge of $27 million to costs of products sold within the accompanying consolidated statements of income to reflect the reduction in carrying value of this inventory to zero. On May 16, 2023, we received an inquiry from the Enforcement Division of the U.S. Securities and Exchange Commission (SEC) requesting us to voluntarily provide information, subsequently augmented with a document subpoena and additional inquiries, primarily related to the sourcing of non-human primates and related disclosures, and we are cooperating with the requests. Our Audit Committee has retained counsel to conduct an independent investigation into certain issues raised in the investigations, and that work is ongoing. We are not able to predict what action, if any, might be taken in the future by the DOJ, USFWS, SEC or other governmental authorities. None of the DOJ, USFWS or SEC has provided us with any specific timeline or indication as to when these investigations or, specific to the DOJ and USFWS, discussions regarding resolution and future processes and procedures, will be concluded or resolved. We cannot predict the timing, outcome or possible impact of the investigations, including without limitation any potential fines, penalties or liabilities.

Current wording

On February 17, 2023, we received a grand jury subpoena requesting certain documents related to an investigation by the U.S. Department of Justice (DOJ) and the U.S. Fish and Wildlife Service (USFWS) into our conduct regarding several shipments of non-human primates from Cambodia in late 2022 and early 2023 (the NHP Shipments). The DOJ also undertook a parallel civil investigation related to the NHP Shipments. Due to a number of factors, including the age of these NHP’s, during the fourth quarter of fiscal year 2024, we recorded a charge of $27 million to costs of products sold within the accompanying consolidated statements of income (loss) to reflect the reduction in carrying value of this inventory to zero. In July 2025, we were informed that USFWS had determined to clear the NHP Shipments for legal entry into the United States. Furthermore, in August 2025 we were advised by the DOJ that both the grand jury investigation and the parallel civil investigation had been closed.

Previous wording

Product revenue is generally recognized when the customer obtains control of our product, which occurs at a point in time, and may be upon shipment or upon delivery based on the contractual shipping terms of a contract. Service revenue is generally recognized over time as the services are delivered to the customer based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. Depending on which better depicts the transfer of value to the customer, we generally measure our progress using either cost-to-cost (input method) or right-to-invoice (output method). We use the cost-to-cost measure of progress when it best depicts the transfer of value to the customer which occurs as we incur costs on our contract, generally related to fixed fee service contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. The costs calculation includes variables such as labor hours, allocation of overhead costs, research model costs, and subcontractor costs. Revenue is recorded proportionally as costs are incurred. The right-to-invoice measure of progress is generally related to rate per unit contracts, as the extent of progress towards completion is measured based on discrete service or time-based increments, such as samples tested or labor hours incurred. Revenue is recorded in the amount invoiced since that amount corresponds directly to the value of our performance to date. During fiscal year 2024, $2.4 billion, or approximately 60%, of our total revenue recognized ($4.0 billion) is DSA service and product revenue transferred over time.

Current wording

Product revenue is generally recognized when the customer obtains control of our product, which occurs at a point in time, and may be upon shipment or upon delivery based on the contractual shipping terms of a contract. Service revenue is generally recognized over time as the services are delivered to the customer based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. Depending on which better depicts the transfer of value to the customer, we generally measure our progress using either cost-to-cost (input method) or right-to-invoice (output method). We use the cost-to-cost measure of progress when it best depicts the transfer of value to the customer which occurs as we incur costs on our contract, generally related to fixed fee service contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. The costs calculation includes variables such as labor hours, allocation of overhead costs, research model costs, and subcontractor costs. Revenue is recorded proportionally as costs are incurred. The right-to-invoice measure of progress is generally related to rate per unit contracts, as the extent of progress towards completion is measured based on discrete service or time-based increments, such as samples tested or labor hours incurred. Revenue is recorded in the amount invoiced since that amount corresponds directly to the value of our performance to date. During fiscal year 2025, $2.4 billion, or approximately 60%, of our total revenue recognized is DSA service and product revenue transferred over time.

