PRESS RELEASE LIFE SCIENCES RESEARCH, INC.
(OTCBB: LSRI)
PO Box 2360
Mettlers Road
East Millstone, NJ 08875-2360
For Further Information:
Richard Michaelson
Phone: US: (732) 649-9961
e-mail: LifeSciencesResearch@LSRinc.net
August 5, 2004
LSR ANNOUNCES SECOND QUARTER RESULTS
East Millstone, New Jersey, August 5, 2004 - Life Sciences Research, Inc.
(OTCBB: LSRI) announced today that revenues for the quarter ended June 30, 2004
were $38.3 million, operating profit was $4.0 million, or 10.4% of revenues, and
EBITDA excluding foreign exchange remeasurement gains associated with the
Company's Bonds was $6.3 million, or 16.4% of revenues. Each of these represents
an improvement on the quarter ended March 31, 2004 which in turn were at the
highest level for five years when announced.
Revenues for the quarter were 17.3% above the revenues for the same period in
the prior year of $32.7 million. Excluding the effect of exchange rate
movements, the increase was 7.6%. The Company reported net income for the
quarter ended June 30, 2004 of $1.2 million, compared with $1.9 million for the
quarter ended June 30, 2003. Net income per common share for the quarter ended
June 30, 2004 was $0.10 compared with $0.16 in the quarter ended June 30, 2003.
The net income in the three months ended June 30, 2004 included Other Expenses
of $0.6 million reflecting a non-cash foreign exchange remeasurement loss
pertaining to the Convertible Capital Bonds. In the three months ended June 30,
2003, Other Income of $2.2 million comprised a non-cash foreign exchange
remeasurement gain of $2.0 million pertaining to the Convertible Capital Bonds,
and a $0.2 million gain on the repurchase of Capital Bonds. Excluding these non
cash items, net income for the current quarter was $1.6 million, or $0.13 per
common share, compared to $0.3 million, or $0.03 per common share in the prior
year, and Earnings before Interest, Taxes, Depreciation and Amortization
("EBITDA") was $6.3 million for the second quarter of 2004, or 16.4% of
revenues, compared with $3.8 million, or 11.7% of revenues, for the same period
in the prior year.
Net cash generated by operating activities totaled $2.3 million in the second
quarter of 2004 (compared with $1.7 million in second quarter 2003), after using
$2.5 million in increased working capital ($0.8 million in 2003). Net days sales
outstanding were 22 days at June 30, 2004, compared with 17 days at June 30,
2003. Capital expenditure totaled $2.3 million in the second quarter of 2004.
Revenues for the six months ended June 30, 2004 at $75.6 million were 17.0%
above revenues for the same period last year of $64.6 million. Excluding the
effect of exchange rate movements, the increase was 6.2%. Operating Income for
that period was $6.3 million, or 8.4%, compared to $3.3 million, or 5.1% in the
prior year. The Company reported net income for the six months ended June 30,
2004 of $2.6 million, compared with $1.5 million in the same period last year.
Net income per common share for the six months ended June 30, 2004 was $0.22
compared with $0.13 in the same period last year.
The net income in the six months ended June 30, 2004 included Other Income of
$0.7 million reflecting a non-cash foreign exchange remeasurement gain
pertaining to the Convertible Capital Bonds. In the six months ended June 30,
2003, Other Income of $1.7 million comprised a non-cash foreign exchange
remeasurement gain of $1.1 million pertaining to the Convertible Capital Bonds
and $0.6 million gain on the repurchase of Capital Bonds. Excluding Other Income
net income for the first six months of 2004 was $2.1 million or $0.17 per common
share, compared with $0.3 million or $0.02 per common share in the prior year
and EBITDA was $10.9 million, or 14.5% of revenues, compared with $7.6 million,
or 11.7% of revenues, in the same period of 2003.
Net cash generated by operating activities in the first half of 2004 was $3.7
million (2003 $1.4 million) after using $4.2 million in increased working
capital ($3.4 million in 2003). Capital expenditure in the first half of 2004
totaled $4.6 million.
Cash on hand at June 30, 2004 was $15.1 million ($17.3 million at December 31,
2003). Long-term debt was $87.6 million at June 30, 2004 the same as at December
31, 2003.
Andrew Baker, LSR's Chairman and CEO said, "Exceeding 10% operating profit this
quarter is a significant milestone for LSR, helped not only by the positive
industry trends, but by the focus and commitment that management and staff have
shown to customer service and expense management. As both the political and
business climate has improved for LSR, we are excited about the prospects both
for continued growth and the return over the coming quarters and years to the
more robust operating margins that our company and peers have historically
enjoyed."
Brian Cass, LSR's President and Managing Director said, "The second quarter saw
a substantial growth in orders over the second quarter of 2003 with the result
that orders for the first half of the year were at record levels. Overall they
were 28% up on last year with a strong contribution from the pharmaceutical
industry which was 41% ahead of last year. This growth in orders has increased
backlog and is supporting the continued growth in revenues."
