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   Biotech / MedicalLife Sciences Research, Inc (LSRI)


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From: leigh aulper8/1/2007 6:57:55 PM
   of 22
 
Wednesday August 1, 4:06 pm ET
Highlights:
-- Revenues of $58.2 million
-- Operating income of $7.5 million
-- Net Income of $5.5 million, or $0.36 per fully diluted share
-- Net new orders of $72.6 million, book to bill ratio of 1.25
-- Cash of $49.6 million

EAST MILLSTONE, N.J.--(BUSINESS WIRE)--Life Sciences Research, Inc. (NYSE Arca: LSR) announced today that revenues for the quarter ended June 30, 2007 were $58.2 million, 21.6% above the revenues for the same period in the prior year of $47.9 million. Excluding the effect of exchange rate movements, revenues increased 14.0%. Operating income for the quarter ended June 30, 2007 was $7.5 million, or 12.9% of revenues, compared with $4.8 million, or 10.1% of revenues for the same period in the prior year. The quarter included FAS123R stock option expense of $0.5 million, or $0.03 per fully diluted share compared with $0.2 million or $0.01 per fully diluted share in the same quarter last year. The Company reported net income before the loss on deconsolidation of variable interest entity for the quarter ended June 30, 2007 of $5.5 million compared with $1.1 million for the quarter ended June 30, 2006. Net income before the loss on deconsolidation of variable interest entity per common share was $0.43 for the three months ended June 30, 2007 compared with $0.09 for the three months ended June 30, 2006. Net income before the loss on deconsolidation of variable interest entity per fully diluted share was $0.36 for the three months ended June 30, 2007 compared with $0.08 for the three months ended June 30, 2006.
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The net income for the three months ended June 30, 2007 included Other Income of $0.7 million which comprised $1.1 million from a non-cash foreign exchange re-measurement gain on the March 2006 Financing denominated in US dollars and other exchange gains of $0.2 million, offset by finance arrangement fee amortization of $0.6 million. In the same period in the prior year, Other Income of $2.2 million was comprised of $3.3 million from the non-cash foreign exchange re-measurement gain on the Convertible Capital Bonds and March 2006 Financing denominated in US dollars and other exchange gains of $0.3 million offset by finance arrangement fee amortization of $1.4 million.

Revenues for the six months ended June 30, 2007 of $112.5 million were 24.6% above revenues for the same period in the prior year of $90.3 million. Excluding the effect of exchange rate movements, the increase was 15.6%. Operating Income for the six months ended June 30, 2007 was $13.7 million, or 12.2% of revenues, compared with $8.9 million, or 9.8% of revenues for the same period in the prior year. The Company reported net income before the loss on deconsolidation of variable interest entity of $9.0 million for the six months ended June 30, 2007 compared with net income for the six months ended June 30, 2006 of $1.6 million. Net income before the loss on deconsolidation of variable interest entity per common share was $0.70 for the six months ended June 30, 2007 compared with $0.13 for the six months ended June 30, 2006. Net income before the loss on deconsolidation of variable interest entity per fully diluted share was $0.59 for the six months ended June 30, 2007 compared with $0.11 for the six months ended June 30, 2006.

Net income in the six months ended June 30, 2007 included Other Income of $0.3 million which comprised $1.2 million from the non-cash foreign exchange re-measurement gain pertaining to the March 2006 Financing denominated in US dollars and other exchange gains of $0.2 million, offset by finance arrangement fee amortization of $1.1 million. In the same period in the prior year, Other Income of $1.3 million was comprised of $3.7 million from the non-cash foreign exchange re-measurement gain pertaining to the Convertible Capital Bonds and March 2006 Financing denominated in US dollars and other exchange gains of $0.2 million, offset by finance arrangement fee amortization of $2.6 million primarily reflecting gains of Alconbury Estates, LSR's landlord, which were consolidated under FIN46.

