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

March 25, 2003

LSR ANNOUNCES 2002 RESULTS

East Millstone, New Jersey, March 25, 2003 – Life Sciences Research, Inc. ("LSR") announced today that net revenues in the year ended December 31, 2002 were $115.7 million, an increase of 17% on revenues of $99.2 million for the year ended December 31, 2001.  The underlying increase, after adjusting for the impact of the movement in exchange rates, was 13%.  The Company reported net income for the year ended December 31, 2002 of $2.7 million compared with a net loss of $9.6 million the previous year. 

Earnings for the year ended December 31, 2002 were $0.24 per share on a diluted basis, compared with loss per share of $1.64 in the year ended December 31, 2001, including Other Income of $4.9 million in 2002 and Other Expenses of $4.5 million in 2001. In 2002, Other Income included a gain of $1.2 million associated with the repurchase of $2.4 million principal amount of the Company’s outstanding convertible bonds; non-cash foreign exchange transaction gains of $5.0 million on accounting for the Company’s dollar denominated bonds converted into UK pound sterling; offset by expenses associated with the Exchange Offer of $1.3 million.  Other Expenses in 2001 included $3.1 million associated with refinancing and the LSR Exchange Offer and $1.4 million associated with non-cash foreign exchange transaction losses on accounting for the Company’s dollar denominated bonds converted into UK pound sterling. Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”), exclusive of the items discussed above, were $12.4 million for full year 2002, or 10.7% of sales, compared to $6.7 million, or 6.7% of sales, for the prior year.  The Company advises that the trend in earnings should be viewed on a GAAP and an adjusted EBITDA basis.

For the quarter ended December 31, 2002, revenues were $31.1 million, compared to $26.8 million during the same period last year.  Excluding the Other Income/Expenses referred to above, net income before taxes for the quarter was $22 thousand, compared to a net loss before taxes of $753 thousand in the prior year period.  On the same basis, EBITDA was $3.8 million, or 12.1% of sales, compared to $3.0 million, or 11.0% of sales in the same period last year.

Net cash provided by operating activities totaled $14.0 million in 2002, compared to cash used of $2.1 million in 2001. Capital expenditures totaled $4.2 million in 2002 compared with $3.3 million in 2001. Year end cash and cash equivalents were $14.6 million compared to $2.2 million in the prior year, and total debt was $84.1 million, a decrease of $4.0 million from December 31, 2001 of $88.1 million.

Net new business signings totaled $37 million for the fourth quarter of 2002, and $135 million for the full year, an increase of 30% and 25% respectively from the prior year. At December 31, 2002 backlog (booked-on work) amounted to approximately $95 million. Net days sales outstanding were 9 days compared with 45 days at the end of 2001.

“This has been a very significant year for Life Sciences Research”, said Andrew Baker, LSR’s Chairman and CEO, “achieving two important financial milestones. We’ve seen meaningful positive cash flow throughout the year, and achieved positive net income from operations in our most recent quarter. These combine to strengthen our balance sheet, including allowing us to repurchase $2.4 million of our convertible subordinated bonds, and a further $1 million subsequent to year-end. We are also completing our first full year as an American domiciled public company, and are more convinced than ever that it was an important and positive strategic step for LSR.”

Brian Cass, LSR’s President and Managing Director, said, “We continue to enjoy a strong market for our services and excellent support from our clients, as reflected by, amongst other things, record orders and a historic level of booked-on work.  In 2002 we signed up several record study values which will stand us in good stead for the coming years.”

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). Information on LSR’s business, recent press releases, and SEC filings can be obtained through its website at www.lsrinc.net.

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, 2001, each as filed with the US Securities and Exchange Commission.

-- Tables to Follow --

 

 

Life Sciences Research Inc. and Subsidiaries

Consolidated Statements of Operations

(unaudited)

Dollars in (000’s), except per share amounts

Year ended December 31,

 

  2002

 

  2001

 

 

 

 

 

 

Revenues

$115,742

 

$99,206

 

Cost of sales

(93,403)

 

(84,133)

 

Gross profit

22,339

 

15,073

 

Selling and administrative expenses

(18,075)

 

(15,966)

 

Other operating expense

-

 

(750)

 

Operating income / (loss)

4,264

 

(1,643)

 

Interest income

66

 

104

 

Interest expense

(6,304)

 

(6,614)

 

Other income/(expense)

4,922

 

(4,471)

 

Income/(loss) before income taxes

2,948

 

(12,624)

 

Income tax (expense)/benefit

(251)

 

2,996

 

Net income/(loss)

$2,697

 

$(9,628)

 

 

 

 

 

 

Income/(loss) per share

 

 

