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 THIRD QUARTER RESULTS Company Reports 107% Increase in Operating Income on 60% Increase in Revenues to $28.0 Million and Net Income Increase of 90%, Resulting in Diluted EPS of $0.13 PHILADELPHIA, PA October 20, 2004/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 third quarter and nine month results for the period ended September 30, 2004. The company reported revenues of $28.0 million for the third quarter, a 60% increase compared to $17.5 million in revenue reported for the third quarter of 2003. eRT reported net income for the third quarter of 2004 of $7.4 million, or $0.13 per diluted share, an increase of 90% compared with net income of $3.9 million, or $0.07 per diluted share, for the third quarter of 2003. Operating income increased by 107% to $12.6 million for the quarter ended September 30, 2004 compared to $6.1 million for the quarter ended September 30, 2003. The company's tax rate for the third quarter of 2004 was 42.8% compared to 40.2% in the second quarter of 2004 and 37.3% in the third quarter of 2003. For the nine months ended September 30, 2004, the company reported revenues of $82.3 million, an 80% increase over revenues of $45.8 million for the nine months ended September 30, 2003. Net income increased 150% to $22.8 million, or $0.41 per diluted share, from $9.1 million, or $0.17 per diluted share, for the nine months ended September 30, 2003. The company's tax rate was 41.1% for the nine months ended September 30, 2004 versus 37.3% for the same period in 2003. "The company delivered strong operating results in the third quarter," commented Joe Esposito, eRT's President and Chief Executive Officer. "The regulatory climate remains favorable to all core labs long-term, however, recent updates in the guidance have caused a pause in the momentum that had been fueled by prior guidance. As drug sponsors digest the new guidance and establish budgets to address their respective pipelines in 2005, the industry and our company should once again see accelerated growth during the course of 2005. The company is fundamentally strong and well positioned to address the growth opportunities ahead." Some of the highlights of the third quarter of 2004 included: o The company completed the quarter with a backlog of $104 million versus $94 million as of September 30, 2003 and $110 million for the second quarter of 2004. o eRT completed the quarter with $83.0 million in cash and short-term investments, an increase of $5.8 million from the second quarter of 2004. During the third quarter, the company repurchased 300,000 shares of its stock at a cost of $6.6 million. o The company's gross margin improved to 66.9% in the third quarter of 2004, from 62.8% in the third quarter of 2003. The gross margin was 68.4% in the second quarter of 2004. The decline in the gross margin from the second quarter of 2004 to the third quarter of 2004 is due to continued investment in personnel and technology to address future growth. o eRT entered into three new Thorough Phase I agreements plus several study extensions for drugs in later stage development. The value of these studies totaled approximately $6 million. o The company announced two program level awards from one customer with a value of $6 million to provide comprehensive cardiac safety and related services for these compounds in all phases of clinical development. o eRT extended its EXPeRT(R) data handling capability by providing semi-automated readings services and received more than $3 million in contracts during the quarter. o The company signed a $1.9 million software and services agreement with a top twenty pharmaceutical company, which includes an end-to-end clinical research platform, electronic data capture, and a web portal for access to real-time data. 2004 AND 2005 GUIDANCE The company issued the following guidance for the remainder of 2004. It expects to report revenues for the fourth quarter ending December 31, 2004 of $26.0 million to $30.0 million and to generate earnings of $0.11 to $0.15 per diluted share. For the full year the company expects revenues of $108 million to $112 million. This represents at least a 62% increase in revenues from the full year 2003. It also expects full year diluted earnings per share of $0.52 to $0.56, a decrease from previous guidance of $0.58 to $0.60. The decrease in revenue and earnings per diluted share from the preliminary guidance is due to continued delays in the commencement of studies, increased costs related to product line extension for semi-automated processing, increased sales and marketing expenditures, and the impact of an increased tax rate. The current guidance assumes a tax rate of 41.1% for 2004, which is an increase from 40.2% used in previous guidance. For 2005 the company expects revenue of $130 million to $140 million and earnings per diluted share of $0.62 to $0.72. The tax rate for 2005 is estimated to be 41.1%. 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. EDT on October 20, 2004. 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 November 20, 2004. 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 5265677 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=00001F40. The webcast can be accessed until November 20, 2004 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, 2004 and 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) (unaudited)

