EX-99.1 3 b414351ex_99-1.htm EXHIBIT 99.1 Prepared and filed by St Ives Financial

Exhibit 99.1

FOR IMMEDIATE RELEASE        
Contact:        
Richard Baron     Matt Hayden  
eResearchTechnology, Inc.     Hayden Communications  
215-282-5566     858-704-5065  

eResearchTechnology Reports Second Quarter Results

Reports Revenue of $22.8 Million and Bookings of $35.1 Million

PHILADELPHIA, PA August 3, 2006 /PRNewswire-SecondCall/ – eResearchTechnology, Inc. (Nasdaq: ERES-News; "eRT" or the "company"), a leading provider of technology and services to the pharmaceutical, biotechnology and medical device industries, today announced results for the second quarter ended June 30, 2006.

The company reported revenues of $22.8 million for the second quarter, compared to $17.6 million in revenue reported for the second quarter of 2005. The revenue results were 29.8 percent greater than the second quarter of 2005, while bookings for the second quarter of 2006 were $35.1 million compared to bookings of $ 25.6 million from the prior year’s quarter.

eRT recorded net income for the second quarter of 2006 of $1.7 million, or $0.03 per diluted share based on 51.5 million shares, versus net income of $2.0 million, or $0.04 per diluted share based on 53.1 million shares, for the second quarter of 2005. The decrease in shares utilized in these computations was directly related to the Company’s share buyback. The results for the 2006 second quarter include stock option compensation expenses, severance and other costs associated with transitioning from the prior Chief Executive and Chief Financial Officers to the current team and certain other professional fees; there were no comparable costs for the same period in 2005. The total of all such costs were $1.6 million or $0.02 per diluted share.

“The quarter was a transitional one for the Company, “said Michael McKelvey, the Company’s new Chief Executive Officer. “Although we were disappointed in the performance of the Company’s quarterly revenues compared to prior guidance, we remain encouraged by the continued growth of bookings, which exceeded our estimates and are indicative of the ongoing strength in the Company’s ability to win new business supported by continued adoption of digital ECG methodology. The fundamentals of the company and the industry are strong, and the bookings give us confidence in our ability to deliver future growth. Our ECG platform provides the opportunity for growth and expansion of cardiac safety services for the drug development clinical research industry.”

Highlights for the quarter ended June 30, 2006 were:

— Hiring of Dr. Michael McKelvey, President and Chief Executive Officer, who started at the end of June and Richard Baron, Executive Vice President and Chief Financial Officer who started in mid-May.
— Signings of $35.1 million in new contracts and work orders; second highest in company history.

 

 

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— The company entered into 9 new Thorough QT definitive ECG agreements valued at approximately $8.3 million in the quarter as well as an additional $8.3 million in program level awards.

For the six months ended June 30, 2006, the company reported revenues of $44.2 million, compared to $40.5 million in revenues for the six months ended June 30, 2005. eRT reported net income of $3.6 million or $0.07 per diluted share for the six months ended June 30, 2006, compared to net income of $6.0 million, or $0.11 per diluted share for the prior year six months.

eRT ended the quarter with $49.8 million in cash, cash equivalents and investments, an increase from $47.3 million at March 31, 2006. The increase in cash was predominately due to net cash from operations excluding non-cash share-based compensation. During the second quarter of 2006 eRT did not purchase any shares of its common stock.

During the second half of 2006 eRT anticipates it will record revenues of between $47 million and $52 million and net income of $0.13 to $0.17 per diluted share. For the full year 2006, the company expects revenue and earnings per diluted share to be reduced from the previously provided guidance to approximately $92 million to $96 million for revenue and $0.20 to $0.24 for earnings per diluted share. The guidance has been reduced from the previous full year guidance of $112 to $118 million for revenue and $0.42 to $0.48 for the full year’s earnings per diluted share. The guidance estimates for the second half of the year includes consideration of the anticipated impact of severance arrangements of the prior CEO and include the anticipated impact of expensing stock options under SFAS No. 123R; the impact of these items are approximately $0.03 per diluted share for the second half of 2006 and $0.05 for the full year 2006.

Dr. Michael McKelvey and Mr. Richard Baron, the company's Chief Executive Officer and Chief Financial Officer, respectively, will hold a conference call to discuss these results. The conference call will take place at 5:00 p.m. EDT on August 3, 2006. Interested participants should call 800-817-4887 when calling within the United States or 913-981-4913 when calling internationally. There will be a playback available until September 3, 2006. To listen to the playback, please call 888-203-1112 when calling within the United States or 719-457-0820 when calling internationally. Please use pass code 4322999 for the replay.