Cash on hand at June 30, 2007 was $49.6 million compared with $44.1 million at December 31, 2006. The increase in cash on hand was due to the continuing improvement in operating performance and the reduction in DSOs over the period offset by the $4.0 million share repurchase. Net days sales outstanding at June 30, 2007 were 8 (12 at June 30, 2006 and 21 at December 31, 2006). Capital expenditure totaled $4.7 million in the second quarter of 2007, compared to $2.3 million in the second quarter of 2006. Capital expenditure for the first six months of 2007 totaled $8.7 million, compared to $4.0 million in the first six months of 2006.

Long-term debt was $89.3 million at June 30, 2007, compared with $89.2 million at December 31, 2006. At June 30, 2007 long-term debt predominantly consisted of the $69.9 million outstanding from the March 2006 Financing and the $23.4 million of finance leases associated with the sale and leaseback, offset by unamortized lender warrant costs.

Net new business signings totaled $72.6 million for the second quarter of 2007. This represented an increase of 43% from the second quarter orders in 2006. Net new business signings for the six months ended June 30, 2007 were $139.0 million, an increase of 29% on the six months ended June 30, 2006. At June 30, 2007 backlog (booked on work) amounted to approximately $192 million.

Brian Cass, LSR's President and Managing Director commented, "We are delighted to report another record quarter for revenues and operating profits. The second quarter was also a record for orders which at $72.6 million, were 35% up on the same quarter last year in constant currency terms. This brought the increase for the first half of 2007 over the same period in 2006 to 20% again in constant currency terms. With the growth in revenues we have seen an improvement in our operating margins, and our book to bill ratio was maintained at a healthy 1.25 during the quarter. The results reflect our continuing success in growing the business and the strength and growth of the outsourcing market."

Andrew Baker, LSR's Chairman and CEO said, "I am proud and pleased with today's announcements; not only the excellent operating performance and financial results announced in this earnings release, but equally in the principal and interest reduction amendment to our financing agreement that we separately announced today. Both of these announcements reflect our ongoing efforts to maximize Company performance and shareholder value, and, I believe, indicate positive developments on these important fronts."

LSR will hold an investor conference call to discuss the quarter's results on August 2, 2007 at 9:00 a.m. Eastern Time. That call can be listened to by dialing (210) 839-8508 pass code 3316789. We suggest calling five minutes prior to the scheduled call.

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From: leigh aulper10/31/2007 4:20:42 PM
   of 22
 
LSR Announces Third Quarter Results
Wednesday October 31, 4:01 pm ET
Highlights:
-- Revenues of $60.9 million
-- Operating income of $8.6 million, or 14.1%
-- Net Income of $5.9 million, or $0.39 per fully diluted share
-- Net new orders of $61.9 million, TTM book to bill ratio of 1.19
-- Cash of $37.2 million

EAST MILLSTONE, N.J.--(BUSINESS WIRE)--Life Sciences Research, Inc. (NYSE Arca: LSR) announced today that revenues for the quarter ended September 30, 2007 were $60.9 million, 23.1% above the revenues for the same period in the prior year of $49.5 million. Excluding the effect of exchange rate movements, revenues increased 16.1%. Operating income for the quarter ended September 30, 2007 was $8.6 million, or 14.1% of revenues, compared with $5.7 million, or 11.6% of revenues for the same period in the prior year. The quarter included FAS123R stock option expense of $0.4 million, or $0.03 per fully diluted share compared with $0.2 million or $0.01 per fully diluted share in the same quarter last year. The Company reported net income for the quarter ended September 30, 2007 of $5.9 million compared with $2.7 million for the quarter ended September 30, 2006. Net income per common share was $0.47 for the three months ended September 30, 2007 compared with $0.21 for the three months ended September 30, 2006. Net income per fully diluted share was $0.39 for the three months ended September 30, 2007 compared with $0.18 for the three months ended September 30, 2006.
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The net income for the three months ended September 30, 2007 included Other Income of $0.02 million which comprised $0.5 million from the non-cash foreign exchange re-measurement gain on the March 2006 Financing denominated in US dollars and other exchange gains of $0.1 million, offset by finance arrangement fee amortization of $0.6 million. In the same period in the prior year, Other Expenses of $0.9 million was comprised of finance arrangement fees of $0.5 million, the non-cash cost of $0.7 million associated with the 100,000 warrants granted in January 2005 for advisory services, offset by $0.3 million non-cash re-measurement gain pertaining to the March 2006 Financing denominated in US dollars.