Previous wording

We use assumptions and estimates in determining the fair value of assets acquired and liabilities assumed in a business combination. The determination of the fair value of intangible assets (including goodwill) and certain biological assets, which represent a significant portion of the purchase price in certain recent acquisitions, requires the use of significant judgment with regard to (i) the fair value; and (ii) whether such assets are amortizable or non-amortizable and, if the former, the period and the method by which the asset will be amortized. We utilize commonly accepted valuation techniques, such as the income, cost and market approaches, as appropriate, in establishing the fair value of these assets. Typically, key assumptions include projections of cash flows that arise from these assets of acquired businesses as well as discount rates based on an analysis of the weighted average cost of capital, adjusted for specific risks associated with the assets.

Current wording

We use assumptions and estimates in determining the fair value of assets acquired and liabilities assumed in a business combination. The determination of the fair value of intangible assets (including goodwill) and certain biological assets, which represented a significant portion of the purchase price in prior acquisitions, requires the use of significant judgment with regard to (i) the fair value; and (ii) whether such assets are amortizable or non-amortizable and, if the former, the period and the method by which the asset will be amortized. We utilize commonly accepted valuation techniques, such as the income, cost and market approaches, as appropriate, in establishing the fair value of these assets. Typically, key assumptions include projections of cash flows that arise from these assets of acquired businesses as well as discount rates based on an analysis of the weighted average cost of capital, adjusted for specific risks associated with the assets.

Previous wording

In our recent acquisitions, customer relationship intangible assets (also referred to as client relationships) and certain biological assets have been the most significant identifiable assets acquired. To determine the fair value of the acquired client relationships and biological assets, we utilized the multiple period excess earnings model (a commonly accepted valuation technique), which includes the following key assumptions: projections of cash flows from the acquired entities, which included future revenue, cost of revenue, operating income margins, customer attrition rates, productivity rates; as well as discount rates based on a market participant’s weighted average cost of capital. During fiscal year 2024, we did not enter into any acquisitions. The value of the client relationship acquired was $23 million and the value of the biological assets acquired was $168 million for fiscal year 2023.

Current wording

In our prior acquisitions, customer relationship intangible assets (also referred to as client relationships) and certain biological assets have been the most significant identifiable assets acquired. To determine the fair value of the acquired client relationships and biological assets, we utilized the multiple period excess earnings model (a commonly accepted valuation technique), which includes the following key assumptions: projections of cash flows from the acquired entities, which included future revenue, cost of revenue, operating income margins, customer attrition rates, productivity rates; as well as discount rates based on a market participant’s weighted average cost of capital. During fiscal years 2025 and 2024, we did not enter into any business combinations.

Previous wording

Upon completion of a quantitative impairment test, it was determined that the fair value of the reporting unit was below its carrying value, resulting in a goodwill impairment of approximately $215.0 million. We will continue to closely monitor future performance and any potential impacts on the value of the reporting unit. If the estimated future cash flows decrease below our current expectations, specifically as a result of lower revenue growth rates or operating income margins, or due to an increase of the weighted-average cost of capital, the fair value may further decrease resulting in an incremental material goodwill impairment.

Current wording

During the fourth quarter ended December 27, 2025, we performed the quantitative goodwill impairment test for our reporting units and upon completion, it was determined that the fair value of the Biologics Solutions reporting unit did not exceed its carrying value, resulting in a goodwill impairment charge of $165.0 million. This was primarily attributable to a decline in its operating performance, resulting in a reduction to the long-range financial plan of the reporting unit, and evolving market information in the fourth quarter of 2025. The fair value of the Biologics Solutions reporting unit tested for impairment during 2025 was determined using a weighted combination of a discounted cash flow model (an income approach), and sales and earnings multiples based on the guideline public company method, and other market information (a market approach). The discounted cash flow model used to determine the fair value of the Biologics Solutions reporting unit reflected significant assumptions related to future revenue, a long term growth rate, operating income margins, and a discount rate based on a weighted-average cost of capital. Significant assumptions used in the market approach included earnings multiples, sales multiples, and other market information about the value of certain asset groups within the reporting unit. The Biologics Solutions reporting unit fair value measurement is classified as Level 3 in the fair value hierarchy because they involve significant unobservable inputs. We will continue to closely monitor future performance and any potential impacts on the value of the reporting unit. If the estimated future cash flows decrease below our current expectations, specifically as a result of lower revenue growth rates or operating income margins, or due to an increase of the weighted-average cost of capital, the fair value may further decrease resulting in an incremental material goodwill impairment.

