PharmaNet Development Group Provides Historical Quarterly Data for Its PharmaNet Specialty Pharmaceutical Services Subsidiary

  
    
  
  
    
      PharmaNet Development Group, Inc. (NASDAQ: PDGI) (the “Company”), 
      a leading provider of global drug development services, previously 
      disclosed that, effective January 1, 2007, it would begin to report the 
      financial results for PharmaNet Specialized Pharmaceutical Services, 
      Inc. (SPS) in the late stage segment. Prior to 2007, the financial 
      results for SPS were reported in the early stage segment.
    
    
      2006 quarterly GAAP and adjusted (non-GAAP) financial results for SPS 
      are in the attached unaudited financial tables to provide stockholders 
      the ability to adjust their financial models accordingly.
    
    
      A reconciliation of quarterly GAAP results to adjusted (non-GAAP) 
      results can be found in the unaudited financial tables included in this 
      press release. A further explanation of the reasoning behind the use of 
      non-GAAP financial results can be found below.
    
    
      Non-GAAP Financial Measures
    
    
      This press release contains certain non-GAAP financial measures, which 
      exclude, among other items, an impairment to goodwill, a non-recurring 
      charge related to financing, amortization of acquisition-related 
      intangible assets and non-cash compensation expense related to 
      restricted stock and RSUs issued to employees and directors of the 
      Company. Share-based compensation is an important part of our employees’ 
      compensation and impacts their performance. PDGI considers these 
      non-GAAP financial measures to be useful metrics because management and 
      investors can compare the Company’s recurring 
      operating results and make more meaningful comparisons between PDGI’s 
      recurring operating results and those of other companies. In addition, 
      management can use this important tool for financial and operational 
      decision making and for evaluating recurring operating results over 
      different periods of time.
    
    
      There are a number of limitations related to the use of non-GAAP 
      operating income versus operating income calculated in accordance with 
      GAAP. Non-GAAP operating income excludes certain costs, including 
      share-based compensation and amortization related to acquisitions that 
      are recurring and have been and will continue to be for the foreseeable 
      future a significant recurring expense in PDGI’s 
      business.
    
    
      The components of the costs that we exclude from our calculation of 
      non-GAAP operating income may differ from the components that our peer 
      companies exclude when they report their results of operations. The 
      Company compensates for these limitations by providing specific 
      information regarding the GAAP amounts excluded from non-GAAP operating 
      income and evaluating non-GAAP operating income together with operating 
      income calculated in accordance with GAAP. Non-GAAP results also allow 
      investors to compare the reported GAAP results and the non-GAAP First 
      Call consensus estimate and to compare the Company’s 
      operations against the financial results of other companies in the 
      industry. The non-GAAP financial measures included in this press release 
      should not be considered superior to or a substitute for results of 
      operations prepared in accordance with GAAP. Reconciliations of the 
      non-GAAP financial measures used in this press release to the most 
      directly comparable GAAP financial measures are set forth in the text 
      of, and the accompanying unaudited tables, to this press release, and 
      can also be found on the Company’s website.
    
    
      About PharmaNet Development Group, 
      Inc.
    
    
      PharmaNet Development Group, a global drug development services company, 
      provides a comprehensive range of services to the pharmaceutical, 
      biotechnology, generic drug, and medical device industries. The Company 
      offers clinical-development solutions including early and late stage 
      consulting services, Phase I clinical studies and bioanalytical 
      analyses, and Phase II, III and IV clinical development programs. With 
      approximately 2,300 employees and more than 40 facilities throughout the 
      world, PharmaNet is a recognized leader in outsourced clinical 
      development. For more information, please visit www.pharmanet.com.
    
