Quintiles Transnational Corp. Reports 3rd Quarter Net Revenue Of $470.3 Million, Up 19%

RESEARCH TRIANGLE PARK, N.C., Nov. 14 /PRNewswire/ -- Quintiles Transnational Corp. today announced financial results for the quarter ended September 30, 2005. Net revenue for third quarter 2005 was $470.3 million, an increase of 19% from net revenue of $396.5 million for third quarter 2004. Profit contribution from Quintiles' Product Development and Commercial Services groups totaled $210.5 million in third quarter 2005, up from $193.1 million for third quarter 2004.

Net income for third quarter 2005 was $26.9 million, after $3.4 million in charges relating to the company's previously announced restructuring program, compared to a net income of $34.5 million in third quarter 2004. Quintiles' effective income tax rate for the third quarter of 2005 was positively impacted due to a $17.8 million income tax benefit recognized as a result of the company's adoption of its domestic reinvestment plan related to the American Jobs Creation Act of 2004. The net income in third quarter 2004 included an after-tax gain of $53.8 million resulting from Quintiles' sale of certain assets relating to its Bioglan Pharmaceuticals business to Bradley Pharmaceuticals, Inc. for $188 million in cash.

Third quarter 2005 earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $58.6 million, including income from discontinued operations net of loss on sale, before income taxes, of $300,000, and the restructuring charge of $3.4 million. Third quarter 2004 EBITDA was $103.2 million, including a gain on sale net of a loss from discontinued operations, before income taxes, of $87.3 million. Excluding these one-time events, EBITDA for third quarter 2005 and third quarter 2004 was, respectively, $60.8 million and $11.3 million. See Schedule 3 for a reconciliation of the above amounts.

"We are continuing to focus on the fundamentals -- providing our customers high-quality, value-added clinical and commercialization services and partnering solutions -- while positioning Quintiles to take advantage of the significant potential we see in emerging markets," said Quintiles Chairman and Chief Executive Officer Dennis Gillings, CBE. "These strong results are tangible evidence of the progress we're making."

Quintiles Transnational Executive Vice President and Chief Financial Officer John Ratliff said: "Our continued improvement in operating profits is the result of our emphasis throughout Quintiles on driving revenue growth and managing costs. At the same time, we are enhancing processes to achieve greater quality and efficiency, and we are investing in areas where we see key opportunities for market growth and to help our customers succeed."

As of September 30, 2005, Quintiles had cash and cash equivalents of $479 million.

During the third quarter of 2005, Quintiles completed the sale to Aptuit, Inc., of its Early Development and Packaging business for approximately $124 mmillion.

After third quarter 2005 ended, Quintiles closed a financing transaction, as previously announced, in which it raised approximately $250 million in cash by monetizing its rights to receive royalties and certain other payments from the U.S. sales of Eli Lilly and Company's antidepressant drug Cymbalta(R) (duloxetine hydrochloride). The royalty rights were part of Quintiles' agreement with Lilly to help co-promote Cymbalta in the United States for five years; that co-promotion agreement remains materially unchanged and Quintiles continues to have a financial interest in the royalty rights. Quintiles contributed its royalty rights and certain other payment rights under the co- promotion agreement to an indirect wholly owned subsidiary (Royalty Sub), which issued $125 million in notes and borrowed $125 million in loans, each secured primarily by the royalty and other payment rights. Quintiles used a portion of the proceeds to repay in full its outstanding term loans of $154 million under Quintiles' existing senior secured credit facility; Quintiles plans to use the remaining cash for other purposes permitted under Quintiles' other debt arrangements and for general corporate purposes.

Quintiles Transnational's third quarter 2005 financial briefing will be held at 11:00 a.m. EST on Tuesday, Nov. 15, and will be broadcast live over the Web. The webcast or replay, which will be available through 5:00 p.m. EST Friday, Dec. 2, can be accessed at http://www.quintiles.com/corporate_info/broadcast_center.