Previous wording

During the fourth quarter ended December 28, 2024, a triggering event was identified for the Biologics Solutions reporting unit after the annual impairment assessment. This resulted from a loss of key customers, ultimately resulting in a reduction in Biologics Solutions’ long range financial outlook. In response, we conducted a quantitative impairment test for goodwill to determine if the goodwill in the Biologics Solutions reporting unit was impaired. The fair value of the Biologics Solutions reporting unit tested for impairment during 2024 was determined based on a discounted cash flow model (an income approach) and earnings multiples (a market approach) based on the guideline public company method. Significant assumptions used in the determination of fair value of the Biologics Solutions reporting unit generally include forecasted cash flows, discount rates, terminal growth rates and earnings multiples. The discounted cash flow model used to determine the fair value of the Biologics Solutions reporting unit as of the impairment triggering date reflected assumptions related to revenue growth rates, operating income margins, discount rate and terminal growth rate. The Biologics Solutions reporting unit fair value measurement is classified as Level 3 in the fair value hierarchy because they involve significant unobservable inputs.

Current wording

During the fourth quarter ended December 28, 2024, a triggering event was identified for the Biologics Solutions reporting unit after the annual impairment assessment. This resulted from a loss of key customers, ultimately resulting in a reduction in Biologics Solutions’ long range financial outlook. In response, we conducted a quantitative impairment test for goodwill to determine if the goodwill in the Biologics Solutions reporting unit was impaired. The fair value of the Biologics Solutions reporting unit tested for impairment during 2024 was determined based on a discounted cash flow model (an income approach) and earnings multiples (a market approach) based on the guideline public company method. Significant assumptions used in the determination of fair value of the Biologics Solutions reporting unit generally include forecasted cash flows, discount rates, terminal growth rates and earnings multiples. The discounted cash flow model used to determine the fair value of the Biologics Solutions reporting unit as of the impairment triggering date reflected assumptions related to revenue growth rates, operating income margins, discount rate and terminal growth rate. The Biologics Solutions reporting unit fair value measurement is classified as Level 3 in the fair value hierarchy because they involve significant unobservable inputs. Upon completion of a quantitative impairment test, it was determined that the fair value of the reporting unit was below its carrying value, resulting in a goodwill impairment of approximately $215.0 million.

Previous wording

During the third quarter ended September 28, 2024, a triggering event was identified for the Discovery Services reporting unit (part of the DSA reportable segment). This resulted from a continuous decline in market conditions and operational challenges, ultimately resulting in a reduction of Discovery Services’ long range financial outlook. In response, we conducted a quantitative impairment test for goodwill to determine if the goodwill in the Discovery Services reporting unit was impaired. Upon completion of a quantitative impairment test, it was determined that the fair value of the reporting unit exceeded its carrying value by approximately 22%, and no impairment was recognized as of September 28, 2024. As of the annual impairment test date, the fair value of the reporting unit exceeded its carrying value by approximately 16% and no impairment was recognized as of December 28, 2024. While the Discovery Services reporting unit is not currently impaired, we will continue to closely monitor future performance and any potential impacts on the value of the reporting unit. If the estimated future cash flows decrease below our current expectations, specifically as a result of lower revenue growth rates or lower operating income margins, or due to an increase of the weighted-average cost of capital, the fair value may decrease below the carrying value, which may result in a material goodwill impairment.

Current wording

During the third quarter ended September 28, 2024, a triggering event was identified for the Discovery Services reporting unit (part of the DSA reportable segment). This resulted from a continuous decline in market conditions and operational challenges, ultimately resulting in a reduction of Discovery Services’ long range financial outlook. In response, we conducted a quantitative impairment test for goodwill to determine if the goodwill in the Discovery Services reporting unit was impaired. Upon completion of a quantitative impairment test, it was determined that the fair value of the reporting unit exceeded its carrying value by approximately 22%, and no impairment was recognized as of September 28, 2024. As of the annual impairment test date, the fair value of the reporting unit exceeded its carrying value by approximately 16% and no impairment was recognized as of December 28, 2024. As of the beginning of fiscal year 2025, the Discovery Services and Safety Assessment reporting units have been combined into a single reporting unit consistent with recent changes to the DSA integrated operating structure.

