Life Sciences Research, Inc. (NYSE Arca: LSR) announced today
record revenues and earnings for the second quarter. Revenues for
the quarter ended June 30, 2008 were $64.3 million, 10.5% above the
revenues for the same period in the prior year of $58.2 million.
Excluding the effect of exchange rate movements, revenues increased
11.1%. Operating income for the quarter ended June 30, 2008 was
$10.0 million, or 15.6% of revenues, compared with $7.5 million, or
12.9% of revenues for the same period in the prior year. The
quarter included FAS123R stock option expenses of $0.6 million, or
$0.04 per fully diluted share compared with $0.5 million, or $0.03
per fully diluted share in the same quarter last year. The Company
reported net income for the quarter ended June 30, 2008 of $7.3
million compared with $5.5 million for the quarter ended June 30,
2007. Net income per common share was $0.58 for the quarter ended
June 30, 2008 compared with $0.43 for the quarter ended June 30,
2007. Net income per fully diluted share was $0.47 for the quarter
ended June 30, 2008 compared with $0.36 for the quarter ended June
30, 2007. Net income for the quarter ended June 30, 2008 included
Other Expense of $0.5 million which comprised fee amortization of
$0.5 million for the Company�s 2006 debt financing and its 2007
amendments. In the same period in the prior year, net income
included Other Income of $0.7 million which comprised $1.1 million
non-cash foreign exchange re-measurement gain pertaining to the
long-term loan denominated in US dollars, and other exchange gains
of $0.2 million, offset by finance arrangement fee amortization of
$0.6 million. Revenues for the six months ended June 30, 2008 of
$127.6 million were 13.4% above revenues for the same period in the
prior year of $112.5 million. Excluding the effect of exchange rate
movements, the increase was 13.1%. Operating Income for the six
months ended June 30, 2008 was $19.7 million, or 15.4% of revenues,
compared with $13.7 million, or 12.2% of revenues for the same
period in the prior year. The six months included FAS123R stock
option expenses of $1.0 million, or $0.07 per fully diluted share
compared with $1.0 million, or $0.07 per fully diluted share in the
same period last year. The Company reported net income of $14.0
million for the six months ended June 30, 2008 compared with $9.0
million for the six months ended June 30, 2007. Net income per
common share was $1.11 for the six months ended June 30, 2008
compared with $0.70 for the six months ended June 30, 2007. Net
income per fully diluted share was $0.91 for the six months ended
June 30, 2008 compared with $0.59 for the six months ended June 30,
2007. Net income for the six months ended June 30, 2008 included
Other Expense of $1.0 million which comprised finance arrangement
fee amortization of $0.9 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,
net income included Other Income of $0.3 million which comprised
$1.2 million non-cash foreign exchange re-measurement gain
pertaining to the long-term loan denominated in US dollars and
other exchange gains of $0.2 million, offset by finance arrangement
fee amortization of $1.1 million. Cash on hand and short-term
investments at June 30, 2008 was $30.1 million compared with $26.6
million at March 31, 2008 and $36.2 million at December 31, 2007.
Net days sales outstanding at June 30, 2008 were 21 (23 at March
31, 2008 and 13 at December 31, 2007). Capital expenditure totaled
$5.0 million in the second quarter of 2008, compared to $4.7
million in the second quarter of 2007. Capital expenditure for the
first six months of 2008 totaled $9.8 million, compared to $8.7
million in the first six months of 2007. Net new orders totaled
$70.2 million for the second quarter of 2008. This represented a
book to bill ratio of 1.09 for the quarter. Net new orders totaled
$141.7 million for the first six months of 2008. This represented a
book to bill ratio of 1.11 for the six months. At June 30, 2008
backlog (booked on work) amounted to approximately $202 million.