Revenues for the nine months ended September 30, 2007 of $173.4 million were 24.0% above revenues for the same period in the prior year of $139.8 million. Excluding the effect of exchange rate movements, the increase was 15.8%. Operating Income for the nine months ended September 30, 2007 was $22.3 million, or 12.9% of revenues, compared with $14.6 million, or 10.5% of revenues for the same period in the prior year. The Company reported net income of $14.8 million for the nine months ended September 30, 2007 compared with net income before the loss on deconsolidation of variable interest entity for the nine months ended September 30, 2006 of $4.3 million. Net income per common share was $1.17 for the nine months ended September 30, 2007 compared with net income before the loss on the deconsolidation of variable interest entity per common share of $0.34 for the nine months ended September 30, 2006. Net income per fully diluted share was $0.99 for the nine months ended September 30, 2007 compared with net income before the loss on deconsolidation of variable interest entity per fully diluted share of $0.29 for the nine months ended September 30, 2006.

Net income for the nine months ended September 30, 2007 included Other Income of $0.3 million which comprised $1.7 million from the non-cash foreign exchange re-measurement gain pertaining to the March 2006 Financing denominated in US dollars and other exchange gains of $0.3 million, offset by finance arrangement fee amortization of $1.7 million. In the same period in the prior year, Other Income of $0.4 million was comprised of $4.0 million from the non-cash foreign exchange re-measurement gain pertaining to the Convertible Capital Bonds and March 2006 Financing denominated in US dollars and other exchange gains of $0.2 million, offset by finance arrangement fee amortization of $3.1 million and the non-cash costs of $0.7 million associated with the 100,000 warrants granted in January 2005 for advisory services.

Cash on hand at September 30, 2007 was $37.2 million compared with $44.1 million at December 31, 2006. Operating activities generated cash of $30.8 million, of which $12.8 million was due to the reduction in DSOs. Net days sales outstanding at September 30, 2007 were 2 (15 at September 30, 2006 and 21 at December 31, 2006). This was offset by $26.1 million used in financing activities, predominantly including $10.8 million debt principal repayment, $4.8 million in costs associated with the August 1, 2007 loan amendment and $10.7 million used to repurchase stock and warrants. Capital expenditure totaled $3.7 million in the third quarter of 2007, compared to $4.2 million in the third quarter of 2006. Capital expenditure for the first nine months of 2007 totaled $12.4 million, compared to $8.2 million in the first nine months of 2006.

Long-term debt was $75.4 million at September 30, 2007, compared with $89.2 million at December 31, 2006. At September 30, 2007 long-term debt predominantly consisted of the $59.8 million outstanding from the March 2006 Financing Loan and the $23.5 million of finance leases associated with the June 2005 sale and leaseback, offset by unamortized lender warrant costs, and the unamortized closing fee associated with the August 1, 2007 loan amendment.

Net new business signings totaled $61.9 million for the third quarter of 2007. This represented an increase of 7% from the third quarter orders in 2006. Net new business signings for the nine months ended September 30, 2007 were $200.9 million, an increase of 21% on the nine months ended September 30, 2006. At September 30, 2007 backlog (booked on work) amounted to approximately $193 million.

Brian Cass, LSR’s President and Managing Director commented, “We have reported record revenues and operating profits for each quarter this year, and I am particularly pleased with this quarter’s 14.1% operating margin. Constant currency revenue growth of 16% year to date is fueling this performance, and this, in turn, is supported by a trailing twelve month book to bill ratio of 1.19. These results reflect not only the current strength of the outsourcing marketplace but, I believe, are also testament to our people’s endeavour to provide the highest standards of science, service and operational performance.”