Previous wording

Our 2024 and 2023 impairment tests indicated that goodwill was not impaired for any other reporting units.

Current wording

Our 2024 annual impairment test indicated that goodwill was not impaired for any other reporting units.

Previous wording

Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset or asset group, net of any sublease income, if applicable, and its eventual disposition. In the event that such cash flows are not expected to be sufficient to recover the carrying amount of the assets, the assets are written-down to their fair values. We measure any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in our current business model. Significant judgments are required to estimate future cash flows, including the selection of appropriate discount rates and other assumptions. We may also estimate fair value based on market prices for similar assets, as appropriate. Changes in these estimates and assumptions could materially affect the determination of fair value for these assets. Actual cash flows arising from a particular intangible asset could vary from projected cash flows which could imply different carrying values from those established at the dates of acquisition and which could result in impairment of such asset.

Current wording

Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use or sale of the asset or asset group, net of any sublease income, if applicable, and its eventual disposition. In the event that such cash flows are not expected to be sufficient to recover the carrying amount of the assets, the assets are written-down to their fair values. We measure any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in our current business model. Significant judgments are required to estimate future cash flows, including the selection of appropriate discount rates and other assumptions. We may also estimate fair value based on market prices for similar assets, as appropriate. Changes in these estimates and assumptions could materially affect the determination of fair value for these assets. Actual cash flows arising from a particular long-lived asset could vary from projected cash flows which could imply different carrying values from those established at the dates of acquisition and which could result in impairment of such asset.

Previous wording

During the fourth quarter ended December 28, 2024, a triggering event was identified for the Cell Therapy asset group within the Biologics Solutions business as there was a loss of key customers, resulting in a significant reduction in cash flows. We concluded there were no impairments for the asset group related to this triggering event, however the remaining useful life of the intangible asset within the asset group was reduced to less than 1 year.

Current wording

In fiscal 2024, a triggering event was identified for the CDMO Cell Therapy asset group within the Biologics Solutions business, part of the Manufacturing reportable segment, as there was a loss of key customers, resulting in a significant reduction in cash flows. We concluded there were no impairments for the asset group related to this triggering event, however the remaining useful life of the intangible asset within the asset group was reduced to less than 1 year. As a result of the decrease in the remaining useful life, $9.4 million of accelerated amortization was recognized within the accompanying consolidated statements of income (loss) for fiscal year 2024. The remaining value of these client relationships was $75.9 million and was amortized over the remaining useful life of approximately 6 months in fiscal year 2025.

Previous wording

Long-lived asset impairments associated with our right-of-use lease assets and property, plant, and equipment, recognized during fiscal years 2024 and 2023 were $51.8 million and $41.9 million, respectively.

Current wording

Long-lived asset impairments, inclusive of the intangible assets charge described above, recognized during fiscal years 2025 and 2024 were $259.1 million and $51.8 million, respectively.

Previous wording

We prepare and file income tax returns based on our interpretation of each jurisdiction’s tax laws and regulations. In preparing our consolidated financial statements, we estimate our income tax liability in each of the jurisdictions in which we operate by estimating our actual current tax expense together with assessing temporary differences resulting from differing treatment of items for tax and financial reporting purposes. These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheets. Significant management judgment is required in assessing the realizability of our deferred tax assets. In performing this assessment, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. In making this determination, under the applicable financial accounting standards, we are allowed to consider the scheduled reversal of deferred tax liabilities, projected future taxable income, and the effects of tax planning strategies. Our valuation allowance was $286.8 million as of December 28, 2024. In the event actual results differ from our estimates, we will adjust our estimates in future periods and may establish additional allowances or reversals as necessary.