 

 

 -basic

$0.25

 

$(1.64)

 

 -diluted

$0.24

 

$(1.64)

 

 

 

 

 

 

Weighted average number of common stock outstanding

 

 

 

 

 -basic

10,678,890

 

5,868,421

 

 -diluted

11,083,416

 

5,868,421

 

 

 

Life Sciences Research Inc. and Subsidiaries

Consolidated Balance Sheets

(unaudited)

Dollars in (000’s), except per share amounts

 

December 31,

ASSETS

2002

 

2001

Current assets:

 

 

 

Cash and cash equivalents

$14,644

 

$2,240

Accounts receivable, net of allowance of $287 and $164 in 2002 and 2001

 

 

 

  respectively

20,176

 

18,257

Unbilled receivables

9,108

 

13,920

Inventories

1,556

 

1,275

Prepaid expenses and other current assets

3,075

 

2,850

Total current assets

$48,559

 

$38,542

Property and equipment, net

94,574

 

90,353

Investments

248

 

202

Unamortized capital bonds issue costs

563

 

691

Deferred income taxes

4,466

 

4,176

Total assets

$148,410

 

$133,964

LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)

 

 

 

Current liabilities:

 

 

 

Accounts payable

$8,574

 

$9,899

Accrued payroll and other benefits

1,773

 

2,323

Accrued expenses and other liabilities

12,990

 

10,494

Fees invoiced in advance

26,066

 

17,722

Total current liabilities

$49,403

 

$40,438

Long-term debt

83,717

 

59,302

Related party loans

358

 

28,821

Pension liabilities

17,712

 

174

Deferred income taxes

5,024

 

9,953

Total liabilities

$156,214

 

$138,688

 

Commitments and contingencies

 

 

Shareholders' equity/(deficit)

   

 

Common Stock, issued and outstanding 12/ 31/02: 11,932,338 (12/31/01: 5,870,305)

119

59

Paid in capital

75,098  

66,035  

Less: Promissory notes for issuance of common stock

Accumulated comprehensive loss, including minimum pension liability of $(13,507) in 2002 ($0 in 2001) associated with deficiency on UK defined benefit pension plan, net of deferred tax

(684)  

 

(18,576)

-  

 

(4,360)

Accumulated deficit

(63,761)  

(66,458)

Total shareholders' (deficit)

$(7,804)  

$(4,724)  

Total liabilities and shareholders' equity/(deficit)

$148,410  

$133,964

 

 

Life Sciences Research Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)

Dollars in (000’s)

Year Ended December 31,

 

2002

 

2001

Cash flows from operating activities:

 

 

 

Net income/(loss)

$2,697

 

$(9,628)

Adjustments to reconcile net loss to net cash from operating activities

 

 

 

Depreciation and amortization

8,108

 

8,307

Foreign exchange (gain)/loss on Capital Bonds

(4,977)

 

1,272

Deferred income taxes/(benefits)

188

 

(2,996)

Gain on repurchase of Capital Bonds

(1,191)

 

-

Provision for losses on accounts receivable

123

 

80

Amortization of capital bonds issue costs

191

 

157

Amortization of warrants

156

 

-

Changes in operating assets and liabilities:

 

 

 

Accounts receivable, unbilled receivables and prepaid expenses

4,605

 

(8,329)

Inventories

(127)

 

44

Accounts payable, accrued expenses and other liabilities

(1,728)

 

7,131

Fees invoiced in advance

5,988

 

1,898

Net cash provided by/(used in) operating activities

$14,033

 

$(2,064)

 

 

 

 

Cash flows from investing activities:

 

 

 

Purchase of property, plant and equipment

(4,177)

 

(3,295)

Net cash used in investing activities

$(4,177)

 

$(3,295)

 

 

 

 

Cash flows from financing activities:

 

 

 

Proceeds from issue of common shares

6,039

 

84

Proceeds from issue of warrants

-

 

680

Proceeds from long-term borrowings

334

 

4,321

Repayments of long-term borrowings

(4,627)

 

(93)

Net cash provided by financing activities

$1,746

 

$4,992

Effect of exchange rate changes on cash and cash equivalents

802

 

(679)

Increase/(decrease) in cash and cash equivalents

12,404

 

(1,046)

Cash and cash equivalents at beginning of year

2,240

 

3,286

Cash and cash equivalents at end of year

$14,644

 

$2,240

 

 

 

 

Supplementary disclosures:

 

 

 

Interest paid

$(6,110)

 

$(6,267)

 

 

 

 

Non-cash transactions:

 

 

 

Conversion of debt to equity

$2,400

 

$-

Issuance of shares for promissory notes

$684

 

$-

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