PharmaNet Development Group Reports Net Earnings from Continuing Operations of $0.32 Per Diluted Share for the First Quarter 200

  
    
  
  
    
      PharmaNet Development Group, Inc. (NASDAQ: PDGI), a leading provider of 
      global drug development services to branded pharmaceutical, 
      biotechnology, generic drug and medical device companies, today reported 
      GAAP net earnings from continuing operations for its first quarter 2007 
      of $6.0 million, or $0.32 per diluted share, compared to $3.3 million, 
      or $0.18 per diluted share, in the first quarter 2006.
    
    
      "With the improvement in the operating performance of the early stage 
      segment, record direct revenues in the late stage segment and 
      significant backlog growth, we are continuing to see the results of our 
      organizational and operational improvements, business development 
      initiatives and capacity expansions,” 
      commented Jeffrey P. McMullen, president and chief executive officer.
    
    
      Basis of presentation
    
    
      Due to the Company's decision to discontinue certain operations in 2006, 
      all financial results for the periods presented reflect the Company's 
      continuing operations only, unless otherwise stated.
    
    
      To better reflect ongoing operations to investors for the periods 
      presented, adjusted (non-GAAP) results are used throughout this press 
      release and the accompanying tables. For the first quarter 2007, 
      adjusted financial results exclude $0.7 million for the amortization of 
      acquisition-related intangibles and $0.2 million non-cash compensation 
      expense related to Statement of Financial Accounting Standards No. 123R (“FAS 
      123R”). For comparative purposes, first 
      quarter 2006 adjusted financial results exclude $0.8 million for 
      amortization of acquisition-related intangibles and $0.5 million 
      non-cash compensation expense related to FAS 123R.
    
    
      Effective January 1, 2007, the Company began reporting the business 
      operations of Specialized Pharmaceutical Services (“SPS”), 
      formerly CPS, in the late stage segment. First quarter 2006 results 
      reflect SPS in the late stage segment rather than the early stage 
      segment as previously reported.
    
    
      A reconciliation of GAAP results to adjusted (non-GAAP) results, and SPS 
      historical performance 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 at the end of 
      this press release.
    
    
      First Quarter 2007 Financial Summary
    
    
      
        Direct revenue, which does not include reimbursed out-of-pocket 
        expenses, increased 13.9% to $84.8 million in the first quarter 2007 
        compared to $74.4 million in the first quarter 2006 due to growth in 
        both the early and late stage segments.
      
      
        GAAP corporate selling, general and administrative (SG&A) expenses 
        increased to $5.2 million in the first quarter 2007 compared to $5.1 
        million in first quarter 2006. Adjusted corporate expenses, which 
        exclude non-cash FAS 123R expense and non-recurring legal and 
        professional fees, increased to $4.5 million in the first quarter 2007 
        compared to $3.9 million in the first quarter 2006 primarily due to 
        higher non-cash compensation expense related to restricted stock units 
        (RSUs). Non-cash compensation expense related to RSUs was $1.0 million 
        in the first quarter 2007 compared $0.3 million in the first quarter 
        2006.
      
      
        GAAP operating margin increased to 10.2% in the first quarter 2007 
        compared to 8.4% in the first quarter 2006. Adjusted operating margin 
        for the first quarter 2007 increased to 11.2% from 10.2% in the first 
        quarter 2006 primarily due to higher revenue in both segments.
      
      
        GAAP net earnings increased to $6.0 million, or $0.32 per diluted 
        share, in the first quarter 2007 compared to $3.3 million, or $0.18 
        per diluted share, in the first quarter 2006. Adjusted net earnings 
        for the first quarter 2007 were approximately $6.7 million, or $0.35 
        per diluted share, compared to approximately $4.4 million, or $0.24 
        per diluted share, for the first quarter 2006 primarily due to higher 
        profits in both segments and the favorable impact of foreign currency 
        exchange partially offset by a higher tax rate.
      
      
        The Company’s backlog increased to $431.5 
        million at March 31, 2007 compared to $352.7 million at December 31, 
        2006. Backlog consists of anticipated direct revenue from written 
        awards, letters of intent and contracts that either have not started 
        or are anticipated to begin in the near future. Verbal awards are not 
        included in backlog.
      
      
        Cash, cash equivalents, and investments in marketable securities at 
        March 31, 2007 were $47.4 million compared to $53.8 million at 
        December 31, 2006.
      
      
        Net cash used in continuing operations was $6.9 million in the first 
        quarter 2007. Capital expenditures were $10.8 million in the first 
        quarter 2007 compared to $4.2 million in the first quarter 2006. 
        Excluding the portion of capital expenditures for the new Quebec City 
        facility, which will be paid for by the investor that purchased the 
        building as part of the sale-leaseback transaction announced in 
        October 2006, capital expenditures would have been $5.3 million in the 
        first quarter 2007 compared to $3.6 million in the first quarter 2006. 
        The $5.3 million of capital expenditure includes $3.7 million for 
        equipment and leasehold improvements in the Quebec City and Toronto 
        facilities paid for by the Company.
      