Current wording

We prepare and file income tax returns based on our interpretation of each jurisdiction’s tax laws and regulations. In preparing our consolidated financial statements, we estimate our income tax liability in each of the jurisdictions in which we operate by estimating our actual current tax expense together with assessing temporary differences resulting from differing treatment of items for tax and financial reporting purposes. These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheets. Significant management judgment is required in assessing the realizability of our deferred tax assets. In performing this assessment, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. In making this determination, under the applicable financial accounting standards, we are allowed to consider the scheduled reversal of deferred tax liabilities, projected future taxable income, and the effects of tax planning strategies. Our valuation allowance was $323.3 million as of December 27, 2025. In the event actual results differ from our estimates, we will adjust our estimates in future periods and may establish additional allowances or reversals as necessary.

Previous wording

Our global operations make the effective tax rate sensitive to significant tax law changes. Several countries have begun to enact legislation to implement the Organization for Economic Cooperation and Development’s (OECD) international tax framework, including the Pillar II global minimum tax regime with effect from January 1, 2024 or later. We are currently monitoring these developments. To date, we have not nor, expect there to be a material financial impact.

Current wording

Our global operations make the effective tax rate sensitive to significant tax law changes. Several countries have begun to enact legislation to implement the Organization for Economic Cooperation and Development’s (OECD) international tax framework, including the Pillar II global minimum tax regime with effect from January 1, 2024 or later. In addition, the U.S. enacted the One Big Beautiful Bill on July 4, 2025 with effect from January 1, 2025, for which much guidance is still expected. We are currently monitoring these developments and believe we have appropriately reflected any current or deferred financial statement impact, which we do not believe to be material.

Previous wording

Revenue for fiscal year 2024 was $4.0 billion compared to $4.1 billion in fiscal year 2023. The 2024 decrease as compared to the corresponding period in 2023 was $79.4 million, or 1.9%, and was primarily due to our DSA business, which experienced lower volume driven by more cautious client spending as a result of the biopharmaceutical demand environment; partially offset by higher revenue within our Manufacturing businesses and the recent acquisition of Noveprim within our RMS business when compared to fiscal year 2023.

Current wording

Revenue for fiscal year 2025 was $4.02 billion compared to $4.05 billion in fiscal year 2024. The decrease of $34.6 million, or 0.9% as compared to fiscal year 2024 was primarily due to our DSA business, which continued to experience lower volume driven by more cautious client spending as a result of the biopharmaceutical demand environment; partially offset by higher revenue in our RMS business, primarily driven by the increase in large research model product revenue when compared to fiscal year 2024.

Previous wording

In fiscal year 2024, our operating income and operating income margin were $227.3 million and 5.6%, respectively, compared with $617.3 million and 14.9%, respectively, in fiscal year 2023. The decreases in operating income and operating income margins for fiscal year 2024 were primarily due to the revenue impacts described above, charge related to the goodwill impairment within our Manufacturing business, recent restructuring activities, including severance, asset impairments, and other site consolidation costs, and an inventory charge incurred in connection with the investigations by the U.S. government into the non-human primate supply chain.

Current wording

In fiscal year 2025, our operating income and operating income margin were $25.2 million and 0.6%, respectively, compared with $227.3 million and 5.6%, respectively, in fiscal year 2024. The decrease in operating income and operating income margin for fiscal year 2025 was primarily due to the intangible asset impairment charges within our Manufacturing and RMS businesses, the acceleration of amortization expense recognized as a result of a decrease in the remaining useful life of certain CDMO client relationships due to a loss of key customers, and the revenue impacts described above; partially offset by a decrease in charges related to goodwill impairments within our Manufacturing business, lower severance costs and the absence of an inventory charge incurred in connection with the investigations by the U.S. government into the non-human primate supply chain in fiscal year 2024.

Previous wording

Net income available to Charles River Laboratories International Inc, common shareholders decreased to $10.3 million in fiscal year 2024, from $474.6 million in the corresponding period of 2023. The decrease in net income available to common shareholders of $464.3 million was due principally to the decreases in operating income described above.

