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 3, 2005
LSR ANNOUNCES SECOND QUARTER RESULTS
East Millstone, New Jersey, August 3, 2005 - Life Sciences Research, Inc.
(OTCBB: LSRI) announced today that revenues for the quarter ended June 30, 2005
were $44.9 million, operating income was $5.4 million, or 12.0% of revenues, and
EBITDA, excluding foreign exchange remeasurement losses associated with the
Company's Bonds, was $7.9 million, or 17.5% of revenues.
Revenues for the quarter ended June 30, 2005 were 17.3% above the revenues for
the same period in the prior year of $38.3 million. Excluding the effect of
exchange rate movements, the increase was 14.9%. The Company reported net loss
for the quarter ended June 30, 2005 of $1.7 million, compared with net income of
$1.2 million for the same period in the prior year. Net loss per common share
for the quarter ended June 30, 2005 was $0.13 compared with net income per
common share of $0.10 for the same period in the prior year. Net loss per fully
diluted share was $0.11 for the quarter ended June 30, 2005 compared with net
income per fully diluted share of $0.10 for the same period in the prior year.
The net loss in the quarter ended June 30, 2005 included Other Expense of $2.7
million reflecting a non-cash foreign exchange remeasurement loss pertaining to
the Convertible Capital Bonds of $2.4 million and finance arrangement fees of
$0.3 million. In the same period in the prior year, Other Expense of $0.6
million comprised a non-cash foreign exchange remeasurement loss pertaining to
the Convertible Capital Bonds. Taxes in the quarter ended June 30, 2005 also
included $2.4 million of taxes associated with the sale and leaseback
transaction announced on June 14, 2005. Excluding these Other Expense items and
related tax effect, and the transaction related tax charges, net income for the
quarter ended June 30, 2005 was $3.0 million, or $0.21 per fully diluted share,
compared with $1.7 million, or $0.14 per fully diluted share for the same period
in the prior year.
Earnings before Interest, Taxes, Depreciation and Amortization and Other
Income/(Expense) ("EBITDA") was $7.9 million for the quarter ended June 30,
2005, or 17.5% of revenues, compared with $6.3 million, or 16.4% of revenues,
for the same period in the prior year.
During the quarter ended June 30, 2005 the Company repaid (pound)22.6 million
($41.1 million) non-bank debt with the proceeds of a sale and leaseback
transaction of the Company's facilities and cash on hand. Net days sales
outstanding at June 30, 2005 were 13 (19 at June 30, 2004 and 4 at December 31,
2004) and capital expenditures totaled $3.7 million in the quarter ended June
30, 2005, compared with $2.3 million for the same period in the prior year. As a
result net cash used totaled $14.5 million in the quarter ended June 30 2005
compared with $0.3 million for the same period in the prior year.
Cash on hand at June 30, 2005 was $15.4 million compared with $33.3 million at
December 31, 2004. Long-term debt was $75.9 million at June 30, 2005 compared
with $89.7 million at December 31, 2004, the reduction primarily due to a net
repayment of $10.7 million associated with the sale and leaseback transaction
and to exchange rate movements.
Net new business signings totaled $46.2 million for the quarter ended June 30,
2005. This represented an increase of 11% over the same period in the prior
year.
Revenues for the six months ended June 30, 2005 of $88.2 million were 16.8%
above revenues for the same period in the prior year of $75.6 million. Excluding
the effect of exchange rate movements, the increase was 14.3%. Operating Income
for the six months ended June 30, 2005 was $10.6 million, or 12.0%, compared
with $6.3 million, or 8.4% for the same period in the prior year. The Company
reported net income for the six months ended June 30, 2005 of $0.9 million,
compared with $2.6 million for the same period in the prior year. Net income per
common share for the six months ended June 30, 2005 was $0.07 compared with
$0.22 for the same period in the prior year.
The net income in the six months ended June 30, 2005 included Other Expense of
$3.4 million reflecting a non-cash foreign exchange remeasurement loss
pertaining to the Convertible Capital Bonds of $3.1 million and finance
arrangement fees of $0.3 million. In the same period in the prior year, Other
Income of $0.7 million comprised a non-cash foreign exchange remeasurement gain
pertaining to the Convertible Capital Bonds. The net income for the six months
ended June 30, 2005 also included $2.4 million of taxes associated with the sale
and leaseback transaction announced on June 14, 2005. Excluding these Other
Expense items and related tax effect, and the transaction related tax charges,
net income for the first six months of 2005 was $6.2 million or $0.43 per fully
diluted share, compared with $2.0 million or $0.16 per fully diluted share for
the same period in the prior year.
EBITDA in the six months ended June 30, 2005 was $15.4 million or 17.5% of
revenues, compared with $10.9 million, or 14.5% of revenues, for the same period
in the prior year.
Capital expenditures in the six months ended June 30, 2005 totaled $6.9 million
compared with $4.6 million in the same period in the prior year. Net cash used
in the six months ended June 30, 2005 was $17.9 million compared with $2.1
million for the same period in the prior year.
Brian Cass, LSR's President and Managing Director said, "This has been another
exciting quarter for the Company, including not just record revenues and
operating income, but a strategic financing that strengthens our balance sheet
and facilitated the repayment of our existing bank debt. Cash balances at the
end of the quarter, although down on the traditionally high year-end balances,
reflected that refinancing, and ended the quarter at $15.4 million,
approximately $0.3 million above the same period last year."
