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

August 8, 2003

LSR ANNOUNCES SECOND QUARTER RESULTS

East Millstone, New Jersey, August 8, 2003 – Life Sciences Research, Inc. (OTCBB:LSRI) announced today that revenues for the quarter ended June 30, 2003 were $32.7 million, 14% above the revenues for same period in the prior year of $28.6 million.  Excluding the effects of exchange rate movements the increase was 7%.  The Company reported net income for the quarter ended June 30, 2003 of $1.9 million, compared with net income of $2.9 million for the quarter ended June 30, 2002.   Net income per share for the quarter ended June 30, 2003 was $0.16 compared with a net income of $0.24 in the quarter ended June 30, 2002.  Net income included non-cash exchange gains on the conversion of the Company’s dollar denominated liabilities including bonds into UK sterling of $2.0 million compared to exchange gains in the same period last year of $3.2 million.  In addition, Convertible Capital Bonds of $450 thousand were repurchased or cancelled in the quarter producing a net income of $0.2 million.  Excluding that non-cash currency gain, and the gain on the repurchase of the Bonds, Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”) was $3.8 million for the second quarter, or 11.7% of revenues, compared with $3.0 million, or 10.6% of revenues, for the same period in the prior year.

Revenues for the six months ended June 30, 2003 at $64.6 million were 18% above the revenues for the same period in the prior year of $54.7 million.  Excluding the effect of exchange rate movements, the increase was 9%.  The Company reported net income for the six months ended June 30, 2003 of $1.5 million compared with a net loss of $0.4 million in the six months ended June 30, 2002.  The income per share for the six months ended June 30, 2003 was $0.13 compared with a loss of $0.04 in the six months ended June 30, 2002.  Net income included  non-cash exchange gains on the conversion of the Company’s dollar denominated liabilities including bonds into UK sterling of $1.1 million compared to exchange gains in the same period last year of $2.1 million. In addition, there was Other income in 2003 of $0.6 associated with the repurchase of Convertible Capital Bonds. Other income in the prior year was offset by merger/offer costs of $1.5 million. Excluding these Other income items, EBITDA was $7.6 million for the first half of the year, or 11.7% of revenues, compared with $5.1 million, or 9.3% of revenues, for the same period in the prior year.

Brian Cass, LSR's President and Managing Director said “We’re proud to report another quarter of steadily improving results.  Revenue, operating profit, and net income from operations are all ahead sequentially and compared to prior year.  First half revenue, adjusted for exchange rate movements, is 9% above prior year, despite some study cancellations and delays.  Operating profits during that same period more than doubled, benefiting from economies of scale and attention to expenses.”

Andrew Baker, LSR’s Chairman and CEO, said “This quarter marks another financial milestone for LSR, getting down to a 4.8 multiple of trailing annual EBITDA to total debt minus cash. With our growing margins, solid cash position, and reduced debt levels over the last few quarters, we’re pleased to be moving in the right direction.  We’re committed to remaining focused on continued improvement in this important metric in the coming one to two years.”

Life Sciences Research, Inc. is one of the world’s leading Contract Research Organizations 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 LSR’s Registration Statement on Form S-1, dated July 12, 2002, and the Company’s Form 10-K for the fiscal year ended December 31, 2002, each as filed with the US Securities and Exchange Commission. 

– tables to follow –


 

 

Life Sciences Research, Inc.
Statement of Operations
(amounts in thousands, except per share data)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 

 

Three months ended
June 30
Unaudited

 

Six months ended
June 30
Unaudited

(Dollars in thousands, except per share data)

2003

 

2002

 

2003

 

2002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

$32,663

 

$28,590

 

$64,564

 

$54,725

Cost of revenue

(25,442)

 

(23,069)

 

(50,815)

 

(44,665)

Gross profit

7,221

 

5,521

 

13,749

 

10,060

Selling , general and administrative expenses

(5,527)

 

(4,375)

 

(10,448)

 

(8,727)

Operating income

1,694

 

1,146

 

3,301

 

1,333

Interest income

23

 

27

 

39

 

33

Interest expense

(1,444)

 

(1,524)

 

(3,152)

 

(3,151)

Other income

2,179

 

3,241

 

1,729

 

618

Income/(loss) before income taxes

2,452

 

2,890

 

1,917

 

(1,167)

Income tax (expense)/benefit

(592)

 

26

 

(415)

 

768

Net income/(loss)

$1,860

 

$2,916

 

$1,502

 

$(399)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income/(loss) per common share

 

 

 

 

 

 

 

- Basic

$0.16

 

$0.24

 

$0.13

 

$(0.04)

- Diluted

$0.15

 

$0.24

 

$0.12

 

$(0.04)

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

- Basic     (000's)

11,932

 

11,932

 

11,932

 

9,428

- Diluted  (000's)

12,244

 

12,053

 

12,754

 

9,428

 

 

 

Life Sciences Research, Inc.
Statement of Operations
(amounts in thousands, except per share data)

(Dollars in thousands)

June 30,

 

December 31,

 

2003

 

2002

 

Unaudited

 

Audited

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$10,645

 

$14,644

Accounts receivable, net of allowance of $415 and $287 in
    2003 and 2002 respectively


20,349

 


20,176

Unbilled receivables

10,873

 

9,108

Inventories

1,619

 

1,556

Prepaid expenses and other current assets

2,897

 

3,075

Total current assets

$46,383

 

$48,559

 

 

 

 

Property and equipment, net

96,358

 

94,574

Investments

245

 

248

Unamortized capital bonds issue costs

479

 

563

Deferred income taxes

4,668

 

4,466

Total assets

$148,133

 

$148,410

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)

 

 

Current liabilities:

 

 

 

Accounts payable

$9,669

 

$8,574

Accrued payroll and other benefits

1,867

 

1,773

Accrued expenses and other liabilities

12,952

 

12,990

Fees invoiced in advance

24,202

 

26,066

Total current liabilities

$48,690

 

$49,403

Long-term debt

83,192

 

83,717

Related party loans

-

 

358

Pension liabilities

17,492

 

17,712

Deferred income taxes

5,648

 

5,024

Total liabilities

$155,022

 

$156,214

Commitments and contingencies

 

 

 

Shareholders' equity/(deficit)

 

 

 

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

 

 

Issued and outstanding at June 30, 2003: 11,932,338 (December 31, 2002: 11,932,338)


119

 


119

Non-Voting Common Stock, $0.01 par value.  Authorized 5,000,000

-

 

-

Issued and oustanding: None

 

 

 

Preferred Stock, $0.01 par value.  Authorized 5,000,000

-

 

-

Issued and outstanding: None

 

 

 

Paid in capital

75,098

 

75,098

Less Promissory notes for the issuance of common stock

(636)

 

(684)

Accumulated comprehensive loss

(19,211)

 

(18,576)

Accumulated deficit

(62,259)

 

(63,761)

Total shareholders' equity /(deficit)

$(6,889)

 

$(7,804)

Total liabilities and shareholders' equity /(deficit)

$148,133

 

$148,410

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