CTI Molecular Imaging, Inc. Reports Financial Results for the First Quarter of Fiscal 2005

CTI Molecular Imaging, Inc. Reports Financial Results for the
First Quarter of Fiscal 2005
Net Revenues Grow 50% to $111 Million Earnings per Share of $0.08, up from
$0.02 Guidance raised for fiscal 2005 


KNOXVILLE, Tenn., Jan. 31  /PRNewswire-FirstCall/ -- CTI Molecular Imaging,
Inc. (NASDAQ:CTMI), a leading provider of positron emission tomography (PET)
equipment, molecular biomarkers and related services, today announced financial
results for its first quarter ended December 31, 2004.

Net revenues for the first quarter were $111.5 million, a 50% increase over net
revenues of $74.1 million for the same period last year.  Net income was $4.0
million, or $0.08 per share on a fully-diluted basis, compared to $0.7 million,
or $0.02 per share on a fully-diluted basis, in the prior fiscal year's first
quarter.  Backlog at December 31, 2004 totaled $164 million, an increase of $25
million from $139 million at September 30, 2004.

"We are off to a strong start in 2005 with revenue and earnings well ahead of
our plan and guidance," said Ron Nutt, Ph.D., President and Chief Executive
Officer.  "Our clinical scanner business did particularly well, providing some
early confirmation that the market continues to improve.  In addition, the
adoption rate of PET continues to increase as FDG dose volumes were in line
with expectations," continued Dr. Nutt.

During the first quarter of fiscal 2005 CTI shipped 40 scanners on a
consolidated basis compared with 26 units in fiscal 2004.  FDG doses sold by
PETNET domestically increased 6.5% sequentially from the fourth quarter of 2004
and 42% over the prior year's first quarter.  These increases were partially
offset by a 3.2% sequential decline in average dose price.

Segment Information:

"Over the past two years our business model has evolved with the acquisition of
three companies -- Mirada, Concorde and Imtek -- and as we have begun the
process of positioning ourselves for the put/call event with our partner
Siemens Medical Systems. Effective October 1, 2004 we restructured our
organization into two business groupings -- the Clinical Scanner Business, run
by Greg Brophy, and Molecular Biomarker Technologies, run by me," said Dr.
Nutt.  "Beginning this quarter, we are presenting our financial results in six
financial reporting segments," added Dr. Nutt.  The Clinical Scanner Business
grouping consists of three reporting segments -- CPS and Detector Materials,
which are unchanged from the past, as well as a new segment entitled Service
and Distribution, which includes the service and distribution activities
related to clinical scanners.  The Molecular Biomarker Technologies grouping
also consists of three reporting segments -- PETNET, Molecular Technologies
Inc. (biomarker development), and Molecular Imaging Products, which includes
Concorde's microPET and microCAT animal scanners, Mirada medical image analysis
applications and cyclotron sales and service.  These new reporting segments of
Service and Distribution, PETNET, Molecular Technologies and Molecular Imaging
Products were all previously a part of CTI Solutions.

                          CTI Molecular Imaging, Inc
                             Segment Information

                                                 Three Months Ended
                                                     December 31,
  (in thousands)                           2004                       2003

  Revenues, gross:
  CPS                                    $67,033                    $55,486
  Detector Materials                       7,687                     12,089
  Service and Distribution                17,154                     13,857
       Clinical Scanner Business          91,874                     81,432
  PETNET                                  26,557                     19,489
  MTI                                        204                        -
  Molecular Imaging Products              13,746                      7,211
       Molecular Biomarker Technologies   40,507                     26,700
  Total                                 $132,381                   $108,132

  Revenue eliminations:
  CPS                                    $(5,353)                  $(17,987)
  Detector Materials                      (7,687)                   (12,064)
  Service and Distribution                (4,764)                    (1,588)
       Clinical Scanner Business         (17,804)                   (31,639)
  PETNET                                     -                          (35)
  MTI                                        (50)                       -
  Molecular Imaging Products              (3,060)                    (2,351)
       Molecular Biomarker Technologies   (3,110)                    (2,386)
  Total                                 $(20,914)                  $(34,025)