Mr. Cass added, "The market for our services to the pharmaceutical sector
continues to be buoyant and this has driven the growth in orders this quarter.
Revenues also grew significantly, with both the UK and US contributing to this
growth, but the US has been particularly strong. We have continued to invest in
new capital projects, increasing capacity in our specialist toxicology
capabilities. We look forward to this coming on stream at the end of the year."
LSR will hold an investor conference call to discuss the quarter's results on
Thursday morning, August 4, 2005 at 9:00 a.m. Eastern Time. That call can be
listened to by dialing (212) 547-0201; pass code 39138. We suggest calling five
minutes prior to the scheduled call.
This announcement contains non-GAAP financial measures, including EBITDA and
non-GAAP earnings per share which exclude, among other items, gains or losses
associated with the non-cash foreign exchange remeasurement loss pertaining to
the Company's Convertible Capital Bonds and one time charges. We exclude these
items from the non-GAAP financial measures because they are outside our normal
operations. We believe that the inclusion of non-GAAP financial measures in this
announcement helps investors to gain a meaningful understanding of our core
operating results and future prospects, and is consistent with how management
measures and forecasts the Company's performance and debt service capabilities,
especially when comparing such results to prior periods or forecasts. Non-GAAP
results also allow investors to compare the Company's operations against the
financial results of other companies in the industry who similarly provide
non-GAAP results. The non-GAAP financial measures included in this announcement
are not meant to be considered superior to or a substitute for results of
operations prepared in accordance with GAAP. Reconciliations of the non-GAAP
financial measures used in this announcement to the most directly comparable
GAAP financial measures are set forth in the text of this announcement and other
public filings, and can also be found on the Company's website at
www.lsrinc.net.
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 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, 2004, 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) 2005 2004 2005 2004
Net revenues $44,941 $38,315 $88,235 $75,551
Cost of revenues (32,459) (28,111) (63,541) (57,546)
----------- ------------ ----------- -----------
Gross profit 12,482 10,204 24,694 18,005
Selling, general and administrative expenses (7,074) (6,201) (14,086) (11,686)
----------- ------------ ----------- -----------
Operating income 5,408 4,003 10,608 6,319
Interest income 22 14 45 28
Interest expense (1,934) (1,593) (3,717) (3,169)
Other (expense)/income (2,703) (625) (3,435) 730
----------- ------------ ----------- -----------
Income before income taxes 793 1,799 3,501 3,908
Income tax expense (2,455) (597) (2,639) (1,313)
----------- ------------ ----------- -----------
Net (loss)/income $(1,662) $1,202 $862 $2,595
----------- ------------ ----------- -----------
(Loss)/income per common share
- - Basic $(0.13) $0.10 $0.07 $0.22
- - Diluted $(0.11) $0.10 $0.06 $0.21
Weighted average common shares outstanding
- - Basic (000's) 12,521 12,050 12,487 12,045
- - Diluted (000's) 14,543 12,346 14,504 12,554
Life Sciences Research Inc.
Balance Sheet
(Dollars in thousands, except per share data) June 30, 2005 December 31,2004
Unaudited Audited
ASSETS
Current assets:
Cash and cash equivalents $15,398 $33,341
Accounts receivable, net of allowance of $310 and $255 in 2005 and 2004,
respectively 27,099 27,841
Unbilled receivables 12,118 11,516
Inventories 1,926 2,024
Prepaid expenses and other current assets 8,830 2,929
------------------- --------------------
------------------- --------------------
Total current assets $65,371 $77,651
Property and equipment, net 105,437 109,999
Goodwill 958 901
Unamortized capital bonds issue costs 163 271
Deferred income taxes 8,167 11,253
------------------- --------------------
Total assets $180,096 $200,075
------------------- --------------------
LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)
Current liabilities:
Accounts payable $14,429 $13,547
Accrued payroll and other benefits 3,145 4,024
Accrued expenses and other liabilities 18,702 19,987
Short-term debt 395 719
Fees invoiced in advance 32,771 37,574
------------------- --------------------
------------------- --------------------
Total current liabilities $69,442 $75,851
Long-term debt 75,933 89,685
Pension liabilities 34,198 36,603
------------------- --------------------
Total liabilities $179,573 $202,139
------------------- --------------------
Commitments and contingencies
Stockholders' equity/(deficit)
Preferred Stock, $0.01 par value. Authorized: 5,000,000
Issued and outstanding : None - -
Non-Voting Common Stock, $0.01 par value. Authorized: 5,000,000
Issued and outstanding: None - -
Voting Common Stock, $0.01 par value. Authorized 50,000,000
Issued and outstanding at June 30, 2005: 12,526,051
(December 31, 2004: 12,441,281) $125 $125
Paid in capital 75,807 75,671
Less: Promissory notes for the issuance of common stocks (261) (697)
Accumulated comprehensive loss (33,571) (34,724)
Accumulated deficit (41,577) (42,439)
------------------- --------------------
------------------- --------------------
Total stockholders' equity/(deficit) 523 $(2,064)
------------------- --------------------
------------------- --------------------
Total liabilities and stockholders' equity/(deficit) $180,096 $200,075
------------------- --------------------