Life Sciences Research, Inc. (NYSE Arca: LSR) announced today that revenues for the quarter ended March 31, 2008 were $63.2 million, 16.4% above the revenues for the same period in the prior year of $54.3 million. Excluding the effect of exchange rate movements, revenues increased 15.3%. Operating income for the quarter ended March 31, 2008 was $9.7 million, or 15.3% of revenues, compared with $6.2 million, or 11.5% of revenues for the same period in the prior year. The quarter included FAS123R stock option expenses of $0.5 million, or $0.03 per fully diluted share compared with $0.6 million or $0.04 per fully diluted share in the same quarter last year. The Company reported net income for the quarter ended March 31, 2008 of $6.7 million compared with $3.5 million for the quarter ended March 31, 2007. Net income per common share was $0.53 for the three months ended March 31, 2008 compared with $0.27 for the three months ended March 31, 2007. Net income per fully diluted share was $0.44 for the three months ended March 31, 2008 compared with $0.23 for the three months ended March 31, 2007.

The net income for the quarter ended March 31, 2008 included Other Expense of $0.5 million which comprised finance arrangement fee amortization of $0.4 million and $0.1 million from the non-cash foreign exchange re-measurement loss on the long-term loan denominated in US dollars. In the same period in the prior year, Other Expense of $0.4 million was comprised of finance arrangement fee amortization of $0.5 million, offset by $0.1 million non-cash foreign exchange re-measurement gain pertaining to the long-term loan denominated in US dollars.

Cash and short-term investments at March 31, 2008 was $26.6 million compared with $36.2 million at December 31, 2007. Operating activities used cash of $1.5 million, of which $6.9 million was due to the increase in Days Sales Outstanding (DSO). Net DSO at March 31, 2008 were 23 compared with 13 days at December 31, 2007. Capital expenditure totaled $4.8 million in the first quarter of 2008, compared to $4.0 million in the first quarter of 2007.

Net new orders totaled $71.4 million for the first quarter of 2008 which represented an increase of 7.7% over first quarter orders in 2007. This resulted in a book to bill ratio of 1.13 for the quarter, and a trailing twelve month (“TTM”) book to bill of 1.11. At March 31, 2008 backlog (booked on work) amounted to approximately $196 million.

Brian Cass, LSR’s President and Managing Director, commented, “I’m delighted with the solid footing that our first quarter’s results represent, with record constant currency revenues and earnings. Our investment in expanded staffing and targeted infrastructure improvements is helping us to profitably meet the growing demand for our services, and we look forward to building on those strengths throughout the year and beyond.”

Andrew Baker, LSR’s Chairman and CEO, said, “This is an encouraging time for our industry, and an exciting time for our Company. We continue to see robust industry demand for outsourced safety testing of both pharmaceutical and biologic products, and our strong new business wins in the past quarter and year are testament to our ability to convert that opportunity. We’re buoyed by the confidence our customers place in us, proud of the commitment of our staff, and pleased with the growing interest and support from the investment community.”

LSR management will host an investor conference call to discuss the quarter’s results on April 30, 2008 at 9:00 a.m. Eastern time. Shareholders and other interested parties may participate in the conference call by dialing +1 (210) 234-0017 and entering pass code 3316789 a few minutes before the scheduled call.

About Life Sciences Research, Inc.

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).

Forward Looking Statements

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, 2007, as filed with the US Securities and Exchange Commission.

 

Life Sciences Research Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

Unaudited

 
Three months ended

March 31

 
(Dollars in thousands, except per share data) 2008   2007
 
Net revenues $63,227 $54,297
Cost of sales (43,364) (40,283)
Gross profit 19,863 14,014
Selling, general and administrative expenses (10,199) (7,795)
Operating income 9,664 6,219
Interest income 323 382
Interest expense (2,661) (3,460)
Other expense (520) (439)
Income before income taxes 6,806 2,702
Income tax (expense)/benefit (71) 752
Net income $6,735 $3,454
 
Income per share
– Basic $0.53 $0.27
– Diluted $0.44 $0.23
 
Weighted average number of common stock
– Basic (000’s) 12,633 12,782
– Diluted (000’s) 15,406 15,056
   

Life Sciences Research Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

 
(Dollars in thousands) March 31, December 31,
2008 2007
ASSETS Unaudited Audited
Current assets:
Cash and cash equivalents $26,605 $32,304
Short-term investments 3,919
Accounts receivable, net 34,955 30,116
Unbilled receivables, net 25,169 25,935
Inventories 2,463 2,530
Prepaid expenses and other current assets 10,264 9,270
Total current assets $99,456 $104,074
 
Property and equipment, net 73,193 70,994
Goodwill 7,269 7,268
Other assets 7,908 8,382
Deferred income taxes 10,795 10,865
Total assets $198,621 $201,583
 
LIABILITIES AND STOCKHOLDERS’ EQUITY/(DEFICIT)
Current liabilities:
Accounts payable $12,086 $15,477
Accrued payroll and other benefits 8,060 6,644
Accrued expenses and other liabilities 28,885 33,086
Short-term debt 455 618
Fees invoiced in advance 44,453 47,347
Total current liabilities $93,939 $103,172
 
Long-term debt, net 75,302 75,429
Deferred gain on disposal of US property 8,707 8,787
Pension liabilities 42,515 43,522
Total liabilities $220,463 $230,910
 
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 March 31, 2008: 12,645,598 (December 31, 2007: 12,626,498)

126

126

Paid in capital 87,739 87,216
Accumulated other comprehensive loss (46,648) (46,875)
Accumulated deficit (63,059) (69,794)
Total stockholders’ deficit (21,842) (29,327)
Total liabilities and stockholders’ deficit $198,621 $201,583
 

Life Sciences Research Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

Unaudited

 
Three months ended March 31
(Dollars in thousands) 2008   2007
 
Cash flows from operating activities:
Net income $6,735 $3,454

Adjustments to reconcile net income to net cash
(used in)/ provided by operating activities:

Depreciation and amortization 2,506 2,229
Amortization of gain on disposal of US property (80) (80)
Non-cash compensation expense associated with employee stock compensation plans

474

558

Foreign exchange loss/(gain) on long-term loan 50 (110)
Foreign exchange loss/(gain) on intercompany balances 10 (12)
Deferred income tax expense/(benefit) 71 (752)
Provision for losses on accounts receivable 36 85
Interest expense related to the amortization of debt issue costs 503 451
Amortization of financing costs 460 387
 
Changes in operating assets and liabilities:
Accounts receivable, unbilled receivables and prepaid expenses (5,193) 2,401
Inventories 71 (234)
Accounts payable, accrued expenses and other liabilities (4,321) 1,117
Fees invoiced in advance (2,810) 616

Net cash (used in)/provided by operating activities

$(1,488) $10,110
 
Cash flows used in investing activities:
Purchase of property, plant and equipment (4,754) (3,981)
Sale of property, plant and equipment 6
Payment for acquisition (1,771)
Sale of short-term investments 3,919
Net cash used in investing activities $(2,606) $(3,975)
 
Cash flows (used in)/provided by financing activities:
Proceeds from issuance of Voting Common Stock 49 35
Repayments of long-term borrowings (600)
Repayments of short-term borrowings (216) (213)
Net cash used in financing activities $(767) $(178)
 
Effect of exchange rate changes on cash and cash equivalents (838) 10
(Decrease)/increase in cash and cash equivalents (5,699) 5,967
Cash and cash equivalents at beginning of period 32,304 44,088
Cash and cash equivalents at end of period $26,605 $50,055
 
Supplementary Disclosures
Interest paid $2,102 $2,934
Taxes paid $80 $128

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