  Revenues, net:
  CPS                                    $61,680                    $37,499
  Detector Materials                         -                           25
  Service and Distribution                12,390                     12,269
       Clinical Scanner Business          74,070                     49,793
  PETNET                                  26,557                     19,454
  MTI                                        154                        -
  Molecular Imaging Products              10,686                      4,860
       Molecular Biomarker Technologies   37,397                     24,314
  Total                                 $111,467                    $74,107

  Income (loss) from operations:
  CPS                                    $14,087                     $6,312
  Detector Materials                       2,714                      6,711
  Service and Distribution                  (778)                    (3,935)
  Eliminations                               861                     (3,497)
       Clinical Scanner Business          16,884                      5,591
  PETNET                                     822                        475
  MTI                                     (1,368)                      (758)
  Molecular Imaging Products                (365)                    (1,053)
  Eliminations                              (361)                        (1)
       Molecular Biomarker Technologies   (1,272)                    (1,337)
       Corporate and Eliminations         (1,429)                       157
  Total                                  $14,183                     $4,411


  Shipments, Orders and Backlog:


The company sold 40 scanners during the first quarter and booked 52 new orders.
 Backlog on a consolidated basis at December 31, 2004 is $164.1 million.  This
backlog includes orders for PET and PET/CT scanners, cyclotrons and service and
maintenance contracts, and excludes orders placed with PETNET for FDG doses and
customer orders to distributors where the related scanners have not yet been
ordered from CPS.

Financial Outlook:

"Based on the strong performance in the first quarter and our current scanner
backlog, we believe that revenues this year will be in the range of $440 - $450
million on the sale of approximately 185 scanners.  Earnings per share for the
year should be in the range of $0.54 to $0.56," said Dr. Nutt. "For the second
quarter, we are expecting a quarter very similar to the first quarter. We
expect revenue of $110 - $115 million and earnings per share of $0.08 to
$0.10," added Dr. Nutt.

Conference Call Information:

The dial-in number for tomorrow's earnings call at 9:00 a.m. EST is (706)
643-3432.  A replay of the call will be available for one week until February
8, 2005.  To hear this replay, please dial [phone] and enter the
reservation number 3583738.  A simultaneous webcast of the call will be
accessible via the internet at http://www.ctimi.com/ under the Investor
Relations section.  A replay of the webcast will also be archived on this site.

About CTI Molecular Imaging:

CTI Molecular Imaging, Inc. is a leading supplier of products and services for
positron emission tomography (PET), a diagnostic imaging technology used in the
detection and treatment of cancer, neurological disorders and cardiac disease. 
Additional information is available at: http://www.ctimi.com/ .

About PET and PET/CT:

PET images the biology of diseases at the molecular level, often before
anatomic changes are visible or, in some cases, before symptoms appear.
Diseases are biological processes and it is these processes that PET examines.
PET/CT is an imaging technology that combines the biological examination of
patients by PET with the CT images of the body's structural detail. PET/CT
technology improves the diagnostic accuracy and treatment management of
patients by providing surgeons, radiation oncologists and other physicians with
precise anatomical landmarks associated with the disease condition as
determined by PET.

PET's whole-body imaging capability helps physicians improve their ability to
detect and determine the location, extent and stage of cancer, neurological
disorders and cardiac disease. By improving diagnosis, PET scans aid physicians
in selecting better courses of treatment, as well as assessing whether
treatment is effective or should be changed. Recent published clinical trials
have shown that in a wide array of cancers, the use of PET has caused the
treatment to be changed for 15 to 50% of patients, depending on the specific
clinical question. In addition, PET and PET/CT provide both the patient and
their physician with a degree of certainty that is often unavailable through
other imaging methods.

