PRESS RELEASE LIFE SCIENCES RESEARCH, INC.
(Other OTC: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 7, 2006
LSR ANNOUNCES SECOND QUARTER RESULTS
Highlights:
o Revenues of $47.9 million. Net Income of $1.1 million, or $0.08 per share.
o Net new orders of $50.8 million.
o $46.2 million Convertible Capital Bond fully repaid on April 6, 2006.
o $10 million Promissory Note repaid to Company on June 30, 2006. Elimination
of FIN46R consolidation accounting effective that date.
East Millstone, New Jersey, August 7, 2006 - Life Sciences Research, Inc. (Other
OTC: LSRI) announced today that revenues for the quarter ended June 30, 2006
were $47.9 million, 6.5% above the revenues for the same period in the prior
year of $44.9 million. Excluding the effect of exchange rate movements, revenues
increased 7.7%. Operating income for the quarter ended June 30, 2006 was $4.8
million, or 10.1% of revenues, compared with $5.4 million, or 12.0% of revenues
for the same period in the prior year. The Company reported net income before
the cumulative effect of the accounting change for the quarter ended June 30,
2006 of $1.1 million, compared with $1.7 million loss for the quarter ended June
30, 2005. Net income per common share before the cumulative effect of the
accounting change for the quarter ended June 30, 2006 was $0.09 compared with
$0.13 loss in the quarter ended June 30, 2005. Net income per fully diluted
share before the cumulative effect of the accounting change was $0.08 for the
current quarter compared to $0.11 loss in the prior year.
Concurrently with the repayment of the $10 million promissory note that was owed
to the Company by Alconbury Estates from the Sale and Leaseback transaction that
was announced in June 2005, FIN46R consolidation accounting ceased effective
June 30, 2006. As a result, the Company recognized a charge in the period for
the cumulative effect of the accounting change of $20.7 million, of which the
largest charge is associated with the non-cash write-down of the Company's UK
facilities.
The net income before the cumulative effect of the accounting change for the
three months ended June 30, 2006 included Other Expenses of $2.2 million which
comprised $3.3 million from a non-cash foreign exchange remeasurement gain
pertaining to the Convertible Capital Bonds and New Financing denominated in US
dollars and other exchange gains of $0.3 million, offset by finance arrangement
fees of $1.4 million primarily reflecting fees of Alconbury Estates, LSR's
landlord, which were consolidated under FIN46. In the same period in the prior
year, Other Expenses of $2.7 million were comprised of finance arrangement fees
of $0.3 million, and $2.4 million from the non-cash foreign exchange
remeasurement loss pertaining to the Convertible Capital Bonds. Excluding these
non cash items and related tax effect, net income before the cumulative effect
of the accounting change for the current quarter was $1.1 million, or $0.07 per
fully diluted share, compared to $3.1 million, or $0.22 per fully diluted share
in the prior year.
Earnings before Interest, Taxes, Depreciation and Amortization and Other
Income/(Expense) ("EBITDA") was $7.5 million for the second quarter of 2006, or
15.6% of revenues, compared with $7.9 million, or 17.5% of revenues, for the
same period in the prior year.
Net days sales outstanding at June 30, 2006 were 12 (13 at June 30, 2005 and 16
at December 31, 2005). Capital expenditure totaled $2.3 million in the second
quarter of 2006, compared to $3.7 million in the second quarter of 2005.
Cash on hand at June 30, 2006 was $42.8 million compared with $15.4 million at
December 31, 2005. Long-term debt was $100.0 million at June 30, 2006 compared
with $30.4 million at December 31, 2005. These increases in both the cash on
hand and the long-term debt were due to the $70 million New Financing Loan which
generated net proceeds of approximately $64 million, of which $46.2 million was
used to redeem the outstanding principal amount of the Convertible Capital
Bonds. The Company included in its reported long-term debt the $22.8 million of
finance lease debt due to the deconsolidation of Alconbury.
Revenues for the six months ended June 30, 2006 of $90.3 million were 2.3% above
revenues for the same period in the prior year of $88.2 million. Excluding the
effect of exchange rate movements, the increase was 6.0%. Operating Income for
the six months ended June 30, 2006 was $8.9 million, or 9.8% of revenues,
compared with $10.6 million, or 12.0% of revenues for the same period in the
prior year. The Company reported net income before the cumulative effect of the
accounting change for the six months ended June 30, 2006 of $1.6 million,
compared with $0.9 million for the same period in the prior year. Net income per
fully diluted share before the cumulative effect of the accounting change for
the six months ended June 30, 2006 was $0.11 compared with $0.06 for the same
period in the prior year.
The net income before the cumulative effect of the accounting change in the six
months ended June 30, 2006 included Other Income of $1.3 million which comprised
$3.7 million from the non-cash foreign exchange remeasurement gain pertaining to
the Convertible Capital Bonds and New Financing denominated in US dollars and
other exchange gains of $0.2 million, offset by finance arrangement fees of $2.6
million primarily reflecting gains of Alconbury Estates, LSR's landlord, which
were consolidated under FIN46. In the same period in the prior year, Other
Expenses of $3.4 million were comprised of finance arrangement fees of $0.3
million and $3.1 million of a non-cash foreign exchange remeasurement loss
pertaining to the Convertible Capital Bonds. Excluding these non cash items and
related tax effect, net income before the cumulative effect of the accounting
change for the six months ended June 30 2006 was $2.3 million, or $0.16 per
fully diluted share, compared to $6.2 million, or $0.43 per fully diluted share
in the prior year.