    
      Forward-Looking Statements
    
    
      Certain statements made in this press release are forward-looking 
      statements within the meaning of the Private Securities Litigation 
      Reform Act of 1995 (the "Act"). Additionally, words such as "seek," 
      "intend," "believe," "plan," "estimate," "expect," "anticipate" and 
      other similar expressions are forward-looking statements within the 
      meaning of the Act. Some or all of the results anticipated by these 
      forward-looking statements may not occur. Factors that could cause or 
      contribute to such differences include, but are not limited to, industry 
      trends and information; the Company's ability to determine its 
      impairment charges and costs of discontinued operations; whether the 
      Company will achieve its estimated value relating to the sale of the 
      land (and any other asset) previously used in discontinued operations; 
      developments with respect to the SEC's inquiry and securities class 
      action lawsuits and derivative lawsuits; the Company’s 
      ability to successfully achieve and manage the technical requirements of 
      specialized clinical trial services, while complying with applicable 
      rules and regulations; regulatory changes; changes affecting the 
      clinical research industry; a reduction of outsourcing by pharmaceutical 
      and biotechnology companies; the Company’s 
      ability to compete internationally in attracting clients in order to 
      develop additional business; the Company’s 
      evaluation of its backlog and the potential cancellation of contracts; 
      its ability to retain and recruit new employees; its clients' ability to 
      provide the drugs and medical devices used in its clinical trials; the 
      Company’s future stock price; the Company’s 
      assessment of its effective tax rate and tax allowance; the Company’s 
      financial guidance; the Company’s future 
      effective tax rate; the Company’s anticipated 
      capital expenditures; the Company’s costs 
      associated with compliance of Section 404 of the Sarbanes-Oxley Act; the 
      impact on the Company of foreign currency transaction costs and the 
      effectiveness of any hedging strategies it implements; and the national 
      and international economic climate as it affects drug development 
      operations.
    
    
      Further information can be found in the Company’s 
      risk factors contained in its Annual Report on Form 10-K for the year 
      ended December 31, 2006 and its most recent Quarterly Report on Form 
      10-Q. The Company does not undertake to update the disclosures made 
      herein, and you are urged to read our filings with the Securities and 
      Exchange Commission.
    
    
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          PhamaNet Specialized Pharmaceutical Services
        
      
      
        
          Excerpted Financial Information
        
      
      
        
          For Each Quarter Ended During 2006
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
          March 31,
        
        
          June 30,
        
        
          September 30,
        
        
          December 31,
        
      
      
        
        
        
          2006
        
        
          2006
        
        
          2006
        
        
          2006
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Direct Revenue
        
        
          $
        
        
          1,264,508 
        
        
          $
        
        
          1,311,163 
        
        
          $
        
        
          798,047 
        
        
          $
        
        
          328,584 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Costs and Expenses
        
        
        
        
        
        
        
        
        
      
      
        
          Direct Costs
        
        
        
        
          334,025 
        
        
        
        
          469,401 
        
        
        
        
          281,315 
        
        
        
        
          302,687 
        
      
      
        
          Selling, General and Administrative Expenses (1)
        
        
        
        
          363,333 
        
        
        
        
          454,050 
        
        
        
        
          398,617 
        
        
        
        
          481,441 
        
      
      
        
          Impairment of Goodwill
        
        
           
        
        
          - 
        
        
           
        
        
          7,873,000 
        
        
           
        
        
          - 
        
        
           
        
        
          - 
        
      
      
        
          Total Costs and Expenses
        
        
        
        
          697,358 
        
        
        
        
          8,796,451 
        
        
        
        
          679,932 
        
        
        
        
          784,128 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
             
          
        
        
           
        
        
           
        
        
           
        
        
           
        
      
      
        
          
            GAAP Earnings (Loss) from Continuing Operations before Income Taxes
          
        
        
          $
        
        
          567,150 
        
        
          $
        
        
          (7,485,288)
        
        
          $
        
        
          118,115 
        
        
          $
        
        
          (455,544)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          GAAP Operating Margin
        
        
        
        
          44.9%
        
        
        
        
          -570.9%
        
        
        
        
          14.8%
        
        
        
        
          -138.6%
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Add: Impairment of Goodwill
        
        
           
        
        
          - 
        
        
          $
        
        
          7,873,000 
        
        
           
        
        
          - 
        
        
           
        
        
          - 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
             
          
        
        
           
        
        
           
        
        
           
        
        
           
        
      
      
        
          
            Non-GAAP Earnings (Loss) from Continuing Operations before Income 
            Taxes
          
        
        
          $
        
        
          567,150 
        
        
          $
        
        
          387,712 
        
        
          $
        
        
          118,115 
        
        
          $
        
        
          (455,544)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Non-GAAP Operating Margin
        
        
        
        
          44.9%
        
        
        
        
          29.6%
        
        
        
        
          14.8%
        
        
        
        
          -138.6%
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          (1) SPS recorded $-0- expense related to 
          amortization of intangible assets expense during 2006.
        