Andrew Baker, LSR’s Chairman and CEO said, “I am proud and very pleased with this quarter’s results, showing further strong growth in revenues and earnings as well as solid performance in cash generation. EPS of 39 cents, including 4 cents of non-cash foreign exchange gains, is also meaningful further progress in creating shareholder value.”

LSR will hold an investor conference call to discuss the quarter’s results on November 1, 2007 at 9:00 a.m. Eastern Time. That call can be listened to by dialing (210) 839-8508 pass code 3316789. We suggest calling five minutes prior to the scheduled call.

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From: leigh aulper2/27/2008 4:45:12 PM
   of 22
 
LSR Announces Fourth Quarter and 2007 Results
Wednesday February 27, 4:30 pm ET
Highlights:
-- Fourth Quarter Revenues of $63.4 million
-- Fourth Quarter Operating income of $9.6 million, or 15.1%
-- 2007 Revenues of $236.8 million, up 15.6% constant currency
-- 2007 Operating margin 13.5%
-- 2007 Net new orders of $266.7 million, up 14% on prior year
-- 2007 book to bill ratio of 1.13

EAST MILLSTONE, N.J.--(BUSINESS WIRE)--Life Sciences Research, Inc. (NYSE Arca: LSR) announced today that revenues for the quarter ended December 31, 2007 were $63.4 million, 20.9% above the revenues for the same period in the prior year of $52.5 million. Excluding the effect of exchange rate movements, revenues increased 15.0%. Operating income for the quarter ended December 31, 2007 was $9.6 million, or 15.1% of revenues, compared with an operating loss of $5.0 million for the same period in the prior year. In the fourth quarter of 2006 the Company incurred Other Operating Expenses of $10.5 million, predominantly associated with the Company’s NYSE Arca listing, excluding this charge Non GAAP operating income would have been $5.5 million or 10.4% of revenues. The Company reported net loss for the quarter ended December 31, 2007 of $28.8 million compared with net income of $1.5 million for the quarter ended December 31, 2006. Net loss per common and fully diluted share was $2.28 for the three months ended December 31, 2007 compared with net income per common share of $0.12 and per fully diluted share of $0.10 for the three months ended December 31, 2006.


The Company derives significant benefit from the UK Research and Development Tax Credit for large companies. In 2008, this will be amended and the relief will be extended further. As a result the Company does not anticipate reporting any UK tax liability for the foreseeable future. The Company has therefore recorded a valuation allowance expense of $37.4 million to reflect a reversal of the previously recorded tax provision that recognized the net tax asset associated with the Company’s UK Net Operating Losses (NOLs) and UK defined benefit pension plan liability. This changed treatment of the NOL tax asset does not impact their availability to the Company in the future, should circumstances change.

The net loss in the quarter ended December 31, 2007 included Other Expense of $2.2 million which comprised $0.9 million from the non-cash foreign exchange re-measurement loss on the March 2006 Financing denominated in US dollars, other exchange losses of $0.2 million, and finance arrangement fee amortization of $1.1 million. In the same period in the prior year, Other Income of $1.6 million was comprised of $2.2 million non-cash foreign exchange re-measurement gain pertaining to the March 2006 Financing denominated in US dollars, other exchange gains of $0.5 million, offset by finance arrangement fees of $1.1 million.

Non GAAP net income was $9.6 million for the quarter ended December 31, 2007, which represents net income exclusive of the tax valuation expense of $37.4 million and the non-cash foreign exchange re-measurement losses described above of approximately $1.0 million. Non GAAP net income was $9.3 million for the quarter ended December 31, 2006, which represents net income excluding the effect of the $10.5 million Other Operating Expenses, and non-cash foreign exchange re-measurement gains of $2.7 million. On that basis, Non GAAP net income per Non GAAP diluted share was $0.63 for the three months ended December 31, 2007 compared with $0.64 for the three months ended December 31, 2006.