Quintiles is the global leader in pharmaceutical services. We improve healthcare worldwide by providing quality professional expertise, market intelligence and innovative partnering solutions to the pharmaceutical, biotechnology and healthcare industries. Quintiles has 16,000 specialized employees and offices in 50 countries. For more information visit the company's Web site at http://www.quintiles.com.

The schedules attached to this release are an integral part of this release. Information in this press release contains "forward looking statements" about Quintiles. These statements involve risks and uncertainties that could cause actual results to differ materially, including, without limitation, the ability to maintain large customer contracts or to enter into new contracts, changes in trends in the pharmaceutical industry, the risk that the market for our products and services will not grow as we expect, the risk that our PharmaBio transactions will not generate revenue or profit at the rate or levels we anticipate or that royalty revenues under the PharmaBio agreements may not be adequate to offset Quintiles' upfront and ongoing expenses in providing sales and marketing services or in making milestone and marketing payments, our ability to fulfill our obligations under our financing arrangements and the potential impact on our operations, our ability to efficiently distribute backlog among project management groups and match demand to resources, actual operating performance, variation in the actual savings and operating improvements resulting from previous restructurings, the ability to operate successfully in new lines of business, and the risk that, even though Royalty Sub's notes and loans are non-recourse to Quintiles, Quintiles may be required to make payments equal to the outstanding principal and interest on the notes and loans in certain limited circumstances. Additional factors that could cause actual results to differ materially are discussed in the company's recent filings with the Securities and Exchange Commission, including but not limited to its Annual Report on Form 10-K, its Form 8-Ks, and its other periodic reports, including Form 10-Qs.

