ERES East Resources Acquisition Company

eResearchTechnology Reports Second Quarter Results Reports Revenue of $17.6 Million and Earnings per Share of $0.04 PHILADELPHIA, July 27 /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 results for the quarter ended June 30, 2005. The company reported revenues of $17.6 million for the second quarter, compared to $28.2 million in revenue reported for the second quarter of 2004. eRT reported net income for the second quarter of 2005 of $2.0 million, or $0.04 per diluted share, versus net income of $8.1 million, or $0.15 per diluted share, for the second quarter of 2004 For the six months ended June 30, 2005, the company reported revenues of $40.5 million, compared to $54.3 million in revenues for the six months ended June 30, 2004. eRT reported net income of $6.0 million, or $0.11 per diluted share for the six months ended June 30, 2005, compared to net income of $15.4 million, or $0.28 per diluted share for the six months ended June 30, 2004. The company signed $25.6 million in new contracts and work orders in the second quarter of 2005, including $7.5 million for new Thorough Phase I ECG study agreements. eRT ended the quarter with $73.9 million in cash equivalents and short-term investments, an increase from $70.8 million at the end of the first quarter of 2005. During the second quarter of 2005, eRT purchased 200,000 shares of its common stock at a cost of $2.2 million. "This quarter represents a potential turning point for the company as the global regulatory agreement to move ICH E14 ECG guidance to implementation as of May 12, 2005, solidifies the importance of cardiac safety evaluation in clinical trials, and serves to establish the standards by which such evaluation should be conducted particularly with respect to Thorough QTc studies," commented Joseph Esposito, President and CEO of eRT. "We expect to see accelerated growth through the balance of 2005 into 2006 commensurate with the increase in demand expected as a result of the E14 requirements." 2005 Guidance The company issued the following update to guidance for 2005: For the third quarter of 2005, the company expects to report revenues of between $21 and $24 million and net income of $0.06 to $0.09 per diluted share. For the full year 2005, the company expects to report revenue of between $90 and $95 million and diluted earnings per share of $0.30 to $0.35. 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 July 27, 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 August 27, 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 6267293 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=00002719. The webcast can be accessed until August 27, 2005 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, 2005 financial guidance, and the impact of regulatory 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 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 Six Months Ended June 30, June 30, 2004 2005 2004 2005 Net revenues: Licenses $2,670 $1,746 $5,123 $3,409 Services 20,308 11,245 38,318 27,147 Site support 5,186 4,586 10,815 9,935 Total net revenues 28,164 17,577 54,256 40,491 Costs of revenues: Cost of licenses 231 104 353 237 Cost of services 6,081 5,576 12,066 12,066 Cost of site support 2,582 3,148 4,945 6,331 Total costs of revenues 8,894 8,828 17,364 18,634 Gross margin 19,270 8,749 36,892 21,857 Operating expenses: Selling and marketing 2,364 2,107 4,817 4,445 General and administrative 2,350 2,639 4,500 5,535 Research and development 1,042 903 2,015 1,894 Total operating expenses 5,756 5,649 11,332 11,874 Operating income 13,514 3,100 25,560 9,983 Other income, net 84 170 192 165 Income before income taxes 13,598 3,270 25,752 10,148 Income tax provision 5,466 1,304 10,352 4,110 Net income $8,132 $1,966 $15,400 $6,038 Basic net income per share $0.16 $0.04 $0.30 $0.12 Diluted net income per share $0.15 $0.04 $0.28 $0.11 Shares used to calculate basic net income per share 51,579 50,388 51,256 50,379 Shares used to calculate diluted net income per share 55,571 53,133 55,488 53,229 eResearchTechnology, Inc. and Subsidiaries Consolidated Balance Sheets (in thousands, except share and per share amounts) December 31, 2004 June 30, 2005 ASSETS (unaudited) Current assets: Cash and cash equivalents $45,806 $40,661 Short-term investments 22,942 33,217 Accounts receivable, net 14,798 11,055 Prepaid expenses and other 3,522 6,872 Deferred income taxes 323 323 Total current assets 87,391 92,128 Property and equipment, net 25,204 25,882 Goodwill 1,212 1,212 Other assets 782 485 Deferred income taxes 1,936 962 $116,525 $120,669 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $2,455 $3,000 Accrued expenses 4,318 4,162 Income taxes payable 2,147 687 Current portion of capital lease obligations 233 141 Deferred revenues 20,325 20,742 Total current liabilities 29,478 28,732 Capital lease obligations, excluding current portion 193 124 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, 56,396,696 and 56,619,865 shares issued, respectively 564 566 Additional paid-in capital 69,694 71,402 Accumulated other comprehensive income 1,601 1,055 Retained earnings 46,550 52,588 Treasury stock, 6,067,519 and 6,267,519 shares at cost (31,555) (33,798) Total stockholders' equity 86,854 91,813 $116,525 $120,669 eResearchTechnology, Inc. and Subsidiaries Consolidated Statements of Cash Flows (in thousands) (unaudited) Six Months Ended June 30, 2004 2005 Operating activities: Net income $15,400 $6,038 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,143 5,209 Cost of sale of equipment - 281 Provision for uncollectable accounts 84 89 Stock option income tax benefits 9,954 993 Investment impairment charge - 284 Changes in operating assets and liabilities: Accounts receivable (3,716) 3,552 Prepaid expenses and other (1,577) (3,026) Accounts payable 290 569 Accrued expenses (348) (211) Income taxes (1,089) (486) Deferred revenues 7,010 524 Net cash provided by operating activities 30,151 13,816 Investing activities: Purchases of property and equipment (7,313) (6,726) Purchases of short-term investments (17,552) (23,025) Proceeds from sales of short-term investments 9,723 12,750 Net cash used in investing activities (15,142) (17,001) Financing activities: Repayment of capital lease obligations (324) (161) Proceeds from exercise of stock options 2,681 722 Repurchase of common stock for treasury - (2,243) Net cash provided by (used in) financing activities 2,357 (1,682) Effect of exchange rate changes on cash 42 (278) Net increase (decrease) in cash and cash equivalents 17,408 (5,145) Cash and cash equivalents, beginning of period 38,364 45,806 Cash and cash equivalents, end of period $55,772 $40,661 DATASOURCE: eResearchTechnology, Inc. CONTACT: Bruce Johnson, eResearchTechnology, Inc., +1-215-282-5580; or Matt Hayden, Hayden Communications, +1-858-704-5065 Web site: http://www.ert.com/

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