Mr. Cass added, "When we announced our results for the first quarter we
indicated that we expected to see the impact of the restructuring of our UK
facilities being felt during the second quarter. That indeed proved to be the
case. This action played a significant role in allowing us to reduce our total
costs in the second quarter by $0.6 million while at the same time growing
revenues by $1 million."
LSR will hold an investor conference call to discuss the quarter's results on
Friday morning, August 6, 2004 at 9:00 Eastern time. That call can be listened
to by dialing (888) 730-9141 (within U.S.) or (517) 308-9012 (outside U.S.);
pass code 58804. We suggest calling five minutes prior to the scheduled call.
Life Sciences Research, Inc. is a global contract research organization
providing product development services to the pharmaceutical, agrochemical and
biotechnology industries. LSR brings leading technology and capability to
support its clients in non-clinical safety testing of new compounds in early
stage development and assessment. The purpose of this work is to identify risks
to humans, animals or the environment resulting from the use or manufacture of a
wide range of chemicals which are essential components of LSR's clients'
products. The Company's services are designed to meet the regulatory
requirements of governments around the world. LSR operates research facilities
in the United States (the Princeton Research Center, New Jersey) and the United
Kingdom (Huntingdon and Eye, England).
This announcement contains statements that may be forward-looking as defined by
the USA's Private Securities Litigation Reform Act of 1995. These statements are
based largely on LSR's expectations and are subject to a number of risks and
uncertainties, certain of which are beyond LSR's control, as more fully
described in the Company's SEC filings, including its Form 10-K for the fiscal
year ended December 31, 2003, as filed with the US Securities and Exchange
Commission.
- tables to follow -
Life Sciences Research Inc.
Statement of Operations
Unaudited
Three months ended June 30 Six months ended
June 30
(Dollars in thousands, except per share data) 2004 2003 2004 2003
Net revenues $38,315 $32,663 $75,551 $64,564
Cost of revenues (28,111) (25,442) (57,546) (50,815)
----------- ------------ ----------- -----------
Gross profit 10,204 7,221 18,005 13,749
Selling, general and administrative expenses (6,201) (5,395) (11,686) (10,316)
Other operating expenses - (132) - (132)
----------- ------------ ----------- -----------
Operating income 4,003 1,694 6,319 3,301
Interest income 14 23 28 39
Interest expense (1,593) (1,444) (3,169) (3,152)
Other income/(expense) (625) 2,179 730 1,729
----------- ------------ ----------- -----------
Income before income taxes 1,799 2,452 3,908 1,917
Income tax expense (597) (592) (1,313) (415)
----------- ------------ ----------- -----------
Net income $1,202 $1,860 $2,595 $1,502
----------- ------------ ----------- -----------
Income per common share
- - Basic $0.10 $0.16 $0.22 $0.13
- - Diluted $0.10 $0.15 $0.21 $0.12
Weighted average common shares outstanding
- - Basic (000's) 12,050 11,932 12,045 11,932
- - Diluted (000's) 12,346 12,244 12,554 12,332
Life Sciences Research Inc.
Balance Sheet
(Dollars in thousands, except per share data) June 30, December 31,
2004 2003
ASSETS Unaudited Audited
Current assets:
Cash and cash equivalents $15,135 $17,271
Accounts receivable, net of allowance of $546 and $561 in
2004 and 2003 respectively 23,360 17,515
Unbilled receivables 13,485 8,246
Inventories 1,771 1,901
Prepaid expenses and other current assets 3,573 4,610
--------------- ---------------
Total current assets 57,324 49,543
Property and equipment, net 103,000 101,547
Goodwill 847 832
Unamortized Capital Bonds issue costs 345 429
Deferred income taxes 3,521 3,922
--------------- ---------------
Total assets $165,037 $156,273
--------------- ---------------
--------------- ---------------
LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)
Current liabilities:
Accounts payable $10,124 $12,508
Accrued payroll and other benefits 2,525 4,152
Accrued expenses and other liabilities 17,478 13,695
Short term debt 263 338
Fees invoiced in advance 28,638 22,761
--------------- ---------------
Total current liabilities 59,028 53,454
Long-term debt 87,649 87,560
Pension liabilities 22,097 21,414
Deferred income taxes 3,237 2,291
--------------- ---------------
Total liabilities 172,011 164,719
--------------- ---------------
Commitments and contingencies
Shareholders' equity/(deficit)
Voting Common Stock, $0.01 par value. Authorized 50,000,000
Issued and outstanding at June 30, 2004: 12,049,534 (December 31,
2003: 12,034,883) 120 120
Non-Voting Common Stock, $0.01 par value. Authorized 5,000,000
Issued and outstanding: None - -
Preferred Stock, $0.01 par value. Authorized 5,000,000
Issued and outstanding: None - -
Paid in capital 75,123 75,101
Less: Promissory notes for the issuance of common stock (643) (661)
Accumulated comprehensive loss (24,136) (22,973)
Accumulated deficit (57,438) (60,033)
--------------- ---------------
Total shareholders' equity /(deficit) (6,974) (8,446)
--------------- ---------------
Total liabilities and shareholders' equity /(deficit) $165,037 $156,273
--------------- ---------------