      
    
    
      
        
           
        
      
      
        
          PharmaNet Development Group, Inc. and Subsidiaries
        
      
      
        
          
            Reconciliation of GAAP Net Earnings (Loss) for Continuing 
            Operations to Non GAAP Net Earnings from Continuing Operations
          
        
      
      
        
          For Each Quarter Ended During 2006
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          March 31,
        
        
          June 30,
        
        
          September 30,
        
        
          December 31,
        
      
      
        
        
        
        
        
          2006
        
        
          2006 (1)
        
        
          2006
        
        
          2006
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          GAAP Net Earnings (Loss) from Continuing Operations
        
        
        
        
          $
        
        
          3,304,315 
        
        
          $
        
        
          (3,728,498)
        
        
          $
        
        
          2,979,540 
        
        
          $
        
        
          3,496,846 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Add: Impairment of Goodwill
        
        
        
        
        
        
          - 
        
        
        
        
          7,873,000 
        
        
        
        
          - 
        
        
        
        
          - 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Add: Non-Recurring Charge Related to Financing
        
        
        
        
        
        
          - 
        
        
        
        
          1,214,306 
        
        
        
        
          - 
        
        
        
        
          - 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            Add: Non-Cash Compensation from the Adoption of SFAS 123R
          
        
        
        
        
        
        
          524,296 
        
        
        
        
          285,156 
        
        
        
        
          149,063 
        
        
        
        
          149,061 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Add: Non-Cash Amortization of Intangible Assets
        
        
        
        
        
        
          801,993 
        
        
        
        
          768,720 
        
        
        
        
          703,646 
        
        
        
        
          708,517 
        
      
      
        
        
        
        
        
           
        
        
           
        
        
           
        
        
           
        
      
      
        
          Subtotal
        
        
        
        
           
        
        
          4,630,604 
        
        
           
        
        
          6,412,684 
        
        
           
        
        
          3,832,249 
        
        
           
        
        
          4,354,424 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Less: Tax Effect of Non-GAAP Adjustments
        
        
        
        
        
        
          243,672 
        
        
        
        
          3,840,787 
        
        
        
        
          122,790 
        
        
        
        
          221,955 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            Add: Tax Valuation Allowance
          
        
        
        
        
        
        
          - 
        
        
        
        
          - 
        
        
        
        
          - 
        
        
        
        
          2,629,968 
        
      
      
        
        
        
        
        
           
        
        
           
        
        
           
        
        
           
        
      
      
        
          Non-GAAP Net Earnings
        
        
        
        
           
        
        
          4,386,932 
        
        
           
        
        
          2,571,897 
        
        
           
        
        
          3,709,459 
        
        
           
        
        
          6,762,437 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Non-GAAP Diluted Net Earnings Per Share
        
        
        
        
          $
        
        
          0.24 
        
        
          $
        
        
          0.14 
        
        
          $
        
        
          0.20 
        
        
          $
        
        
          0.36 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
             
          
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          
            Number of Shares Used in Computing Diluted Non-GAAP Earnings Per 
            Share
          
        
        
        
        
        
        
          18,316,002 
        
        
        
        
          18,150,267 
        
        
        
        
          18,473,375 
        
        
        
        
          18,653,190 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          (1) Diluted earnings per share is computed 
          by increasing the denominator to include the number of additional 
          common shares that would have been outstanding if the dilutive 
          potential common shares had been issued. Due to the GAAP loss 
          reported in the second quarter 2006, 139,237 dilutive equivalents 
          have been excluded from the calculation of diluted earnings per 
          common share for the three month period ended June 30, 2006, since 
          they were anti-dilutive.