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
November 3, 2005
LSR ANNOUNCES THIRD QUARTER RESULTS
East Millstone, New Jersey, November 3, 2005 - Life Sciences Research, Inc.
(OTCBB: LSRI) announced today that revenues for the quarter ended September 30,
2005 were $43.8 million, operating income was $5.7 million, or 13.0% of
revenues, and EBITDA, excluding Other Expenses, was $8.1 million, or 18.5% of
revenues.
Revenues for the quarter ended September 30, 2005 of $43.8 million were 7.1%
above the revenues for the same period in the prior year of $40.9 million.
Excluding the effect of exchange rate movements, the increase was 8.6%.
Operating Income for the quarter ended September 30, 2005 was $5.7 million, or
13.0% of revenues, compared with $4.5 million, or 11.1% of revenues for the same
period in the prior year. The Company reported net income for the quarter ended
September 30, 2005 of $1.1 million, compared with net income of $1.8 million for
the same period in the prior year. Net income per common share for the quarter
ended September 30, 2005 was $0.09 compared with net income per common share of
$0.15 for the same period in the prior year. Net income per fully diluted share
was $0.08 for the quarter ended September 30, 2005 compared with net income per
fully diluted share of $0.13 for the same period in the prior year.
The net income in the quarter ended September 30, 2005 included Other Expense of
$1.8 million reflecting a non-cash foreign exchange remeasurement loss
pertaining to the Convertible Capital Bonds of $0.6 million and finance
arrangement fees of Alconbury, our landlord, of $1.2 million associated with
FIN46R consolidation of their financing expenses. In the same period in the
prior year, Other Expense of $0.1 million comprised a non-cash foreign exchange
remeasurement loss pertaining to the Convertible Capital Bonds. Excluding these
Other Expense items and related tax effect, non-GAAP net income for the quarter
ended September 30, 2005 was $3.2 million, or $0.22 per fully diluted share,
compared with $1.9 million, or $0.13 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 $8.1 million for the quarter ended September 30,
2005, or 18.5% of revenues, compared with $7.0 million, or 17.0% of revenues,
for the same period in the prior year.
Net days sales outstanding at September 30, 2005 were 21 (20 at September 30,
2004 and 4 at December 31, 2004) and capital expenditures totaled $5.1 million
in the quarter ended September 30, 2005, compared with $2.4 million for the same
period in the prior year. As a result net cash used totaled $3.3 million in the
quarter ended September 30, 2005 compared with $5.7 million of net cash
generated for the same period in the prior year.
Cash on hand at September 30, 2005 was $12.2 million compared with $33.3 million
at December 31, 2004. Long-term debt was $29.6 million at September 30, 2005,
compared with $89.7 million at December 31, 2004. This reduction was primarily
due to the reclassification to short-term debt of the $46.2 million outstanding
amount of Convertible Capital Bonds, which mature in September 2006; a net
repayment of $10.7 million of our non-bank debt concurrently with completion of
the sale and leaseback transaction; and exchange rate movements.
Net new business signings totaled $42.0 million for the quarter ended September
30, 2005. This represented a decrease of 7% from the same period in the prior
year. At September 30, 2005, backlog (booked on work) amounted to approximately
$115 million.
Revenues for the nine months ended September 30, 2005 of $132.0 million were
13.4% above revenues for the same period in the prior year of $116.4 million.
Excluding the effect of exchange rate movements, the increase was 12.3%.
Operating Income for the nine months ended September 30, 2005 was $16.3 million,
or 12.3% of revenues, compared with $10.8 million, or 9.3% of revenues for the
same period in the prior year. The Company reported net income for the nine
months ended September 30, 2005 of $2.0 million, compared with $4.4 million for
the same period in the prior year. Net income per common share for the nine
months ended September 30, 2005 was $0.16 compared with $0.36 for the same
period in the prior year.
The net income in the nine months ended September 30, 2005 included Other
Expense of $5.2 million reflecting a non-cash foreign exchange remeasurement
loss pertaining to the Convertible Capital Bonds of $3.8 million and finance
arrangement fees of $1.4 million. In the same period in the prior year, Other
Income of $0.6 million comprised a non-cash foreign exchange remeasurement gain
pertaining to the Convertible Capital Bonds. The net income for the nine months
ended September 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,
non-GAAP net income for the nine months ended September 30, 2005 was $9.4
million or $0.65 per fully diluted share, compared with $3.9 million or $0.29
per fully diluted share for the same period in the prior year.
EBITDA in the nine months ended September 30, 2005 was $23.5 million or 17.8% of
revenues, compared with $17.9 million, or 15.4% of revenues, for the same period
in the prior year.
