EX-99 2 ex99-1.txt EXHIBIT 99.1 EXHIBIT 99.1 FOR IMMEDIATE RELEASE --------------------- CONTACT: BRUCE JOHNSON MATT HAYDEN ERESEARCHTECHNOLOGY, INC. HAYDEN COMMUNICATIONS 215-282-5580 858-456-4533 ERESEARCHTECHNOLOGY REPORTS REVENUE GROWTH OF 29% IN THE FOURTH QUARTER AND 64% FOR THE FULL YEAR Net Income Increased 30% in the Fourth Quarter and 106% for the Full Year, Resulting in Diluted EPS of $0.13 and $0.54 for the Quarter and Full Year PHILADELPHIA, PA February 9, 2005/PRNewswire-FirstCall/ -- eResearchTechnology, Inc. (Nasdaq: ERES) ("eRT" or "the company"), a leading provider of technology and services to the pharmaceutical, biotechnology and medical device industries, announced today fourth quarter and full year results for the period ended December 31, 2004. The company reported revenues of $27.1 million for the fourth quarter, a 29% increase compared to $21.0 million in revenue reported for the fourth quarter of 2003. eRT reported net income for the fourth quarter of 2004 of $7.0 million, or $0.13 per diluted share, an increase of 30% compared with net income of $5.4 million, or $0.10 per diluted share, for the fourth quarter of 2003. The company's tax rate for the fourth quarter of 2004 was 40.0% compared to 42.8% in the third quarter of 2004 and 38.9% in the fourth quarter of 2003. For the year ended December 31, 2004, the company reported revenues of $109.4 million, a 64% increase over revenues of $66.8 million for the year ended December 31, 2003. Net income increased 106% to $29.7 million, or $0.54 per diluted share, from $14.5 million, or $0.27 per diluted share, for the year ended December 31, 2003. The company's tax rate was 40.8% for the year ended December 31, 2004 versus 37.9% for the same period in 2003. "The company delivered strong results in 2004," commented Joseph Esposito, eRT's President and Chief Executive Officer. "I have great admiration and appreciation for our employees who have dedicated themselves to safely advancing clinical research. I want to recognize them for their outstanding accomplishments, as well. In 2004, FORTUNE Magazine recognized the company as the second fastest growing company in the United States over the past three years. During this time our employees improved business processes, enhanced our technology and advanced our global infrastructure to address the requirements of a growing customer base. Through the efforts of our employees, the company strengthened its market leadership position. The company is well positioned to capitalize on the growth anticipated as a result of continued regulatory reinforcement of vigorous drug safety testing in clinical trials." Some of the highlights of the fourth quarter and full year included: o eRT signed more than $112 million in new contracts and work orders for the full year 2004, the largest volume in the company's history. o During 2004, the company signed 39 new cardiac safety accounts and contracted for work on new studies for 119 new compounds. o The company entered into new Thorough Phase I definitive ECG study agreements valued at approximately $6.6 million for the quarter and $38.0 million for the full year. o The company signed $6.0 million in program level awards in the fourth quarter and $14.6 million for the full year. o eRT extended its EXPeRT(R) data handling capability by reintroducing semi-automated machine based readings in response to the regulatory guidance update in mid-September and received more than $3.5 million in contracts related to this service in the fourth quarter and more than $6.9 million for the full year. o The company signed $2.0 million in software and related services agreements in the fourth quarter which included an agreement for an end-to-end clinical research platform, electronic data capture and web portal for PRACS Institute. eRT signed more than $8.4 million in new software and related service agreements for the full year. o eRT completed the year with $68.7 million in cash and short-term investments, an increase of $16.8 million from the end of 2003. During the fourth quarter, the company repurchased 1.7 million shares of its stock at a cost of $21.6 million. In the third quarter of 2004, eRT purchased 300,000 shares of its stock at a cost of $6.6 million. o The company's gross margin declined to 64.5% in the fourth quarter of 2004, from 66.2% in the fourth quarter of 2003. The decline in the gross margin is due to continued investment in personnel and technology to address future growth. The gross margin for the full year increased to 66.8% from 63.0% in 2003. o The company's operating margins improved to 41.9% for the fourth quarter and 45.3% for the full year from 41.4% and 34.4% for the fourth quarter and full year 2003 respectively. The operating margin was negatively affected by one-time expenses incurred in the fourth quarter primarily for compliance with internal control certification requirements. 2005 GUIDANCE The company issued the following guidance for 2005: It expects to report first quarter of 2005 revenues of between $26.0 and $28.0 million and net income of $0.12 to $0.14 per diluted share. The company reinforced guidance for 2005 and continues to expect full year revenue between $130 and $140 million and diluted earnings per share of $0.62 to $0.72 (excluding the impact of expensing stock options under SFAS 123R). Mr. Esposito and Bruce Johnson, the company's Chief Financial Officer, will hold a conference call to discuss these results. The conference call will take place at 4:45 p.m. EST on February 9, 2005. Interested participants should call 888-874-9713 when calling within the United States or 973-935-8506 when calling internationally. There will be a playback available until March 9, 2005. To listen to the playback, please call 877-519-4471 when calling within the United States or 973-341-3080 when calling internationally. Please use pass code 5606173 for the replay. This call is being webcast by ViaVid Broadcasting and can be accessed at eRT's web site at www.eRT.com. The webcast may also be accessed at ViaVid's website at www.viavid.net/detailpage.aspx?sid=000021BA. The webcast can be accessed until March 9, 2005 on either site. Based in Philadelphia, PA, eResearchTechnology, Inc. (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, 2005 guidance, involve a number of risks and uncertainties such as competitive factors, technological development, market demand, and the company's ability to obtain new contracts and accurately estimate net revenues due to variability in size, scope and duration of projects, and internal issues at the sponsoring client. 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 Reports on Form 10-K and 10-Q 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. ERESEARCHTECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts)