Three Months Ended September 30, Nine Months Ended September 30, 2003 2004 2003 2004 -------------- -------------- -------------- -------------- Net revenues: Licenses $ 2,513 $ 2,675 $ 4,856 $ 7,798 Services 14,951 25,329 40,967 74,462 -------------- -------------- -------------- -------------- Total net revenues 17,464 28,004 45,823 82,260 -------------- -------------- -------------- -------------- Costs of revenues: Cost of licenses 185 163 517 516 Cost of services 6,306 9,103 17,123 26,114 -------------- -------------- -------------- -------------- Total costs of revenues 6,491 9,266 17,640 26,630 -------------- -------------- -------------- -------------- Gross margin 10,973 18,738 28,183 55,630 -------------- -------------- -------------- -------------- Operating expenses: Selling and marketing 1,870 2,534 5,617 7,351 General and administrative 1,818 2,562 4,896 7,062 Research and development 1,196 1,031 3,400 3,046 -------------- -------------- -------------- -------------- Total operating expenses 4,884 6,127 13,913 17,459 -------------- -------------- -------------- -------------- Operating income 6,089 12,611 14,270 38,171 Other income, net 83 255 227 447 -------------- -------------- -------------- -------------- Income before income taxes 6,172 12,866 14,497 38,618 Income tax provision 2,299 5,506 5,400 15,858 -------------- -------------- -------------- -------------- Net income $ 3,873 $ 7,360 $ 9,097 $ 22,760 ============== ============== ============== ============== Basic net income per share $ 0.08 $ 0.14 $ 0.19 $ 0.44 ============== ============== ============== ============== Diluted net income per share $ 0.07 $ 0.13 $ 0.17 $ 0.41 ============== ============== ============== ============== Shares used to calculate basic net income per share 49,823 51,951 49,109 51,488 ============== ============== ============== ============== Shares used to calculate diluted net income per share 54,769 55,473 53,645 55,483 ============== ============== ============== ==============

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

December 31, 2003 September 30, 2004 ----------------- ------------------ (unaudited) ASSETS Current assets: Cash and cash equivalents $ 38,364 $ 60,014 Short-term investments 13,558 22,947 Accounts receivable, net 13,947 18,455 Prepaid expenses and other 2,219 4,108 Deferred income taxes 277 277 ----------------- -------------- Total current assets 68,365 105,801 Property and equipment, net 16,416 22,229 Goodwill 1,212 1,212 Investments in non-marketable securities 509 509 Other assets 168 259 Deferred income taxes 5,308 3,796 ----------------- -------------- $ 91,978 $ 133,806 ================= ============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 3,513 $ 2,995 Accrued expenses 4,446 4,097 Income taxes payable 1,584 2,501 Current portion of capital lease obligations 644 308 Deferred revenues 12,401 23,072 ----------------- -------------- Total current liabilities 22,588 32,973 ----------------- -------------- Capital lease obligations, excluding current portion 131 229 ----------------- -------------- 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, 54,748,617 and 56,336,067 shares issued, respectively 547 563 Additional paid-in capital 54,238 69,275 Accumulated other comprehensive income 1,038 1,127 Retained earnings 16,826 39,586 Treasury stock, 4,062,519 and 4,362,519 shares at cost, respectively (3,390) (9,947) ----------------- -------------- Total stockholders' equity 69,259 100,604 ----------------- -------------- $ 91,978 $ 133,806 ================= ==============

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

Nine Months Ended September 30, 2003 2004 --------------- -------------- Operating activities: Net income $ 9,097 $ 22,760 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,595 6,330 Cost of sale of equipment - 295 Provision for uncollectable accounts - 126 Stock option income tax benefits 5,320 11,919 Changes in operating assets and liabilities: Accounts receivable (4,989) (4,569) Prepaid expenses and other (13) (1,988) Accounts payable (51) (525) Accrued expenses (398) (350) Income taxes (838) 2,393 Deferred revenues 4,681 10,651 --------------- -------------- Net cash provided by operating activities 16,404 47,042 --------------- -------------- Investing activities: Purchases of property and equipment (4,646) (12,033) Purchases of short-term investments (8,084) (21,058) Proceeds from sales of short-term investments 4,443 11,669 --------------- -------------- Net cash used in investing activities (8,287) (21,422) --------------- -------------- Financing activities: Repayment of capital lease obligations (444) (608) Proceeds from exercise of stock options 3,164 3,138 Repurchase of common stock for treasury - (6,557) --------------- -------------- Net cash provided by (used in) financing activities 2,720 (4,027) --------------- -------------- Effect of exchange rate changes on cash 247 57 --------------- -------------- Net increase in cash and cash equivalents 11,084 21,650 Cash and cash equivalents, beginning of period 17,443 38,364 --------------- -------------- Cash and cash equivalents, end of period $ 28,527 $ 60,014 =============== ==============