Certain matters discussed in this press release and the related conference call
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements,
which may be identified by words such as "believe," "expect," "anticipate,"
"intend," "estimate" or similar expressions, include statements regarding CTI's
financial outlook for 2005, anticipated market share data, growth in unit sales
from international markets, future demand for scanners and other PET-related
products, the impact of reduced reimbursement levels for PET and PET-related
radiopharmaceuticals, future pricing trends, product mix and any other
statements that necessarily depend on future events.  Forward-looking
statements involve a number of risks and uncertainties and there can be no
assurance that any forward-looking statements will prove to be accurate.
Important factors that could cause actual results to differ materially from
those anticipated in the forward-looking statements include: competition;
uncertainties and potential difficulties regarding the implementation of the
new agency agreement with Siemens; the seasonality of capital equipment sales;
the availability and amount of third-party payor reimbursement for PET
procedures; Siemens' option to purchase a majority interest in CPS, CTI's
subsidiary that develops and manufactures PET scanners; market adoption of and
demand for PET products in general and CTI's products and services in
particular; the timing of orders from distribution partners and customers;
legislative and regulatory developments; the timing of research and development
and marketing expenses; relationships with suppliers and distributors; pricing;
product mix; customer demand for financing services; and general economic
conditions, such as interest rates. CTI undertakes no obligation to update or
revise any forward-looking statements. Further information regarding risks,
uncertainties and other factors that could adversely affect CTI or cause actual
results to differ materially from those anticipated in forward-looking
statements are included in CTI's Annual Report on Form 10-K for the fiscal year
ended September 30, 2004.

                        CTI Molecular Imaging, Inc
                       Consolidated Balance Sheets

                                               December 31,    September 30,
  (in thousands)                                  2004              2004
                                               (unaudited)
       ASSETS
  Current assets:
    Cash and cash equivalents                    $24,853           $36,381
    Accounts receivable -- trade, net             63,815            65,946
    Accounts receivable -- related party,
     net (1)                                      56,077            34,231
    Inventories                                   85,253            92,219
    Deferred tax asset                            13,839            13,474
    Prepaid expenses and other current assets      7,674             8,345
          Total current assets                   251,511           250,596

  Property and equipment, net                    137,211           133,074
  Goodwill                                        48,096            46,629
  Other assets                                    35,975            34,915
          Total assets                          $472,793          $465,214

       LIABILITIES AND SHAREHOLDERS' EQUITY
  Current liabilities:
    Trade accounts payable                       $30,213           $33,012
    Current maturities of long-term
     debt and capital lease obligations            4,003             4,289
    Accrued liabilities                           20,532            22,059
    Customer advances                             11,084             9,801
    Income taxes payable                             770             4,472
          Total current liabilities               66,602            73,633

  Deferred revenues                                5,381             4,447
  Deferred tax liability                           4,815             5,013
  Long-term debt and capital lease obligations    12,322            12,856
          Total liabilities                       89,120            95,949

  Minority interest                               67,638            62,213

  Shareholders' equity                           316,035           307,052
          Total liabilities and
           shareholders' equity                 $472,793          $465,214

  (1) Represent receivables from Siemens Medical Solutions USA, Inc.



                       CTI Molecular Imaging, Inc.
                  Consolidated Statements of Operations

                                                      Three Months Ended
                                                          December 31,
                                                    2004               2003
  (In thousands, except share and per share data)         (unaudited)

  Revenues                                         $111,467        $74,107
  Cost of revenues                                   69,702         43,735
          Gross margin                               41,765         30,372

  Operating expenses:
    Selling, general and administrative expenses     16,850         15,260
    Research and development expenses                 9,261         10,190
    Stock-based compensation expense                  1,471            511
      Total operating expenses                       27,582         25,961

  Income from operations                             14,183          4,411

  Interest expense, net                                 223            485
  Other (income) expense                                (15)          (595)

  Income before income taxes and minority interest   13,975          4,521

  Provision for income taxes                          5,272          1,699

  Income before minority interest                     8,703          2,822

  Amount applicable to minority interest,
   net of taxes                                       4,743          2,105

  Net income                                         $3,960           $717

  Earnings per share
    Basic                                             $0.09          $0.02
    Diluted                                           $0.08          $0.02

  Weighted average shares
    Basic                                        45,229,213     44,331,007
    Diluted                                      48,060,300     46,321,070


DATASOURCE: CTI Molecular Imaging, Inc.



CONTACT:  David N. Gill of CTI Molecular Imaging, Inc., [phone]



Web site:  http://www.ctimi.com/ 

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