Current wording

Net loss available to Charles River Laboratories International Inc, common shareholders was $144.3 million in fiscal year 2025, compared to Net income available to Charles River Laboratories International Inc, common shareholders of $10.3 million in the corresponding period of fiscal year 2024. The decrease of $154.6 million was due principally to the decrease in operating income described above; partially offset by a decline in income tax and interest expenses.

Previous wording

During fiscal year 2024, our cash flows from operations was $734.6 million compared with $683.9 million for fiscal year 2023. The increase in net cash provided by operating activities was primarily due to favorable performance across our revenue related accounts, including collections on trade receivables, deferred revenue, and customer deposits; benefiting cash provided by operations by $46.7 million, lower purchases of inventory supporting our Safety Assessment business, benefiting our cash provided by operations by $16.8 million; partially offset by $27.6 million related to accrued compensation, and timing of payments to our suppliers and vendors reducing our cash provided by operations by $14.3 million.

Current wording

During fiscal year 2025, our cash flows from operations was $737.6 million compared with $734.6 million for fiscal year 2024. The increase in net cash provided by operating activities was primarily due to lower payments of variable compensation, benefiting cash provided by operations by approximately $79 million, our revenue related accounts, including collections on trade receivables, deferred revenue, and customer deposits; benefiting cash provided by operations by approximately $12 million; partially offset by higher purchases of inventory of $49 million.

Previous wording

RMS revenue increased $37.0 million due primarily to an increase in large research model product revenue, principally due to the recent acquisition of Noveprim, which contributed $39.4 million, and an increase in small research model revenue in all geographic areas; partially offset by lower Cell Solutions product revenue and Insourcing Solutions services revenue.

Current wording

RMS revenue increased $16.7 million primarily driven by an increase in large research model product revenue, an increase in small research model revenue in China and Europe, an increase in Insourcing Solutions services revenue, and the effect of changes in foreign currency exchange rates; partially offset by lower Cell Solutions product revenue.

Previous wording

DSA operating income decreased $163.6 million compared to fiscal year 2023. DSA operating income as a percentage of revenue for fiscal year 2024 was 18.1%, a decrease of 510 bps from 23.2% for fiscal year 2023. Operating income and operating income as a percentage of revenue decreased primarily due to the lower revenue described above, as well as higher severance related to recent restructuring activities, adjustments to contingent consideration associated with the acquisition of Noveprim, and higher third-party legal costs and a $27 million inventory charge to cost of revenue incurred in connection with the investigations by the U.S. government into the non-human primate supply chain compared to the corresponding period in 2023.

Current wording

DSA operating income decreased $18.0 million compared to fiscal year 2024. DSA operating income as a percentage of revenue for fiscal year 2025 was 17.7%, a decrease of 40 bps from 18.1% for fiscal year 2024. Operating income and operating income as a percentage of revenue decreased primarily due to the lower revenue described above, increased restructuring activities, including asset impairments and site consolidation charges; partially offset by the absence of the inventory charge incurred in connection with the investigations by the U.S. government into the NHP supply chain and lower severance costs as compared to the corresponding period in fiscal year 2024.

Previous wording

Unallocated corporate costs consist of selling, general and administrative expenses that are not directly related or allocated to the reportable segments. The increase in unallocated corporate costs of $26.3 million, or 11.4%, compared to fiscal year 2023 is primarily related to severance associated with recent restructuring activities, adjustments to contingent consideration associated with a recent divestiture, and the absence of positive net settlements recognized on virtual power purchase agreements as compared to the corresponding period in 2023. Costs as a percentage of revenue for fiscal year 2024 was 6.4%, an increase of 80 bps from 5.6% for fiscal year 2023.

Current wording

Unallocated corporate costs consist of selling, general and administrative expenses that are not directly related or allocated to the reportable segments. The increase in unallocated corporate costs of $1.6 million, or 0.6%, compared to fiscal year 2024 is due to higher third-party legal and advisory costs for the execution of a Cooperation Agreement entered into with a shareholder earlier this year and other transaction costs partially offset by a decline in employee compensation and benefits related costs. Costs as a percentage of revenue for fiscal year 2025 was 6.5%, an increase of 10 bps from 6.4% for fiscal year 2024.