Schedule 1 of 3 Condensed Consolidated Statements of Income (Unaudited) Three Three Nine Nine months months months months ended ended ended ended September September September September 30, 30, 30, 30, 2005 2004 2005 2004 In thousands, except per share data Net revenues $470,290 $396,497 $1,413,721 $1,167,020 Add: reimbursed service costs 141,109 91,620 377,371 251,573 Gross revenues 611,399 488,117 1,791,092 1,418,593 Costs, expenses and other: Costs of revenues 441,497 357,888 1,285,462 1,026,055 Selling, general and administrative 136,857 147,021 431,557 433,562 Interest expense (income), net 12,088 14,838 41,702 44,033 Other expense (income), net (2,240) (247) 423 (3,014) Restructuring 3,358 - 22,565 - Impairments - - 6,633 - Transaction expense, net - - (2,666) - Gain on sale of portion of an investment in a subsidiary - - - (24,688) Non-operating gain on change of interest transaction - - - (10,030) 591,560 519,500 1,785,676 1,465,918 Income (loss) before income taxes 19,839 (31,383) 5,416 (47,325) Income tax (benefit) expense (includes $17,778 and $49,299 of income tax benefit related to American Jobs Creation Act of 2004 for the three and nine months ended September 30, 2005, respectively) (9,489) (15,111) (38,862) 1,729 Income (loss) before minority interests and equity in (losses) earnings of unconsolidated affiliates 29,328 (16,272) 44,278 (49,054) Equity in (losses) earnings of unconsolidated affiliates (849) (366) (1,377) (389) Minority interests (1,154) (702) (3,222) (1,135) Income (loss) from continuing operations 27,325 (17,340) 39,679 (50,578) Income (loss) from discontinued operations, net of income taxes 4,233 (2,002) (32,940) 5,401 (Loss) gain from sale of discontinued operations, net of income taxes (4,609) 53,802 (4,609) 53,802 Net income $26,949 $34,460 $2,130 $8,625 Consolidated Balance Sheet Data (Unaudited) September 30, December 31, 2005 2004 In millions Cash, cash equivalents and debt investments $493 $548 Investments in marketable equity securities 33 24 Investments in non-marketable equity securities and loans 53 56 Investments in unconsolidated affiliates 126 121 Working capital 347 491 Total assets 1,808 2,036 Debt including current portion 636 795 Shareholders' equity 543 568 Schedule 2 of 3 Segment Information (Unaudited) Three Three Nine Nine months months months months ended ended ended ended September September September September 30, 30, 30, 30, 2005 2004 2005 2004 In thousands Service revenues: Product development $279,946 $238,923 $835,777 $691,533 Commercial services 182,680 179,126 560,063 484,972 Eliminations (24,319) (26,703) (75,963) (41,582) Total net service revenues 438,307 391,346 1,319,877 1,134,923 PharmaBio Development Commercial rights and royalties 31,093 7,660 95,795 38,401 Investment 890 (2,509) (1,951) (6,304) Total PharmaBio Development 31,983 5,151 93,844 32,097 Total net revenues 470,290 396,497 1,413,721 1,167,020 Reimbursed service costs 141,109 91,620 377,371 251,573 Gross revenues $611,399 $488,117 $1,791,092 $1,418,593 Contribution (revenues less cost of revenues excluding depreciation and amortization expense except as noted below): Product development $141,971 $121,165 $417,937 $345,530 Commercial services 68,527 71,917 214,285 187,782 PharmaBio Development (includes amortization and depreciation expense noted below) (13,440) (35,099) (49,483) (57,255) Total contribution $197,058 $157,983 $582,739 $476,057 Depreciation and amortization expense (excluded from contribution except as noted below): Product development $17,225 $16,709 $49,716 $50,183 Commercial services 8,743 7,857 23,887 23,864 PharmaBio Development (included in contribution) 376 1,121 4,609 2,940 Corporate 1,188 3,188 3,506 9,472 Total depreciation and amortization expense $27,532 $28,875 $81,718 $86,459 Schedule 3 of 3 EBITDA Reconciliation (Unaudited) Three Three Nine Nine months months months months ended ended ended ended September September September September 30, 30, 30, 30, 2005 2004 2005 2004 In millions Net revenues $470.3 $396.5 $1,413.7 $1,167.0 Add: reimbursed service costs 141.1 91.6 377.4 251.6 Gross revenues 611.4 488.1 1,791.1 1,418.6 Costs, expenses and other: Costs of revenues (441.5) (357.9) (1,285.5) (1,026.1) Selling, general and administrative (136.9) (147.0) (431.6) (433.6) Other (expense) income, net 2.2 0.2 (0.4) 3.0 Impairments 0.0 0.0 (6.6) 0.0 Transaction expense, net 0.0 0.0 2.7 0.0 Depreciation and amortization 27.5 28.9 81.7 86.5 Equity in earnings (losses) of unconsolidated affiliates (0.8) (0.4) (1.4) (0.4) Minority interests (1.2) (0.7) (3.2) (1.1) EBITDA, excluding discontinued operations, restructuring charges and Mitsui gains 60.8 11.3 146.8 46.9 Income (loss) from discontinued operations, net of (loss) gain on sale 0.3 87.3 (63.5) 92.9 Depreciation and amortization from discontinued operations 0.8 4.7 8.8 16.2 Restructuring (3.4) 0.0 (22.6) 0.0 Gain on sale of portion of an investment in a subsidiary 0.0 0.0 0.0 24.7 Non-operating gain on change of interest transaction 0.0 0.0 0.0 10.0 EBITDA 58.6 103.2 69.5 190.7 Depreciation and amortization (28.3) (33.5) (90.5) (102.7) Interest expense, net (12.1) (14.8) (41.7) (44.0) Income tax benefit (expense) 8.8 (20.4) 64.8 (35.4) Net income $26.9 $34.5 $2.1 $8.6

Quintiles Transnational Corp.

CONTACT: Pat Grebe, Media Relations, media.info@quintiles.com, or GregConnors, Investor Relations, invest@quintiles.com, of QuintilesTransnational Corp., +1-919-998-2000

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