      
        Depreciation expense was $2.9 million and amortization of intangibles 
        was $0.7 million in the first quarter 2007 compared to $2.9 million 
        and $0.8 million, respectively, in the first quarter 2006.
      
      
        Net days sales outstanding (DSO), which includes accounts receivable 
        and unbilled services less current and long-term advanced billings, 
        was 43 days at March 31, 2007 and 34 days at December 31, 2006.
      
      
        The Company’s effective tax rate in the 
        first quarter 2007 was 22.5% compared to 18.4% in the first quarter 
        2006.
      
      
        Effective January 1, 2007, the Company adopted Financial Accounting 
        Standards Board Interpretation No. 48, "Accounting for Uncertainty in 
        Income Taxes, an interpretation of FASB Statement No.109, Accounting 
        for Income Taxes" ("FIN 48"). The cumulative effect adjustment of $2.9 
        million was charged to retained earnings to increase the accrued 
        liability for uncertain tax positions. On an annual basis, we do not 
        believe that FIN 48 will have a significant impact on our operations. 
        Going forward, the tax provision could vary from quarter to quarter as 
        we adjust tax positions as events occur, consistent with FIN 48. For 
        the quarter ended March 31, 2007, the Company recorded an interest 
        charge of $0.1 million as a result of the adoption of FIN 48.
      
    
    
      For the segment financial results provided below, the Company has 
      excluded an allocation of corporate expenses related to certain adjusted 
      SG&A expenses.
    
    
      Early Stage
    
    
      PharmaNet Development Group, Inc.’s early 
      stage segment primarily includes the areas of Phase I clinical trials, 
      support services, bioequivalency trials and bioanalytical services.
    
    
      For the early stage segment, GAAP direct revenue, which does not include 
      reimbursed out-of-pocket expenses, increased approximately 14.0% to 
      $29.7 million in the first quarter 2007 compared to $26.1 million in the 
      first quarter 2006. Direct revenues were higher in the first quarter 
      2007 compared to the first quarter 2006 due to higher volume in the 
      Company’s bioanalytical laboratories for both 
      branded and generic clients and increased pricing in generic segment of 
      the clinics.
    
    
      Early stage segment GAAP operating margins increased to 17.0% in the 
      first quarter 2007 compared to 12.3% in the first quarter 2006. Early 
      stage segment adjusted operating margins increased to 17.4% in the first 
      quarter 2007 compared to 13.1% in the first quarter 2006 primarily due 
      to higher direct revenues and the reclassification of the SPS division 
      which more than offset higher executive severance costs of $0.8 million.
    
    
      The backlog for the early stage segment increased to $54.4 million at 
      March 31, 2007 from $42.3 million reported at December 31, 2006 due to 
      new branded and generic Phase I business, bioequivalency projects and 
      bioanalytical business.
    
    
      The new Quebec City, Canada facility, which replaces two existing 
      facilities and houses the new clinic, laboratory and offices, has 
      opened. The move of staff and equipment began in March and is expected 
      to be completed by end of May 2007. The new clinics will house 
      approximately 200 beds.
    
    
      There is specific accounting treatment for sale-leaseback transactions 
      involving real estate. As a result, the construction and land costs of 
      approximately $21.3 million appear on the Company’s 
      balance sheet as assets held for sale, along with a liability for the 
      same amount. Both the asset and liability balance will be netted against 
      each other and no longer appear on the balance sheet once the final 
      building documentation is completed. Completion of the sale-leaseback 
      transaction for accounting purposes will have no impact on the Company’s 
      liquidity or the line of credit.
    
    
      The Company has substantially completed the leasehold improvements at 
      its new Toronto site. The Company expects the building to be operational 
      mid-year 2007 with ninety beds and will add another sixty beds as client 
      demand requires.
    
    
      The Company is also completing leasehold improvements to expand the 
      laboratory capacity of its Barcelona joint venture. The Company expects 
      to occupy the new Barcelona facilities mid-year 2007.
    
    
      Late Stage
    
    
      PharmaNet Development Group, Inc.’s late 
      stage segment primarily conducts Phase II through IV clinical trials, 
      data management and biostatistics, medical and scientific affairs, 
      regulatory affairs and submissions, and provides software tools and 
      services for use in clinical trials.
    
    
      For the late stage segment, GAAP direct revenue, which does not include 
      reimbursed out-of-pocket expenses, increased approximately 13.9% and 
      achieved record levels of $55.1 million in the first quarter 2007 
      compared to $48.4 million in the first quarter 2006.
    
    
      Late stage segment GAAP operating margins were 16.0% in the first 
      quarter 2007 compared to 16.9% in the first quarter 2006. Late stage 
      segment adjusted operating margins were 17.0% in the first quarter 2007 
      compared to 18.1% in the first quarter 2006 primarily due to the 
      reclassification of the SPS business into the late stage segment and 
      higher direct costs.
    
    
      The backlog for the late stage segment was $377.1 million at March 31, 
      2007 compared to $310.4 million at December 31, 2006.
    