Revenues for the year ended December 31, 2007 of $236.8 million were 23.2% above revenues for the same period in the prior year of $192.2 million. Excluding the effect of exchange rate movements, the increase was 15.6%. Operating Income for the year ended December 31, 2007 was $31.9 million, or 13.5% of revenues, compared with $9.6 million, or 5.0% of revenues for the same period in the prior year. Excluding the $10.5 million charge described above, 2006 Non GAAP Operating Income was $20.1 million, or 10.4% of revenues. The Company reported net loss of $14.0 million for the year ended December 31, 2007 compared with $14.9 million for the year ended December 31, 2006. Net loss per common and fully diluted share was $1.10 for the year ended December 31, 2007 compared with $1.18 for the year ended December 31, 2006.

Net loss for the year ended December 31, 2007 included Other Expense of $1.9 million which comprised finance arrangement fee amortization of $2.8 million, offset by $0.8 million from the non-cash foreign exchange re-measurement gain pertaining to the March 2006 Financing denominated in US dollars and other exchange gains of $0.1 million. In the same period in the prior year, Other Income of $1.9 million was comprised of $6.2 million from the non-cash foreign exchange re-measurement gain pertaining to the Convertible Capital Bonds and March 2006 Financing denominated in US dollars and other exchange gains of $0.7 million, offset by finance arrangement fee amortization of $5.0 million.

Non GAAP net income was $22.5 million for the year ended December 31, 2007, which represents net income exclusive of the tax valuation expense of $37.4 million and the non-cash foreign exchange re-measurement gains described above of $0.9 million. Non GAAP net income was $9.4 million for the year ended December 31, 2006, which represents net income excluding the effect of the $10.5 million Other Operating Expenses, the loss on deconsolidation of variable interest entity of $20.7 million, and non-cash foreign exchange re-measurement gains of $6.9 million. On that basis, Non GAAP net income per Non GAAP diluted share was $1.50 for the year ended December 31, 2007 compared with $0.65 for the year ended December 31, 2006.

Cash on hand and short term investments at December 31, 2007 was $36.2 million compared with $44.1 million at December 31, 2006. Operating activities generated cash of $47.0 million, of which $3.0 million was due to the reduction in DSOs. Net days sales outstanding at December 31, 2007 were 13 (21 at December 31, 2006). This was offset by $26.4 million used in financing activities, mainly comprising $10.7 million debt principal repayment, $5.0 million in costs associated with the August 1, 2007 loan amendment and $10.7 million used to repurchase stock and warrants. Capital expenditure totaled $4.0 million in the fourth quarter of 2007, compared to $4.9 million in the fourth quarter of 2006. Capital expenditure in the year ended December 31, 2007 totaled $16.4 million, compared to $13.1 million in the year ended December 31, 2006.

Long-term debt was $75.4 million at December 31, 2007, compared with $89.2 million at December 31, 2006. At December 31, 2007 long-term debt predominantly consisted of the $59.2 million outstanding from the March 2006 Financing and the $23.3 million of finance leases associated with the June 2005 sale and leaseback, offset by unamortized lender warrant costs, and the unamortized closing fee associated with the August 1, 2007 loan amendment.

Net new business signings totaled $65.8 million for the fourth quarter of 2007. This represented a book to bill ratio of 1.04. Net new business signings for the year ended December 31, 2007 were $266.7 million, for a book to bill ratio of 1.13, and an increase of 14.2% on prior year. At December 31, 2007 backlog (booked on work) amounted to approximately $190 million.