Previous wording

Interest income for fiscal year 2024 was $8.6 million, an increase of $3.4 million, or 65.0%, driven primarily from higher interest rates and interest bearing asset balances.

Current wording

Interest income for fiscal year 2025 was $4.9 million, a decrease of $3.6 million, or 42.4%, driven primarily from lower interest rates and interest earning asset balances.

Previous wording

Interest expense for fiscal year 2024 was $126.3 million, a decrease of $10.4 million, or 7.6%, compared to $136.7 million in fiscal year 2023. The decrease was due primarily to lower debt balances as we continue to pay down our revolving credit facility.

Current wording

Interest expense for fiscal year 2025 was $107.0 million, a decrease of $19.3 million, or 15.3%, compared to $126.3 million in fiscal year 2024 due primarily to lower average debt balances.

Previous wording

Income tax expense for fiscal year 2024 was $67.8 million, a decrease of $33.1 million compared to $100.9 million for fiscal year 2023. Our effective tax rate was 72.8% for fiscal year 2024 compared to 17.4% for fiscal year 2023. The increase in our effective tax rate in fiscal year 2024 compared to fiscal year 2023 was primarily attributable to the impact of the non-deductible goodwill impairment of the Biologic Solutions reporting unit, as well as the non-taxable gain on Noveprim of $98.5 million in fiscal year 2023.

Current wording

Income tax expense for fiscal year 2025 was $42.7 million, a decrease of $25.2 million compared to $67.8 million for fiscal year 2024. Our effective tax rate was (42.9)% for fiscal year 2025 compared to 72.8% for fiscal year 2024. The change in our effective tax rate in fiscal year 2025 compared to fiscal year 2024 was primarily attributable to the impact of the non-deductible goodwill impairment of the Biologic Solutions reporting unit.

Previous wording

Net cash provided by cash flows from operating activities represents the cash receipts and disbursements related to all of our activities other than investing and financing activities. Operating cash flow is derived by adjusting our net income for items including, but not limited to (1) non-cash operating items such as depreciation and amortization, stock-based compensation, goodwill impairment, debt financing costs, deferred income taxes, long-lived asset impairment changes, gains and/or losses on venture capital and strategic equity investments, gains and/or losses on divestitures, changes in fair value of contingent consideration, as well as (2) changes in operating assets and liabilities, which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in our results of operations.

Current wording

Net cash provided by cash flows from operating activities represents the cash receipts and disbursements related to all of our activities other than investing and financing activities. Operating cash flow is derived by adjusting our net income (loss) for items including, but not limited to (1) non-cash operating items such as depreciation and amortization, stock-based compensation, goodwill impairments, debt financing costs, deferred income taxes, write downs of inventories, provisions of credit losses, long-lived asset impairment charges, gains and/or losses and impairments on venture capital and strategic equity investments, gains and/or losses on divestitures, changes in fair value of contingent consideration, as well as (2) changes in operating assets and liabilities, which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in our results of operations.

Previous wording

During fiscal year 2024, our cash flows from operations was $734.6 million compared with $683.9 million for fiscal year 2023. The increase in net cash provided by operating activities was primarily due to favorable performance across our revenue related accounts, including collections on trade receivables, deferred revenue, and customer deposits; benefiting cash provided by operations by $46.7 million, lower purchases of inventory supporting our Safety Assessment business, benefiting our cash provided by operations by $16.8 million; partially offset by $27.6 million related to accrued compensation, and timing of payments to our suppliers and vendors reducing our cash provided by operations by $14.3 million.

Current wording

During fiscal year 2025, our cash flows from operations was $737.6 million compared with $734.6 million for fiscal year 2024. The increase in net cash provided by operating activities was primarily due to lower payments of variable compensation, benefiting cash provided by operations by approximately $79 million, our revenue related accounts, including collections on trade receivables, deferred revenue, and customer deposits; benefiting cash provided by operations by approximately $12 million; partially offset by higher purchases of inventory of $49 million.