Earnings before Interest, Taxes, Depreciation and Amortization and Other
Income/(Expense) ("EBITDA") was $14.0 million for the six months ended June 30,
2006, or 15.5% of revenues, compared with $15.4 million, or 17.5% of revenues,
for the same period in the prior year.
Capital expenditure totaled $4.0 million in the first six months of 2006,
compared to $6.9 million in the first six months of 2005.
Net new business signings totaled $50.8 million for the second quarter of 2006.
This represented an increase of 10% from the second quarter orders in 2005. Net
new business signings for the six months ended June 30, 2006 were $107.4
million, an increase of 14% on the six months ended June 30, 2005. At June 30,
2006 backlog (booked on work) amounted to approximately $144 million.
Brian Cass, LSR's President and Managing Director added, "We are delighted with
the strong order levels we have experienced this year. We are now seeing an 18%
growth over last year on this measure on a constant currency basis. This has
been driven by increases in the pharmaceutical business which year on year is
now up 27% at constant currency. Particularly pleasing within this was the
support from the top global pharmaceutical companies. These order levels are
beginning to flow through into increased revenues as we saw this quarter.
Despite an unusually high expense profile this quarter we did show margin
improvement from the first quarter and expect to maintain this going forward."
LSR will hold an investor conference call to discuss the quarter's results on
Monday morning, August 7, 2006 at 9:30 a.m. Eastern Time. That call can be
listened to by dialing (312) 470-0031 pass code 25264. 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 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, 2005, as filed with the US Securities and Exchange
Commission.
- tables to follow -
Life Sciences Research Inc. and Subsidiaries
Condensed Consolidated Statements of Income
Unaudited
Three months ended Six months ended
June 30 June 30
(Dollars in thousands, except per share data) 2006 2005 2006 2005
Revenues $47,851 $44,941 $90,306 $88,235
Cost of sales (35,125) (32,459) (66,883) (63,541)
------------- ------------ ----------- -----------
Gross profit 12,726 12,482 23,423 24,694
Selling, general and administrative expenses (7,881) (7,074) (14,552) (14,086)
------------- ------------ ----------- -----------
Operating income 4,845 5,408 8,871 10,608
Interest income 273 22 531 45
Interest expense (3,932) (1,934) (6,895) (3,717)
Other income/(expense) 2,234 (2,703) 1,263 (3,435)
------------- ------------ ----------- -----------
Income before income taxes 3,420 793 3,770 3,501
Income tax expense (2,283) (2,455) (2,163) (2,639)
------------- ------------ ----------- -----------
Income/(loss) before cumulative effect of
accounting change $1,137 $(1,662) $1,607 $862
Cumulative effect of accounting change (net of
income tax benefit of $22,218) (20,656) - (20,656) -
------------- ------------ ----------- -----------
Net (loss)/income $(19,519) $(1,662) $(19,049) $862
------------- ------------ ----------- -----------
Basic (loss)/income per share
Income/(loss) before cumulative effect of
accounting change $0.09 $(0.13) $0.13 $0.07
Cumulative effect of accounting change (1.63) - (1.64) -
------------- ------------ ----------- -----------
Basic (loss)/income per share $(1.54) $(0.13) $(1.51) $0.07
------------- ------------ ----------- -----------
Diluted (loss)/income per share:
Income/(loss) before cumulative effect of
accounting change $0.08 $(0.11) $0.11 $0.06
Cumulative effect of accounting change $(1.42) - $(1.42) -
------------- ------------ ----------- -----------
Diluted (loss)/income per share $(1.34) $(0.11) $(1.31) $0.06
------------- ------------ ----------- -----------
Weighted average number of common stock
- - Basic (000's) 12,653 12,521 12,606 12,487
- - Diluted (000's) 14,533 14,543 14,500 14,504
Life Sciences Research Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except per share data) June 30, December 31,
2006 2005
ASSETS Unaudited Audited
Current assets:
Cash and cash equivalents $42,830 $15,420
Accounts receivable, net of allowance of $728 and $618 in
2006 and 2005 respectively 28,345 26,810
Unbilled receivables 14,257 11,981
Inventories 1,970 1,992
Prepaid expenses and other current assets 9,429 7,062
---------------- ----------------
Total current assets 96,831 63,265
Property and equipment, net 56,785 105,605
Goodwill 1,422 1,195
Other assets 9,383 901
Unamortized capital bonds issue costs - 70
Deferred income taxes 34,364 13,333
---------------- ----------------
Total assets $198,785 $184,369
---------------- ----------------
LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)
Current liabilities:
Accounts payable $14,865 $15,742
Accrued payroll and other benefits 3,711 3,655
Accrued expenses and other liabilities 14,140 15,862
Pension liabilities 4,994 4,635
Short-term debt 680 46,946
Fees invoiced in advance 35,941 32,920
---------------- ----------------
Total current liabilities 74,331 119,760
Long-term debt 100,005 30,430
Pension liabilities, less short-term portion 52,514 48,747
---------------- ----------------
Total liabilities $226,850 $198,937
---------------- ----------------
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, 2006: 12,668,820 (December
31, 2005: 12,553,251) 127 126
Paid in capital 81,284 75,848
Less: Promissory notes for the issuance of common stock (73) (205)
Accumulated other comprehensive loss (49,406) (49,389)
Accumulated deficit (59,997) (40,948)
---------------- ----------------
Total stockholders' equity /(deficit) (28,065) (14,568)
---------------- ----------------
Total liabilities and stockholders' equity /(deficit) $198,785 $184,369
---------------- ----------------