Brian Cass, LSR’s President and Managing Director commented, “We have reported record revenues and operating profits for each quarter this year and I am particularly pleased with this quarter’s 15.1% operating margin. It has been a great year for our Company. This is reflected in the operating results we are reporting today and in the expansion of our staff and capabilities to meet the growing needs of our customers. Constant currency revenue growth of almost 16% is testament to our ability to attract and retain talented individuals who our customers want to work with. Our success so much depends on the dedication and commitment of all our staff and they have made 2007 a banner year for our Company. ”

Andrew Baker, LSR’s Chairman and CEO said, “When our current management team joined the Company almost 10 years ago, we committed ourselves to delivering outstanding customer service, scientific quality and operational excellence. I commend Brian and his team for their unrelenting focus on these objectives, which are so central to rebuilding the top and bottom line of our Company. Our goal of achieving industry standard operating margins met its first milestone this past quarter and we are confident that we have the right strategy in place, and the right team, to be even more successful in future. Our thanks go to the many that have supported us in this effort.”

LSR will hold an investor conference call to discuss the quarter’s results on February 28, 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).

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From: leigh aulper4/29/2008 4:28:21 PM
   of 22
 
LSR Announces First Quarter 2008 Financial Results
Tuesday April 29, 4:02 pm ET
Highlights:
-- Revenues of $63.2 million
-- Operating income of $9.7 million, or 15.3%
-- Net income of $6.7 million, or $0.44 per fully diluted share
-- Net new orders of $71.4 million, TTM book to bill ratio of 1.11

EAST MILLSTONE, N.J.--(BUSINESS WIRE)--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.

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From: leigh aulper3/4/2009 2:54:19 PM
   of 22
 
Life Sciences Research Receives Proposal from Andrew Baker to Acquire LSR

* Wednesday March 4, 2009, 8:45 am EST

EAST MILLSTONE, N.J.--(BUSINESS WIRE)--Life Sciences Research, Inc. (NYSE Arca: LSR) today announced that Andrew Baker, Chairman and CEO of LSR, has made a non-binding proposal to acquire all of the outstanding shares of LSR for a price of $7.50 per share pursuant to a letter dated March 3, 2009. LSR’s common stock closed at $4.79 per share on March 3, 2009.

The proposal letter indicates that the proposal is conditioned upon satisfactory completion of due diligence, negotiation of definitive transaction documents, receipt of the requisite financing commitments and receipt of necessary board approval. Mr. Baker indicates in the letter that he has commenced exploring potential financing sources and that while he is confident that he will be able to secure the requisite financing for the proposal, there can be no assurance of success.

The Board of Directors of LSR has established a special committee of independent directors to act on behalf of LSR with respect to consideration of the proposal and other strategic alternatives. The special committee has the authority to engage its own legal, financial and other advisors.

The process of considering the proposal is only in its beginning stages and consequently no decisions have been made by the special committee of the Board in respect of LSR’s response, if any, to the proposal. Shareholders are not being asked to take any action with respect to the proposal. There can be no assurance that the proposed transaction or any other transaction will be approved or completed.

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From: leigh aulper7/9/2009 8:07:03 AM
   of 22
 
Item 1.01 . Entry into a Material Definitive Agreement.

A. Agreement and Plan of Merger

On Wednesday, July 8, 2009, Life Sciences Research, Inc., a Maryland corporation (the “Company”), entered into an agreement and plan of merger (“Merger Agreement”) with Lion Holdings, Inc. (“Parent”) and Lion Merger Corp. (“Lion”), a wholly owned subsidiary of Parent. Each of Parent and Lion was formed for the purpose of consummating the transactions contemplated by the Merger Agreement, and each of such entities is controlled by Andrew Baker, Chairman and CEO of the Company. The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, Lion will merge with and into the Company (the “Merger”), with the Company continuing as the surviving company and a wholly owned subsidiary of Parent following the Merger.

A Special Committee consisting of the Company’s independent directors was charged with evaluating strategic alternatives for the Company and unanimously recommended the approval of the Merger. Based upon this recommendation, the Board of Directors of the Company (with Andrew Baker and Brian Cass abstaining), approved the Merger and resolved to recommend that LSR stockholders approve the Merger. The Special Committee was advised by independent counsel and an independent financial advisor who provided a fairness opinion to the Special Committee.

