For further information:
Richard Michaelson
Phone US:  (732) 649-9961
e-mail:  LifeSciencesResearch@LSRinc.net

May 5, 2004

LSR ANNOUNCES FIRST QUARTER RESULTS

East Millstone, New Jersey, May 5, 2004 – Life Sciences Research, Inc. (OTCBB: LSRI) announced today that revenues for the quarter ended March 31, 2004 were $37.2 million, operating profit was $2.3 million, and EBITDA excluding foreign exchange remeasurement gains associated with the Company’s bonds was $4.7 million, each representing record quarterly levels for the past five years.

Revenues for the quarter were 16.7% above the revenues for the same period in the prior year of $31.9 million. Excluding the effect of exchange rate movements, the increase was 4.7%.  The Company reported net income for the quarter ended March 31, 2004 of $1.4 million, compared with a net loss of $0.4 million for the quarter ended March 31, 2003.   Net income per common share for the quarter ended March 31, 2004 was $0.12 compared with net loss of $0.03 in the quarter ended March 31, 2003. 

The net income in the three months ended March 31, 2004 included Other Income of $1.4 million reflecting a non-cash foreign exchange remeasurement gain pertaining to the Convertible Capital Bonds. In the three months ended March 31, 2003, Other Expense of $0.5 million comprised a non-cash foreign exchange remeasurement loss of $0.9 million pertaining to the Convertible Capital Bonds, offset by $0.4 million gain on the repurchase of Capital Bonds. Excluding those Other Income/(Expenses), Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”) was $4.7 million for the first quarter of 2004, or 12.5% of revenues, compared with $3.7 million, or 11.7% of revenues, for the same period in the prior year.

Net cash generated by operating activities totaled $1.5 million in the first quarter of 2004 (compared with net cash used of $0.3 million in first quarter 2003), after using $1.7 million in increased working capital ($2.6 million in 2003). Net days sales outstanding were 17 days at March 31, 2004, the same as at December 31 2003. Capital expenditure totaled $2.3 million in the first quarter of 2004, the same as the first quarter in 2003.

Cash on hand at March 31, 2004 was $15.4 million ($17.3 million at December 31, 2003). Long-term debt has increased to $88.3 million at March 31, 2004 ($87.6 million at December 31, 2003) as a result of exchange rate movements of $1.2 million on the Company’s GBP 22.6 million debt, offset by repayments of $0.5 million.

Andrew Baker, LSR’s Chairman and CEO said, “We are proud to be reporting another quarter of improving results and strong momentum on our key financial metrics. We have enjoyed  solid revenue and operating margin growth and we are encouraged by the strong growth in orders in the first quarter of 2004. Cash balances at the end of the quarter were $15.4 million compared to $11.1 million a year ago, and we continue to invest in new capital projects to strengthen our facilities and capabilities such as the expansion of our the inhalation capacity in our US facility that is scheduled to be operational by the end of this the second quarter”.

Brian Cass, LSR’s President and Managing Director said, “When we announced our results for 2003 I noted that new business enquiries remained strong and that we were seeing indications of strong order demand in the beginning of the year.  I am pleased to report that net new orders in the first quarter were a record for this company, 34% up on the first quarter of 2003 and 29% ahead of the last quarter of 2003. This growth in orders has increased backlog, and helped support the continuing growth in revenues. Toxicology and pharmaceutical chemistry, two of the company’s core competencies have shown particularly strong growth in orders."

Mr. Cass added “While strong industry demand and encouraging revenue growth are important, we remain focused on driving operating margin improvement in 2004. The restructuring of our UK facilities was completed during the first quarter.  This was designed to improve the efficiency of our operations whilst not hampering our near term capacity for meeting clients needs or our commitment to client service, and the benefits will start to be felt during the second quarter."

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 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 March 31

(Dollars in thousands, except per share data)

2004

 

2003

 

 

 

 

 

 

 

 

Net revenues

$37,236

 

$31,901 

Cost of revenues

(29,435)

 

(25,373)

Gross profit

7,801

 

6,528

Selling, general and administrative expenses

(5,485)

 

(4,921)

Operating income

2,316

 

1,607

Interest income

14

 

16

Interest expense

(1,576)

 

(1,708)

Other income/(expense)

1,355

 

(450)

Income/(loss) before income taxes

2,109

 

(535)

Income tax (expense)/benefit

(716)

 

177

Net income/(loss)

$1,393

 

$(358)

 

 

 

 

 

 

 

 

Income/(loss) per common share

 

 

 

- Basic

$0.12

 

$(0.03)

- Diluted

$0.11

 

$(0.03)

 

 

 

 

Weighted average common shares outstanding

 

 

 

- Basic     (000's)

12,040

 

11,932

- Diluted  (000's)

12,241

 

11,932

 

 

 

Life Sciences Research Inc.
Balance Sheet

(Dollars in thousands, except per share data)

March 31,

 

December 31,

 

2004

 

2003

ASSETS

Unaudited

 

Audited

Current assets:

 

 

 

Cash and cash equivalents

$15,423

 

$17,271

Accounts receivable, net of allowance of $606 and $561 in
    2004 and 2003 respectively

 

20,292

 

 

17,515

Unbilled receivables

11,869

 

8,246

Inventories

1,757

 

1,901

Prepaid expenses and other current assets

4,396

 

4,610

Total current assets

53,737

 

49,543

 

 

 

 

Property and equipment, net

104,197

 

101,547

Goodwill

859

 

832

Unamortized Capital Bonds issue costs

395

 

429

Deferred income taxes

3,858

 

3,922

Total assets

$163,046

 

$156,273

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)

 

 

Current liabilities:

 

 

 

Accounts payable

$11,400

 

$12,508

Accrued payroll and other benefits

2,197

 

4,152

Accrued expenses and other liabilities

17,575

 

13,695

Short term debt

213

 

338

Fees invoiced in advance

26,277

 

22,761

Total current liabilities

57,662

 

53,454

 

 

 

 

Long-term debt

88,291

 

87,560

Pension liabilities

22,654

 

21,414

Deferred income taxes

2,975

 

2,291

Total liabilities

171,582

 

164,719

 

 

 

 

Commitments and contingencies

 

 

 

Shareholders' equity/(deficit)

 

 

 

Voting Common Stock, $0.01 par value.  Authorized 50,000,000

 

 

Issued and outstanding at March 31, 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

75,124

 

75,101

Less: Promissory notes for the issuance of common stock

(666)

 

(661)

Accumulated comprehensive loss

(24,474)

 

(22,973)

Accumulated deficit

(58,640)

 

(60,033)

Total shareholders' equity /(deficit)

(8,536)

 

(8,446)

Total liabilities and shareholders' equity /(deficit)

$163,046

 

$156,273

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