This call is being webcast by ViaVid Broadcasting and can be accessed at eRT's web site at http://www.eRT.com. The webcast may also be accessed at ViaVid's website at http://viavid.net/dce.aspx?sid=0000334B The webcast can be accessed until September 3, 2006 on either site.

Based in Philadelphia, PA, eResearchTechnology, Inc. (http://www.eRT.com) is a provider of technology and services to the pharmaceutical, biotechnology and medical device industries on a global basis. The company is a market leader in providing centralized core-diagnostic electrocardiographic (ECG) technology and services to evaluate cardiac safety in clinical development. The company is also a leader in providing technology and services to streamline the clinical trials process by enabling its customers to automate the collection, analysis, and distribution of clinical data in all phases of clinical development.

Statements included in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements, including, but not limited to, 2006 financial guidance, involve a number of risks and uncertainties such as the company's ability to obtain new contracts and accurately estimate net revenues due to uncertain regulatory guidance, variability in size, scope and duration of projects, and internal issues at the sponsoring client, competitive factors, technological development, and market demand. As a result, actual results may differ materially from any financial outlooks stated herein. Further information on potential factors that could affect the company's financial results can be found in the company's Report on Form 10-K filed with the Securities and Exchange Commission. The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.

 

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eResearchTechnology, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)

                                 
          Three Months Ended June 30,     Six Months Ended June 30,  
          2005   2006   2005   2006  
         
 
 
 
 
                                 
Net revenues:                          
      Licenses   $ 1,746   $ 1,096   $ 3,409   $ 1,734  
      Services     11,245     12,822     27,147     27,547  
      Site support     4,586     8,900     9,935     14,936  
         
 
 
 
 
Total net revenues     17,577     22,818     40,491     44,217  
         
 
 
 
 
Costs of revenues:                          
      Cost of licenses     104     77     237     153  
      Cost of services     5,576     6,300     12,066     12,456  
      Cost of site support     3,148     5,791     6,331     9,944  
         
 
 
 
 
Total costs of revenues     8,828     12,168     18,634     22,553  
         
 
 
 
 
                                 
Gross margin     8,749     10,650     21,857     21,664  
         
 
 
 
 
Operating expenses:                          
      Selling and marketing     2,107     3,178     4,445     6,216  
      General and administrative     2,639     3,974     5,535     7,813  
      Research and development     903     1,034     1,894     2,348  
         
 
 
 
 
Total operating expenses     5,649     8,186     11,874     16,377  
         
 
 
 
 
                                 
Operating income     3,100     2,464     9,983     5,287  
Other income, net     170     338     165     728  
         
 
 
 
 
                                 
Income before income taxes     3,270     2,802     10,148     6,015  
Income tax provision     1,304     1,125     4,110     2,414  
         
 
 
 
 
Net income   $ 1,966   $ 1,677   $ 6,038   $ 3,601  
         
 
 
 
 
                                 
Basic net income per share   $ 0.04   $ 0.03   $ 0.12   $ 0.07  
         
 
 
 
 
                                 
Diluted net income per share   $ 0.04   $ 0.03   $ 0.11   $ 0.07  
         
 
 
 
 
                                 
Shares used to calculate basic net                          
      income per share     50,388     49,266     50,379     49,184  
         
 
 
 
 
                                 
Shares used to calculate diluted net                          
      income per share     53,133     51,515     53,229     51,600  
         
 
 
 
 
                                 

 

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eResearchTechnology, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share amounts)

  December 31, 2005   June 30, 2006  
ASSETS           (unaudited)  
               
Current assets:
              
Cash and cash equivalents
   $ 18,432   $ 9,180  
Short-term investments
     33,569     38,686  
Accounts receivable, net
     15,178     14,299  
Prepaid income taxes
     27     1,619  
Prepaid expenses and other
     2,501     3,610  
Deferred income taxes
     841     865  
Total current assets
     70,548     68,259  
               
Property and equipment, net
     28,670     30,824  
Goodwill
     1,212     1,212  
Long-term investments
     3,008     1,971  
Deferred income taxes
     335     736  
Other assets
     993     884  
    $ 104,766   $ 103,886  
               
LIABILITIES AND STOCKHOLDERS' EQUITY
              
               
Current liabilities:
              
Accounts payable
   $ 2,332   $ 3,811  
Accrued expenses
     5,155     4,364  
Income taxes payable
     1,041     746  
Current portion of capital lease obligations
     153     118  
Deferred revenues
     16,072     10,336  
Total current liabilities
     24,753     19,375  
               