The Merger Agreement provides that, upon consummation of the Merger, each share of common stock, par value $0.01 per share, of the Company (the “Shares”) issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time”), other than Shares owned by Parent, Lion or their affiliates, will be converted into the right to receive $8.50 in cash (“Per Share Merger Consideration”). Based upon the latest information available to the Company, Mr. Baker beneficially owns approximately 17.5% of the Shares. No stockholder has any statutory right to demand and receive payment of the fair value of his, her or its Shares in connection with the Merger.

The Merger Agreement provides that any outstanding options to purchase Shares and any outstanding warrants will become fully vested and will be converted into the right to receive an amount of cash equal to the positive difference, if any, between the value of the Per Share Merger Consideration and the per share exercise price for each Share subject to such option or warrant. In addition, at the Effective Time, the vesting of each Share of restricted stock will be accelerated, and each such Share will be converted into the right to receive the Per Share Merger Consideration.

Consummation of the Merger is subject to a number of conditions, including without limitation: (i) the approval of the Merger by (A) the holders of at least a majority of the outstanding Shares entitled to vote on the Merger at a stockholders’ meeting duly called and held for such purpose and (B) a majority of the votes cast by holders of outstanding Shares entitled to vote on the Merger at a stockholders’ meeting duly called and held for such purpose, excluding any votes cast by Parent, Lion, Andrew Baker or any other “interested party” (as such term is defined in the Merger Agreement); (ii) the absence of any “company material adverse effect” (as defined in the Merger Agreement); and (iii) other closing conditions set forth in the Merger Agreement.

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Each of the Company and Parent and Lion have made customary representations, warranties and covenants in the Merger Agreement including, among others, covenants requiring the Company to carry on the Company’s business in the ordinary course during the period between the date of signing the Merger Agreement and the closing of the Merger. The Company has agreed to certain other negative operating covenants, as set forth more fully in Section 6.1 of the Merger Agreement. The Company is also restricted from directly or indirectly soliciting, negotiating, or facilitating an alternative acquisition proposal with a third-party, unless the proposal constitutes or is reasonably likely to constitute a “Superior Proposal” and certain other conditions are satisfied, as more fully described in the Merger Agreement. However, the Company must pay the Parent a termination fee of $2,230,000 if the Company accepts a Superior Proposal or the Company terminates (or, under certain circumstances, the Parent terminates) the Merger Agreement after the Company’s Board of Directors changes its recommendation to the stockholders.

Parent has provided the Company with executed equity and debt financing commitments that provide for the necessary funds to consummate the transactions contemplated by the Merger Agreement. The Merger Agreement does not contain a financing condition. If the closing conditions are satisfied five business days before December 8, 2009, and Parent is unable to obtain the proceeds of such financing to consummate the Merger and provided that the Company is not then in material breach of the Merger Agreement, the Company may terminate the Merger Agreement and Parent shall be required to pay the Company a termination fee of $2,230,000.

The Merger Agreement contains other termination rights for either the Company or Parent under certain circumstances, including if the Merger is not consummated by December 8, 2009 or the required approval of the Merger by the Company’s stockholders is not obtained. The Company may terminate the Merger Agreement in connection with a Superior Proposal or a change in the Board’s recommendation to stockholders with respect to the Merger and under certain other circumstances. The Parent may terminate the Merger Agreement in connection with the Company’s pursuit of an alternative acquisition proposal, if the Company fails to include, in the proxy statement, the Board’s recommendation to stockholders to approve the Merger, if the stockholder meeting is not called as required under the Merger Agreement and under certain other circumstances.

If either Company or Parent willfully or intentionally breaches the Merger Agreement in any material respect, the other party may terminate the Merger Agreement in which case the breaching party must pay the other party a termination fee of $4,460,000. Under certain other circumstances, the Merger Agreement may be terminated and either Company or the Parent must pay the other a lower fee of $1,000,000.


