RESEARCH TRIANGLE PARK, N.C., March 7 /PRNewswire-FirstCall/ -- Quintiles Transnational Corp. today announced financial results for the year and quarter ended Dec. 31, 2004. Net revenue for 2004 was $1.78 billion versus $1.63 billion in 2003. Contribution for Quintiles’ Product Development and Commercial Services groups totaled $808.1 million for 2004 versus $713.7 million for 2003. Net income for 2004 was $1.0 million, compared with $29.7 million for 2003.
Net revenue for fourth quarter 2004 was $493.2 million, an increase of 20% from net revenue of $412.4 million for the same period in 2003. Contribution for Quintiles’ Product Development and Commercial Services groups totaled $224.6 million in fourth quarter 2004 versus $187.0 million for the same quarter in 2003. Net loss for fourth quarter 2004 was $7.6 million, compared with a loss of $8.2 million for fourth quarter 2003.
Net new business in the second half of 2004 was $1.38 billion versus $841 million for the second half of 2003. Net new business for 2004 and 2003 was $2.3 billion and $1.6 billion, respectively, a 44% increase. Net new business for 2004 included $388 million of net wins of internal service contracts. Backlog was $2.6 billion on Dec. 31, 2004, versus $1.9 billion on the same date in 2003.
“Exceeding $2 billion in new business signings in 2004 and achieving a record $2.6 billion in backlog are significant accomplishments,” said Quintiles Transnational Chairman and Chief Executive Officer Dennis Gillings, Ph.D., CBE. “The second half of 2004 was our fifth consecutive half-year increase in net new business.
“These robust new business wins are driving revenue growth. Our Product Development group’s new business wins increased 27% in 2004 from the previous year. Revenue for this group grew in excess of 20% for the quarter compared to fourth quarter 2003 as a result of this success in winning new business.”
As of Dec. 31, 2004, Quintiles had cash and cash equivalents of $535.7 million; on the same date in 2003, cash and cash equivalents totaled $373.6 million.
Quintiles Transnational Chief Financial Officer John Ratliff said: “We bolstered our already strong cash position in 2004 primarily through two previously announced transactions - Mitsui’s payment of approximately $80 million in cash to become a 20% shareholder in Quintiles Japan, and Bradley Pharmaceutical’s purchase of our Bioglan Pharmaceuticals subsidiary for about $188 million.”
During 2004, Quintiles recognized a pre-tax gain of $34.7 million from the Mitsui transaction ($18.1 million after-tax gain) and an after-tax gain of $54.4 million from the Bioglan transaction. Ratliff continued: “In addition to strengthening our cash position, we also made significant progress in 2004 toward creating a refined organizational structure to achieve sustained, profitable growth. We are hiring worldwide, adding staff to carry out the projects we’ve signed with customers. At the same time we have identified areas, as previously announced, where we need to reduce staff in order to become more efficient.
“I anticipate that by the end of 2005 our global work force -- now about 17,000 -- will have grown substantially, with more individuals focused on delivering on customer projects.”
In order to facilitate an understanding of the 2004 results in comparison to the 2003 results, Quintiles’ Predecessor and Successor results are discussed on a combined basis in this press release. The table attached to this press release presents a reconciliation of the Predecessor and Successor results to the combined results.
Quintiles Transnational’s fourth quarter 2004 financial briefing will be held at 11:00 a.m. EST on Wednesday, March 9, and will be broadcast live over the Web. The webcast or replay, which will be available through 5:00 p.m. EST March 25, can be accessed at http://www.quintiles.com/Corporate_Info/Broadcast_Center .
Quintiles helps improve healthcare worldwide by providing a broad range of professional services, information and partnering solutions to the pharmaceutical, biotechnology and healthcare industries. Headquartered near Research Triangle Park, North Carolina, Quintiles has offices in 50 countries and is the world’s leading pharmaceutical services organization. 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 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 our restructurings and risks which affect our industry generally, including trends in pharmaceutical outsourcing, delays in drug development and maintenance of large contracts. 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 Twelve months months months Sept. 26 Jan. 1 ended ended ended through through Dec. 31, Dec. 31, Dec. 31, Dec. 31, Sept. 25, 2004 2003 2004 2003 2003 Successor Successor Successor Successor Predecessor In thousands Net revenues $493,223 $412,379 $1,782,254 $431,626 $1,196,247 Add: reimbursed service costs 103,874 92,790 364,080 96,255 268,683 Gross revenues 597,097 505,169 2,146,334 527,881 1,464,930 Costs, expenses and other: Costs of revenues 426,996 347,304 1,547,444 362,012 969,474 Selling, general and administrative 162,612 148,717 637,115 154,688 397,318 Interest (income) expense, net 14,545 14,857 58,578 15,890 (10,374) Other expense (income), net (1,630) (2,095) (1,079) (2,403) (5,391) Transaction and restructuring 6,577 - 6,577 - 54,148 Gain on sale of portion of an investment in a subsidiary - - (24,688) - - Non-operating gain on change of interest transaction - - (10,030) - - 