July 31, 2002

LSR ANNOUNCES SECOND QUARTER RESULTS

East Millstone, New Jersey, July 31, 2002 – Life Sciences Research, Inc. (OTCBB:LSRI) announced today that revenues for the quarter ended June 30, 2002 were $28.6 million, 19% above the revenues for same period in the prior year of $24.0 million.  The Company reported net income for the quarter ended June 30, 2002 of $2.9 million, compared with a net loss of $1.7 million for the quarter ended June 30, 2001.   Net income per share for the quarter ended June 30, 2002 was $0.24 compared with a net loss of $0.28 in the quarter ended June 30, 2001.  Net income included non-cash exchange gains on the conversion of the Company’s dollar denominated liabilities including bonds into UK sterling of $3.3 million compared to exchange losses in the same period last year of $0.3 million. Excluding that non-cash currency gain, Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”) was $3.2 million for the second quarter, or 11.2% of revenues, compared with $1.6 million, or 6.7% of revenues, for the same period in the prior year.  

Revenues for the six months ended June 30, 2002 at $54.7 million were 17% above the revenues for the same period in the prior year of $46.7 million.  The Company reported a net loss for the six months ended June 30, 2002 of $0.4 million compared with a net loss of $6.0 million in the six months ended June 30, 2001.  The loss per share for the six months ended June 30, 2002 was $0.04 compared with a loss of $1.02 in the six months ended June 30, 2001.  EBITDA was $3.6 million for the first half of the year, or 6.6% of revenues, compared with $1.3 million, or 2.8% of revenues, for the same period in the prior year.

Brian Cass, LSR's President and Managing Director said "We established a positive momentum during 2001 and this is being sustained as we progress through 2002.  Our business has shown excellent improvement on all of our key measurements this quarter, with meaningful growth in revenues, margins, and new orders.  Positive cash flow resulted from strong operating results and improvements in working capital. We’re enjoying a historic level of backlog, and a market for pre-clinical CRO services that is very buoyant at the moment and looks set to continue."

Andrew Baker, LSR’s Chairman and CEO, said “We’re proud of the excellent operating results LSR achieved in the quarter, an important step towards the results that have historically been achieved by this Company and others in our industry.  We are encouraged by the support we’re seeing for both our staff and Company.  The record orders and backlog that we’ve seen in each of the past two quarters are the highest compliment we can be paid by our clients, and we are committed to continue working diligently to retain their confidence and respect. We’re also pleased to see growing liquidity in our stock on the US trading markets, further convincing us of the valuable benefits of our new structure.”

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

Life Sciences Research, Inc.

Statement of Operations

(amounts in thousands, except per share data)

 Unaudited

Three months ended

Six months ended

June 30

2001

2001

Net revenues

$28,590

$24,012

$54,725

$46,701

Cost of revenue

(23,120)

(20,454)

(44,766)

(41,369)

Gross profit

5,470

3,558

9,959

5,332

Selling and administrative expenses

(4,324)

(4,178)

(8,626)

(8,184)

Other operating (expense)/income

(14)

169

(1,531)

(5)

Operating income/(loss)

1,132

(451)

(198)

(2,857)

Interest income

27

36

33

75

Interest expense

(1,524)

(1,616)

(3,151)

(3,284)

Other income/(loss)

3,255

(346)

2,149

(2,417)

Income/(loss) before income taxes

2,890

(2,377)

(1,167)

(8,483)

Income tax benefit

26

705

768

2,475

Net income/(loss)

$2,916

$(1,672)

$(399)

$(6,008)

Income/(loss) per common share

- Basic

($)

0.24

(0.28)

(0.04)

(1.02)

- Diluted

($)

0.24

(0.28)

(0.04)

(1.02)

Weighted average common shares outstanding

- Basic

11,932

5,870

9,428

5,867

- Diluted

12,053

5,870

9,428

5,867

Life Sciences Research, Inc.

Balance Sheet

(amounts in thousands)

Unaudited

June 30,

December 31,

2002

2001

ASSETS

Current assets:

Cash and cash equivalents

$9,282

$2,240

Accounts receivable net of allowance of $58 (2001: $124)

20,363

18,257

Unbilled receivables

11,262

13,920

Inventories

1,605

1,275

Prepaid expenses and other

4,098

2,777

Deferred income taxes

-

73

Total current assets

46,610

38,542

Property and equipment: net

91,698

90,353

Investments

228

202

Unamortized capital bonds issue costs

643

691

Deferred income taxes

4,992

4,176

Total assets

$144,171

$133,964

LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)

Current liabilities:

Accounts payable

$10,315

$9,899

Accrued payroll and other benefits

1,486

2,323

Accrued expenses and other liabilities

9,191

10,336

Fees invoiced in advance

22,488

17,722

Short-term borrowings

146

158

Total current liabilities

43,626

40,438

Long-term debt

87,015

59,302

Related party loans

552

28,821

Other long-term liabilities

26

174

Deferred income taxes

10,144

9,953

Total liabilities

141,363

138,688

Commitments and contingencies

-

-

Shareholders' equity/(deficit)

Voting Common Stock, $0.01 par value

Authorized at June 30, 2002, 50,000,000 (December 31, 2001, 50,000,000)

Issued and outstanding at June 30, 2002, 11,032,338

(December 31, 2001, 5,870,305)

105

59

Non-Voting Common Stock, $0.01 par value

Authorized at June 30, 2002, 5,000,000 (December 31, 2001, 5,000,000)

Issued and outstanding at June 30, 2002, 900,000 (December 31, 2001, Nil)

9

-

Preferred Stock, $0.01 par value

Authorized at June 30, 2002 5,000,000 (December 31, 2001, 5,000,000)

Issued and outstanding at June 30, 2002, Nil (December 31, 2001, Nil)

Paid in capital

74,303

66,035

Foreign currency translation adjustments

(4,752)

(4,360)

Accumulated deficit

(66,857)

(66,458)

Total shareholders' equity/(deficit)

2,808

(4,724)

Total liabilities and shareholders' equity/(deficit)

$144,171

$133,964