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B. Third Amendment and Waiver and Consent to Financing Agreement

On July 8, 2009, the Company entered into the Third Amendment and Waiver and Consent (the “Third Amendment”) to the Financing Agreement, dated as of March 1, 2006, as amended as of August 1, 2007 and November 30, 2007, with its lenders (the “Financing Agreement”). The Third Amendment, among other things, provides the consent of the lenders to the Company’s entry into the Merger Agreement. It also makes the following principal revisions to the Financing Agreement: (i) increases the applicable interest rate under the terms of the Financing Agreement from LIBOR plus 3.50% per annum to LIBOR plus 5.50% per annum; (ii) revises the covenants regarding Leverage Ratio and Consolidated EBITDA for the period ending June 30, 2009 to 1.06:1.00 and $41,300,000, respectively; and (iii) revises the covenants regarding Leverage Ratio and Consolidated EBITDA for the period ending September 30, 2009 to 1.15:1.00 and $37,000,000, respectively. The Third Amendment also provides that Consolidated EBITDA shall exclude reasonable fees and expenses incurred in connection with the transactions contemplated by the Merger Agreement to the extent accrued or actually paid during such period (without duplication) in an aggregate amount not to exceed $2,000,000. The Third Amendment provides for an amendment fee of $5 million payable to the lenders; such fee, however, will not be due if, on or prior to the date that is five months after the amendment effective date, (i) all obligations under the Financing Agreement are paid in full; (ii) the Merger is consummated; or (iii) a “superior proposal” (as defined in the Merger Agreement) is consummated with the prior written consent of the Required Lenders (which consent shall not be unreasonably withheld).

The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is attached as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference. The Merger Agreement and related description are intended to provide information regarding the terms of the Merger Agreement and are not intended to modify or supplement any factual disclosures about the Company in its public reports filed with the SEC. In particular, the Merger Agreement and related description are not intended to be, and should not be relied upon as, disclosures regarding any facts and circumstances relating to the Company, Parent or Lion. The representations and warranties have been negotiated with the principal purpose of not establishing matters of fact, but rather as a risk allocation method establishing the circumstances in which a party may have the right not to close the Merger if the representations and warranties of the other party prove to be untrue due to a change in circumstance or otherwise. The representations and warranties also may be subject to a contractual standard of materiality different from those generally applicable under the securities laws.

Item 8.01 . Other Events.

On July 9, 2009, the Company issued a press release announcing the Merger. A copy of this press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.


Important Additional Information for Investors and Stockholders


In connection with the proposed Merger, the Company intends to file with the SEC a proxy statement for the meeting of stockholders of the Company to be convened to approve the Merger. The Company, Lion and Parent plan to file a Schedule 13E-3 with the SEC regarding the proposed merger transaction. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, THE COMPANY’S STOCKHOLDERS AND INVESTORS ARE URGED TO READ THE PROXY STATEMENT AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. Company stockholders and other investors will be able to obtain copies of these materials (when they are available) without charge from the SEC through the SEC’s Web site at www.sec.gov. These documents (when they are available) can also be obtained free of charge by accessing them on the Company’s corporate Web site at www.lsrinc.net.


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The Company and its directors, executive officers and certain other members of its management and employees may, under SEC rules, be deemed to be participants in the solicitation of proxies from the Company’s stockholders in connection with the transaction. Information regarding the interests of such directors and executive officers (which may be different than those of the Company’s stockholders generally) will be set forth in the Company’s proxy statement referred to above and additional information regarding the Company’s directors and executive officers is included in the Company’s 2009 proxy statement and 2008 Annual Report on Form 10-K, previously filed with SEC. Stockholders may obtain additional information regarding the interests of the Company and its directors and executive officers in the Merger and the solicitation of proxies, which may be different than those of the Company’s stockholders generally, by reading the proxy statement and other relevant documents regarding the Merger, when filed with the SEC.

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