Brian Cass, LSR�s President and Managing Director commented,
�Record revenues and earnings are not just a source of pride, but
also serve as a constant reminder to remain focused on our core
strategies of customer service, scientific quality and operational
excellence. It is delivery here that will maintain and enhance
confidence within the BioPharmaceutical industry to outsource more
of the safety testing of their new potential therapies. Our clear
drive to excel in these areas, coupled with an increasing depth and
breadth of scientific expertise across the full range of new
molecules being developed, provide us the opportunity to grow our
business in this exciting market.� Andrew Baker, LSR�s Chairman and
CEO said, �Our pace of revenue growth is consistent with our
objectives as we increase capacity utilization in a managed way. In
the last year, we have added staff commensurate with that growth
and hired into some key areas of expertise, often from our customer
industries. Additionally, we have targeted capital investment into
particular growth services to maintain a portfolio that is balanced
and consistent with market needs. Most exciting now is the prospect
of needing to consider facility expansion beyond our current
footprint, which we believe will support our near term growth to
the $320 million level, as we strive to match the longer term
business growth expectations of our customers.� LSR will hold an
investor conference call to discuss the quarter�s results on August
5, 2008 at 9:00 a.m. Eastern Time. That call can be listened to by
dialing (210) 234-0017 pass code 3316789. 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, 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 June 30 Six months ended June 30 �
(Dollars in thousands, except per share data) 2008 � 2007 2008 �
2007 � Net revenues $ 64,330 $ 58,191 $ 127,557 $ 112,488 Cost of
sales � (43,507 ) � (40,411 ) � (86,871 ) � (80,694 ) Gross profit
20,823 17,780 40,686 31,794 Selling, general and administrative
expenses � (10,796 ) � (10,254 ) � (20,995 ) � (18,049 ) Operating
income 10,027 7,526 19,691 13,745 Interest income 256 803 579 1,185
Interest expense (2,667 ) (3,482 ) (5,328 ) (6,942 ) Other
(expense)/income � (450 ) � 708 � � (970 ) � 269 � Income before
income taxes 7,166 5,555 13,972 8,257 Income tax benefit/(expense)
� 118 � � (46 ) � 47 � � 706 � Net income $ 7,284 � $ 5,509 � $
14,019 � $ 8,963 � � Income per share -Basic $ 0.58 $ 0.43 $ 1.11 $
0.70 -Diluted $ 0.47 $ 0.36 $ 0.91 $ 0.59 � Weighted average number
of common stock - Basic (000�s) 12,655 12,775 12,644 12,779 -
Diluted (000�s) 15,559 15,131 15,480 15,073 Life Sciences Research
Inc. and Subsidiaries Condensed Consolidated Balance Sheets � � �
(Dollars in thousands except per share data) June 30, December 31,
2008 2007 ASSETS (Unaudited) (Audited) Current assets: Cash and
cash equivalents $ 30,090 $ 32,304 Short-term investments - 3,919
Accounts receivable, net 31,693 30,116 Unbilled receivables, net
25,375 25,935 Inventories 2,677 2,530 Prepaid expenses and other
current assets � 10,165 � � 9,270 � Total current assets $ 100,000
$ 104,074 � Property and equipment, net 75,912 70,994 Goodwill
7,351 7,268 Other assets 7,438 8,382 Deferred income taxes � 10,815
� � 10,865 � Total assets $ 201,516 � $ 201,583 � � LIABILITIES AND
STOCKHOLDERS� EQUITY/(DEFICIT) Current liabilities: Accounts
payable $ 12,445 $ 15,477 Accrued payroll and other benefits 6,901
6,644 Accrued expenses and other liabilities 28,029 33,086
Short-term debt 344 618 Fees invoiced in advance � 42,251 � �
47,347 � Total current liabilities $ 89,970 $ 103,172 � Long-term
debt, net 75,316 75,429 Deferred gain on disposal of US property
8,627 8,787 Pension liabilities � 41,547 � � 43,522 � Total
liabilities $ 215,460 � $ 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 June 30, 2008:
12,660,826 (December 31, 2007: 12,626,498) 127 126 Paid in capital
88,415 87,216 Accumulated other comprehensive loss (46,711 )
(46,875 ) Accumulated deficit � (55,775 ) � (69,794 ) Total
stockholders� deficit � (13,944 ) � (29,327 ) Total liabilities and
stockholders� deficit $ 201,516 � $ 201,583 � Life Sciences
Research Inc. and Subsidiaries Condensed Consolidated Statements of
Cash Flows Unaudited � Six months ended June 30 (Dollars in
thousands) 2008 � 2007 � � Cash flows from operating activities:
Net income $ 14,019 $ 8,963 Adjustments to reconcile net income to
net cash provided by operating activities: Depreciation and
amortization 4,938 4,545 Amortization of gain on disposal of US
property (160 ) (160 ) Non-cash compensation expense associated
with employee stock compensation plans 1,045 1,023 Foreign exchange
loss/(gain) on March 2006 Financing 21 (1,191 ) Foreign exchange
loss/(gain) on intercompany balances 16 (211 ) Deferred income tax
benefit (47 ) (706 ) Provision for losses on accounts receivable 51
(148 ) Interest expense related to the amortization of debt issue
costs 1,014 1,133 Amortization of financing costs 933 560 � Changes
in operating assets and liabilities: Accounts receivable, unbilled
receivables and prepaid expenses (2,031 ) (1,453 ) Inventories (140
) (100 ) Accounts payable, accrued expenses and other liabilities
(6,013 ) (274 ) Fees invoiced in advance � (5,044 ) � 5,975 � Net
cash provided by operating activities $ 8,602 � $ 17,956 � � Cash
flows used in investing activities: Purchase of property, plant and
equipment (9,839 ) (8,676 ) Sale of property, plant and equipment -
6 Payment for acquisition (1,779 ) - Sale of short-term investments
� 3,919 � � - � Net cash used in investing activities $ (7,699 ) $
(8,670 ) � Cash flows used in financing activities: Proceeds from
issuance of Voting Common Stock 156 171 Repurchase of Voting Common
Stock - (4,000 ) Repayments of long-term borrowings (1,200 ) (72 )
Repayments of short-term borrowings � (373 ) � (435 ) Net cash used
in financing activities $ (1,417 ) $ (4,336 ) � Effect of exchange
rate changes on cash and cash equivalents � (1,700 ) � 609 �
(Decrease)/increase in cash and cash equivalents (2,214 ) 5,559
Cash and cash equivalents at beginning of period � 32,304 � �
44,088 � Cash and cash equivalents at end of period $ 30,090 � $
49,647 � � Supplementary Disclosures Interest paid $ 4,084 $ 5,912
Taxes paid $ 89 $ 138
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