Previous wording

During fiscal year 2024, cash used in investing activities was primarily driven by capital expenditures, an immaterial asset acquisition, and net purchases and sales in investments related to certain venture capital and strategic equity investments. Capital expenditures declined for the fiscal year 2024 compared to 2023, primarily as a result of disciplined spend management in light of the global economic and demand environment. Cash used in investing activities in fiscal year 2023 primarily related to the acquisitions of Noveprim and SAMDI, capital expenditures to support the growth of the business, and investments in certain venture capital and strategic equity investments.

Current wording

During fiscal year 2025, cash used in investing activities was primarily driven by capital expenditures and net purchases and sales in investments related to certain venture capital and strategic equity investments; partially offset by proceeds from divestitures of certain site and business assets. Capital expenditures declined for fiscal year 2025 compared to fiscal year 2024, primarily as a result of disciplined spend management in light of the global economic and demand environment. Cash used in investing activities in fiscal year 2024 was primarily driven by capital expenditures, an immaterial asset acquisition, and net purchases and sales in investments related to certain venture capital and strategic equity investments.

Previous wording

•Net repayments of $70.9 million towards our Credit Facility.

Current wording

•Net repayments of $111.2 million towards our Credit Facility

Previous wording

•Treasury stock purchases of$24.2 million made due to the netting of common stock upon vesting of stock-based awards in order to satisfy individual statutory tax withholding requirements

Current wording

•Treasury stock purchases of $350.0 million associated with our stock repurchase program and $10.1 million due to the netting of common stock upon vesting of stock-based awards in order to satisfy individual statutory tax withholding requirements

Previous wording

•Net dividend payments to noncontrolling interest holders of $14.5 million

Current wording

•Dividend payments to noncontrolling interest holders of $14.5 million

Previous wording

On December 13, 2024, the Company modified its revolving credit facility “Credit Facility”. The Credit Facility provides for up to $2.0 billion in multi-currency revolving credit (reduced from $3.0 billion) and has a maturity date of December 2029 (previously April 2026), with no required scheduled payment before that date. The terms of the Credit Facility are substantially the same with the interest rates equal to (A) for revolving loans denominated in U.S. dollars, at the Company’s option, either the base rate (which is the higher of (1) the prime rate, (2) the federal funds rate plus 0.50%, or (3) the one-month adjusted SOFR rate plus 1.0%) or the adjusted SOFR rate, (B) for revolving loans denominated in euros, the adjusted EURIBOR rate and (C) for revolving loans denominated in sterling, the daily simple SONIA rate, in each case, plus an interest rate margin based upon the Company’s leverage ratio.

Current wording

The Revolving credit facility, “Credit Facility” provides for up to $2.0 billion in multi-currency revolving credit and has a maturity date of December 2029, with no required scheduled payment before that date. The Credit Facility maintains interest rates equal to (A) for revolving loans denominated in U.S. dollars, at our option, either the base rate (which is the higher of (1) the prime rate, (2) the federal funds rate plus 0.50%, or (3) the one-month adjusted SOFR rate plus 1.0%) or the adjusted SOFR rate, (B) for revolving loans denominated in euros, the adjusted EURIBOR rate and (C) for revolving loans denominated in sterling, the daily simple SONIA rate, in each case, plus an interest rate margin based upon our leverage ratio.

Previous wording

Our 2028 Senior Notes have semiannual interest payments due May 1 and November 1. Our 2029 and 2031 Senior Notes have semiannual interest payments due March 15 and September 15.

Current wording

Our 2028 Senior Notes have semi-annual interest payments due May 1 and November 1. Our 2029 and 2031 Senior Notes have semi-annual interest payments due March 15 and September 15.

Previous wording

We had an interest rate swap with a notional amount of$500 million to manage interest rate fluctuation related to our floating rate borrowings under the revolving credit facility, at a fixed rate of 4.65%. Our swap matured on November 2, 2024 and we have not entered into any additional interest rate swap contracts.

Current wording

We had an interest rate swap with a notional amount of$500 million to manage interest rate fluctuation related to our floating rate borrowings under the revolving credit facility, at a fixed rate of 4.65%. Our swap matured in fiscal year 2024 and we have not entered into any additional interest rate swap contracts.