609,100 508,783 2,213,917 530,187 1,405,175 (Loss) income before income taxes (12,003) (3,614) (67,583) (2,306) 59,755 Income tax (benefit) expense (4,292) 9,339 (6,599) 9,810 27,224 (Loss) income before equity in (losses) earnings of unconsolidated affiliates and minority interests (7,711) (12,953) (60,984) (12,116) 32,531 Equity in earnings (losses) of unconsolidated affiliates 240 (10) (149) 13 (8) Minority interests (731) (122) (1,866) (123) 12 (Loss) income from continuing operations (8,202) (13,085) (62,999) (12,226) 32,535 Income from discontinued operation - 4,839 9,620 4,799 4,626 Gain from sale of discontinued operation, net of income taxes 620 - 54,422 - - Net (loss) income $(7,582) $(8,246) $1,043 $(7,427) 37,161 Consolidated Balance Sheet Data (Unaudited) December 31, December 31, 2004 2003 In millions Successor Successor Cash, cash equivalents and debt investments $548 $385 Investments in marketable equity securities 24 58 Investments in non-marketable equity securities and loans 56 49 Investments in unconsolidated affiliates 121 121 Working capital, excluding discontinued operation 316 131 Total assets 2,048 1,993 Debt including current portion 795 794 Shareholders’ equity 568 535 Schedule 2 of 3 Segment Information (Unaudited) Three Three Twelve months months months Sept. 26 Jan. 1 ended ended ended through through Dec. 31, Dec. 31, Dec. 31, Dec. 31, Sept. 25, 2004 2003 2004 2003 2003 Successor Successor Successor Successor Predecessor In thousands Service revenues: Product development $313,143 $258,363 $1,126,687 $270,247 $734,729 Commercial services 183,385 134,597 668,357 141,163 392,050 Eliminations (24,105) (9,940) (65,687) (10,458) (29,777) Total net service revenues 472,423 383,020 1,729,357 400,952 1,097,002 PharmaBio Development Commercial rights and royalties 24,116 26,812 62,517 27,914 71,072 Investment (3,316) 2,547 (9,620) 2,760 28,173 Total PharmaBio Development 20,800 29,359 52,897 30,674 99,245 Total net revenues 493,223 412,379 1,782,254 431,626 1,196,247 Reimbursed service costs 103,874 92,790 364,080 96,255 268,683 Gross revenues $597,097 $505,169 $2,146,334 $527,881 $1,464,930 Contribution (revenues less cost of revenues excluding depreciation and amortization expense except as noted below): Product development $158,668 $134,445 $554,405 $141,046 $375,125 Commercial services 65,930 52,530 253,712 55,353 142,144 PharmaBio Development (includes amortization and depreciation expense noted below) (27,067) 3,892 (84,322) 4,040 37,455 Total contribution $197,531 $190,867 $723,795 $200,439 $554,724 Depreciation and amortization expense (excluded from contribution except as noted below): Product development $19,332 $21,328 $83,471 $22,406 $43,143 Commercial services 6,895 8,792 30,759 9,177 15,521 PharmaBio Development (included in contribution) 514 927 3,454 962 2,210 Corporate 1,203 2,882 10,675 2,987 604 Total depreciation and amortization expense $27,944 $33,929 $128,359 $35,532 $61,478 Schedule 3 of 3 Reconciliation (Unaudited) Sept. 26 Jan. 1 Twelve months through through ended Dec. 31, Sept. 25, Dec. 31, 2003 2003 2003 Successor Predecessor Combined In thousands Net revenues $431,626 $1,196,247 $1,627,873 Add: reimbursed service costs 96,255 268,683 364,938 Gross revenues 527,881 1,464,930 1,992,811 Costs, expenses and other: Costs of revenues 362,012 969,474 1,331,486 Selling, general and administrative 154,688 397,318 552,006 Interest (income) expense, net 15,890 (10,374) 5,516 Other expense (income), net (2,403) (5,391) (7,794) Transaction and restructuring - 54,148 54,148 530,187 1,405,175 1,935,362 (Loss) income before income taxes (2,306) 59,755 57,449 Income tax (benefit) expense 9,810 27,224 37,034 (Loss) income before equity in (losses) earnings of unconsolidated affiliates and minority interests (12,116) 32,531 20,415 Equity in earnings (losses) of unconsolidated affiliates 13 (8) 5 Minority interests (123) 12 (111) (Loss) income from continuing operations (12,226) 32,535 20,309 Income from discontinued operation 4,799 4,626 9,425 Net (loss) income $(7,427) 37,161 $29,734 Service revenues: Product development $270,247 $734,729 $1,004,976 Commercial services 141,163 392,050 533,213 Eliminations (10,458) (29,777) (40,235) Total net service revenues 400,952 1,097,002 1,497,954 PharmaBio Development Commercial rights and royalties 27,914 71,072 98,986 Investment 2,760 28,173 30,933 Total PharmaBio Development 30,674 99,245 129,919 Total net revenues 431,626 1,196,247 1,627,873 Reimbursed service costs 96,255 268,683 364,938 Gross revenues $527,881 $1,464,930 $1,992,811 Contribution (revenues less cost of revenues excluding depreciation and amortization expense except as noted below): Product development $141,046 $375,125 $516,171 Commercial services 55,353 142,144 197,497 PharmaBio Development (includes amortization and depreciation expense noted below) 4,040 37,455 41,495 Total contribution $200,439 $554,724 $755,163 Depreciation and amortization expense (excluded from contribution except as noted below): Product development $22,406 $43,143 $65,549 Commercial services 9,177 15,521 24,698 PharmaBio Development (included in contribution) 962 2,210 3,172 Corporate 2,987 604 3,591 Total depreciation and amortization expense $35,532 $61,478 $97,010
Quintiles Transnational Corp.
CONTACT: Media Relations, Pat Grebe, media.info@quintiles.com , orInvestor Relations, Greg Connors, invest@quintiles.com , both of QuintilesTransnational Corp., +1-919-998-2000