Capital expenditures in the nine months ended September 30, 2005 totaled $12.1
million compared with $7.0 million in the same period in the prior year. Net
cash used in the nine months ended September 30, 2005 was $21.2 million compared
with $3.3 million of net cash generated for the same period in the prior year.
Andrew Baker the Company's Chairman and CEO said, "These last few months have
seen both exciting and frustrating developments in LSR's fortunes. In August, we
announced the approval for listing on the New York Stock Exchange of LSR's
common stock, only to be followed the morning of that scheduled listing with the
unprecedented postponement by the Exchange. The NYSE's decision to postpone our
trading, which continues today, has been met with condemnation by many
organizations and the world's financial media, and provoked questions in the US
Senate last week. The Senate's examination of the animal rights extremist
campaign that has targeted our company and the world of medical research has
resulted in their introduction of new legislation to address the challenge of
controlling this form of domestic terrorism. This progress, along with the
continuing commitment we've seen from the UK government and law enforcement, is
welcomed not only by LSR, but by the medical research community and others who
recognize that this issue is far broader than the symptoms that have affected
our company and your stock".
Brian Cass, LSR's President and Managing Director said, "This progress in
providing support for the whole research community is very promising and we are
proud of the part we have been able to play in encouraging it. However, as a
company, we remain focussed on pursuing our financial success. In this regard
the steady growth in revenues has been maintained this quarter and we have
increased our operating income by 25% over last year to come in at a new record
level of 13% of revenues."
LSR will hold an investor conference call to discuss the quarter's results on
Friday morning, November 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 Nine months ended
September 30 September 30
(Dollars in thousands, except per share data) 2005 2004 2005 2004
Net revenues $43,758 $40,855 $131,993 $116,406
Cost of revenues (31,673) (29,674) (95,214) (87,220)
----------- ------------ ----------- -----------
Gross profit 12,085 11,181 36,779 29,186
Selling, general and administrative expenses (6,410) (6,659) (20,496) (18,345)
----------- ------------ ----------- -----------
Operating income 5,675 4,522 16,283 10,841
Interest income 21 13 66 41
Interest expense (2,138) (1,689) (5,855) (4,858)
Other (expense)/income (1,760) (105) (5,195) 625
----------- ------------ ----------- -----------
Income before income taxes 1,798 2,741 5,299 6,649
Income tax expense (649) (945) (3,288) (2,261)
----------- ------------ ----------- -----------
Net income $1,149 $1,796 $2,011 $4,388
----------- ------------ ----------- -----------
Income per common share
- - Basic $0.09 $0.15 $0.16 $0.36
- - Diluted $0.08 $0.13 $0.14 $0.33
Weighted average common shares outstanding
- - Basic (000's) 12,542 12,166 12,506 12,085
- - Diluted (000's) 14,601 13,914 14,521 13,369
Life Sciences Research Inc.
Balance Sheet
(Dollars in thousands, except per share data) September 30, 2005 December 31,2004
Unaudited Audited
ASSETS
Current assets:
Cash and cash equivalents $12,161 $33,341
Accounts receivable, net of allowance of $338 and $259
in 2005 and 2004, respectively 29,581 27,841
Unbilled receivables 12,531 11,516
Inventories 1,733 2,024
Prepaid expenses and other current assets 8,712 2,929
------------------- --------------------
Total current assets 64,718 77,651
Property and equipment, net 107,709 109,999
Goodwill 1,032 901
Unamortized capital bonds issue costs 117 271
Deferred income taxes 7,450 11,253
------------------- --------------------
Total assets $181,026 $200,075
------------------- --------------------
LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)
Current liabilities:
Accounts payable $15,855 $13,547
Accrued payroll and other benefits 3,948 4,024
Accrued expenses and other liabilities 16,928 19,987
Short-term debt 46,499 719
Fees invoiced in advance 31,850 37,574
------------------- --------------------
Total current liabilities 115,080 75,851
Long-term debt 29,643 89,685
Pension liabilities 33,760 36,603
------------------- --------------------
Total liabilities 178,483 202,139
------------------- --------------------
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 September 30, 2005: 12,548,251
(December 31, 2004: 12,441,281) $125 $125
Paid in capital 75,841 75,671
Less: Promissory notes for the issuance of common stocks (238) (697)
Accumulated comprehensive loss (32,757) (34,724)
Accumulated deficit (40,428) (42,439)
------------------- --------------------
Total stockholders' equity/(deficit) 2,543 (2,064)
------------------- --------------------
Total liabilities and stockholders' equity/(deficit) $181,026 $200,075
------------------- --------------------