Capital lease obligations, excluding current portion
     40     —  
               
Stockholders' equity:
              
Preferred stock-$10.00 par value, 500,000 shares authorized,
              
none issued and outstanding
     —     —  
Common stock-$.01 par value, 175,000,000 shares authorized,
              
56,871,010 and 57,622,811 shares issued, respectively
     569     576  
Additional paid-in capital
     73,290     79,348  
Accumulated other comprehensive income
     586     1,261  
Retained earnings
     61,915     65,516  
Treasury stock, 7,847,119 and 8,247,119 shares at cost, respectively
     (56,387 )   (62,190 )
Total stockholders' equity     79,973     84,511  
               
    $ 104,766   $ 103,886  
               

 

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eResearchTechnology, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

    Six Months Ended June 30,   
    2005   2006  
   
 
 
Operating activities:
              
Net income
   $ 6,038   $ 3,601  
Adjustments to reconcile net income to net cash
              
provided by operating activities:
              
Depreciation and amortization
     5,209     5,772  
Cost of sale of equipment
     281     2,612  
Provision for uncollectible accounts
     89     —  
Non-cash share-based compensation
     —     1,643  
Stock option income tax benefits
     993     —  
Investment impairment charge
     284     —  
Changes in operating assets and liabilities:
              
Accounts receivable
     3,552     960  
Prepaid expenses and other
     (3,026 )   (961 )
Accounts payable
     569     1,458  
Accrued expenses
     (211 )   (823 )
Income taxes
     (486 )   (2,332 )
Deferred revenues
     524     (5,788 )
   
 
 
Net cash provided by operating activities
     13,816     6,142  
   
 
 
               
Investing activities:
              
Purchases of property and equipment
     (6,726 )   (10,007 )
Purchases of investments
     (23,025 )   (18,720 )
Proceeds from sales of investments
     12,750     14,640  
   
 
 
Net cash used in investing activities
     (17,001 )   (14,087 )
   
 
 
               
Financing activities:
              
Repayment of capital lease obligations
     (161 )   (75 )
Proceeds from exercise of stock options
     722     2,062  
Excess tax benefit related to stock options
     —     2,365  
Repurchase of common stock for treasury
     (2,243 )   (5,803 )
   
 
 
Net cash used in financing activities
     (1,682 )   (1,451 )
   
 
 
               
Effect of exchange rate changes on cash
     (278 )   144  
   
 
 
               
Net decrease in cash and cash equivalents
     (5,145 )   (9,252 )
Cash and cash equivalents, beginning of period
     45,806     18,432  
   
 
 
Cash and cash equivalents, end of period   $ 40,661   $ 9,180  
   
 
 
               

 

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eResearch Technology, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Information
For the Three and Six Months Ended June 30, 2005 and 2006
(in thousands)
(unaudited)

    Three Months    Six Months   
    Ended June 30    Ended June 30   
                           
    2005   2006   2005   2006  
                           
Gross margin:                          
GAAP gross margin   $ 8,749   $ 10,650   $ 21,857   $ 21,664  
Stock based employee compensation expense   $ —   $ 221   $ —   $ 420  
Non-GAAP income gross margin   $ 8,749   $ 10,871   $ 21,857   $ 22,084  
                           
                           
                           
Reconciliation of GAAP to Non-GAAP                          
operating income:                          
GAAP operating income   $ 3,100   $ 2,464   $ 9,983   $ 5,287  
Stock based employee compensation expense     —     913     —     1,640  
CEO and CFO transition     —     731     —     1,200  
Settlement of contract dispute     —     —     —     646  
Subtotal of reconciling items     —     1,644     —     3,486  
Non-GAAP operating income   $ 3,100   $ 4,108   $ 9,983   $ 8,773  
                           
                           
                           
Reconciliation of GAAP to Non-GAAP net                          
income and net income per diluted share:                          
GAAP net income   $ 1,966   $ 1,677   $ 6,038   $ 3,601  
Stock based employee compensation expense     —     726     —     1,349  
CEO and CEO transition     —     438     —     718  
Settlement of contract dispute     —     —     —     387  
Subtotal of reconciling items     —     1,164     —     2,454  
Non-GAAP net income   $ 1,966   $ 2,841   $ 6,038   $ 6,055  
                           
                           
GAAP net income per diluted share   $ 0.04   $ 0.03   $ 0.11   $ 0.07  
                           
Non-GAAP net income per diluted share   $ 0.04   $ 0.06   $ 0.11   $ 0.12