Three Months Ended December 31, Year Ended December 31, 2003 2004 2003 2004 -------- -------- -------- -------- (unaudited) (unaudited) Net revenues: Licenses $ 882 $ 2,005 $ 5,738 $ 9,803 Services 15,192 18,176 46,791 76,340 Site support 4,945 6,952 14,313 23,250 -------- -------- -------- -------- Total net revenues 21,019 27,133 66,842 109,393 -------- -------- -------- -------- Costs of revenues: Cost of licenses 141 148 658 664 Cost of services 4,943 6,004 17,473 24,124 Cost of site support 2,017 3,492 6,610 11,486 -------- -------- -------- -------- Total costs of revenues 7,101 9,644 24,741 36,274 -------- -------- -------- -------- Gross margin 13,918 17,489 42,101 73,119 -------- -------- -------- -------- Operating expenses: Selling and marketing 2,146 2,040 7,763 9,391 General and administrative 1,908 3,041 6,804 10,103 Research and development 1,164 1,044 4,564 4,090 -------- -------- -------- -------- Total operating expenses 5,218 6,125 19,131 23,584 -------- -------- -------- -------- Operating income 8,700 11,364 22,970 49,535 Other income, net 83 243 310 690 -------- -------- -------- -------- Income before income taxes 8,783 11,607 23,280 50,225 Income tax provision 3,417 4,643 8,817 20,501 -------- -------- -------- -------- Net income $ 5,366 $ 6,964 $ 14,463 $ 29,724 ======== ======== ======== ======== Basic net income per share $ 0.11 $ 0.14 $ 0.29 $ 0.58 ======== ======== ======== ======== Diluted net income per share $ 0.10 $ 0.13 $ 0.27 $ 0.54 ======== ======== ======== ======== Shares used to calculate basic net income per share 50,517 51,038 49,461 51,375 ======== ======== ======== ======== Shares used to calculate diluted net income per share 55,198 54,084 54,033 55,133 ======== ======== ======== ========

ERESEARCHTECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts)

December 31, 2003 December 31, 2004 ----------------- ----------------- (unaudited) ASSETS Current assets: Cash and cash equivalents $ 38,364 $ 45,806 Short-term investments 13,558 22,942 Accounts receivable, net 13,947 14,798 Prepaid expenses and other 2,219 3,522 Deferred income taxes 277 323 --------- --------- Total current assets 68,365 87,391 Property and equipment, net 16,416 24,499 Goodwill 1,212 1,212 Other assets 677 782 Deferred income taxes 5,308 1,936 --------- --------- Total assets $ 91,978 $ 115,820 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 3,513 $ 2,455 Accrued expenses 4,446 3,613 Income taxes payable 1,584 2,147 Current portion of capital lease obligations 644 233 Deferred revenues 12,401 20,325 --------- --------- Total current liabilities 22,588 28,773 --------- --------- Capital lease obligations, excluding current portion 131 193 --------- --------- 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, 54,735,914 and 56,396,696 shares issued, respectively 547 564 Additional paid-in capital 54,238 69,694 Accumulated other comprehensive income 1,038 1,601 Retained earnings 16,826 46,550 Treasury stock, 4,062,519 and 6,067,519 shares at cost, respectively (3,390) (31,555) --------- --------- Total stockholders' equity 69,259 86,854 --------- --------- Total liabilities and stockholders' equity $ 91,978 $ 115,820 ========= =========

ERESEARCHTECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)

Year Ended December 31, 2003 2004 -------- -------- (unaudited) Operating activities: Net income $ 14,463 $ 29,724 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5,306 8,706 Cost of sale of equipment -- 1,152 Provision for uncollectible accounts -- 171 Stock option income tax benefits 9,895 12,173 Changes in operating assets and liabilities: Accounts receivable (6,731) (815) Prepaid expenses and other 155 (1,541) Accounts payable 1,484 (1,093) Accrued expenses 720 (858) Income taxes (2,258) 3,856 Deferred revenues 7,533 7,812 -------- -------- Net cash provided by operating activities 30,567 59,287 -------- -------- Investing activities: Purchases of property and equipment (8,887) (17,021) Purchases of short-term investments (12,435) (23,351) Proceeds from sales of short-term investments 8,184 13,967 -------- -------- Net cash used in investing activities (13,138) (26,405) -------- -------- Financing activities: Repayment of capital lease obligations (601) (720) Proceeds from exercise of stock options 3,685 3,303 Repurchase of common stock for treasury -- (28,165) -------- -------- Net cash provided by (used in) financing activities 3,084 (25,582) -------- -------- Effect of exchange rate changes on cash 408 142 -------- -------- Net increase in cash and cash equivalents 20,921 7,442 Cash and cash equivalents, beginning of period 17,443 38,364 -------- -------- Cash and cash equivalents, end of period $ 38,364 $ 45,806 ======== ========