    
      Conference Call and Webcast
    
    
      A conference call and webcast to discuss first quarter 2007 financial 
      results will be held on Thursday, May 3, 2007 at 8:30 a.m., EDT.
    
    Dial-in:         [phone] for U.S.
                 [phone] for International
                 Pass code: 40038227

Dial-in Replay:  [phone] for U.S.
                 [phone] for International
                 Pass code: 83884265

                 The dial-in replay will be available approximately
                 two hours after the call Through Thursday, May 10,
                 2007.

Webcast:         Please visit www.pharmanet.com and select the
                 investor tab to access the webcast or alternatively,
                 you may click on the following hyperlink:
                 http://phx.corporate-ir.net/phoenix.zhtml?p=irol-
                 eventDetails&c=124176&eventID=1523683
                 The archived webcast will be available for
                 approximately thirty (30) days following the
                 conference call.
    
      Non-GAAP Financial Measures
    
    
      This press release contains certain non-GAAP financial measures, which 
      exclude, among other items, 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 tables, to this press release, and can also be 
      found on the Company’s website.
    
    
      About PharmaNet Development Group, Inc.
    
    
      PharmaNet Development Group, Inc., 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 l 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 our website at 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 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.
    
    
      
        
          PharmaNet Development Group, Inc. and Subsidiaries
        
      
      
        
          Statement of Operations - Unaudited
        
      
      
        
          For the Three Months Ended March 31, 2007 and March 31, 2006
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
          2007 
        
        
        
        
        
        
          2006(1)
        
      
      
        
           
        
        
           
        
        
           
        
        
           
        
        
          (revised)
        
      
      
        
          REVENUE
        
        
           
        
        
           
        
        
           
        
        
           
        
      
      
        
          Direct revenue
        
        
          
             
          
        
        
          $
        
        
          84,781,481 
        
        
        
        
          $
        
        
          74,423,994 
        
      
      
        
          Reimbursed out-of-pockets
        
        
           
        
        
           
        
        
          22,961,582 
        
        
           
        
        
           
        
        
          29,076,785 
        
      
      
        
          TOTAL REVENUE
        
        
           
        
        
           
        
        
          107,743,063 
        
        
           
        
        
           
        
        
          103,500,779 
        
      
      
        
          COSTS AND EXPENSES
        
        
           
        
        
           
        
        
           
        
        
           
        
      
      
        
          Direct costs
        
        
        
        
        
        
          50,477,967 
        
        
        
        
        
        
          45,328,662 
        
      
      
        
          Reimbursable out-of-pocket expenses
        
        
        
        
        
        
          22,961,582 
        
        
        
        
        
        
          29,076,785 
        
      
      
        
          Selling, general and administrative expenses
        
        
           
        
        
           
        
        
          25,690,442 
        
        
           
        
        
           
        
        
          22,858,685 
        
      
      
        
          TOTAL COSTS AND EXPENSES
        
        
           
        
        
           
        
        
          99,129,991 
        
        
           
        
        
           
        
        
          97,264,132 
        
      
      
        
          EARNINGS FROM CONTINUING OPERATIONS
        
        
           
        
        
           
        
        
          8,613,072 
        
        
           
        
        
           
        
        
          6,236,647 
        
      
      
        
          OTHER INCOME (EXPENSE)
        
        
           
        
        
           
        
        
           
        
        
           
        
      
      
        
          Interest income
        
        
        
        
        
        
          541,838 
        
        
        
        
        
        
          345,478 
        
      
      
        
          Interest expense
        
        
        
        
        
        
          (1,643,291)
        
        
        
        
        
        
          (1,776,241)
        
      
      
        
          Foreign exchange transaction loss, net
        
        
           
        
        
           
        
        
          392,505 
        
        
           
        
        
           
        
        
          (526,568)
        
      
      
        
          TOTAL OTHER INCOME (EXPENSE)
        
        
           
        
        
           
        
        
          (708,948)
        
        
           
        
        
           
        
        
          (1,957,331)
        
      
      
        
          EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
        
        
          
             
          
        
        
        
        
        
        
        
      
      
        
           
        
        
           
        
        
          7,904,124 
        
        
           
        
        
           
        
        
          4,279,316 
        
      
      
        
          Income tax (benefit)
        
        
           
        
        
           
        
        
          1,783,152 
        
        
           
        
        
           
        
        
          786,215 
        
      
      
        
          
            EARNINGS FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST IN 
            JOINT VENTURE
          
        
        
        
        
        
        
        
        
        
      
      
        
           
        
        
           
        
        
          6,120,972 
        
        
           
        
        
           
        
        
          3,493,101 
        
      
      
        
          Minority interest in joint venture
        
        
           
        
        
           
        
        
          129,169 
        
        
           
        
        
           
        
        
          188,786 
        
      
      
        
          NET EARNINGS FROM CONTINUING OPERATIONS
        
        
           
        
        
           
        
        
          5,991,803 
        
        
           
        
        
           
        
        
          3,304,315 
        
      
      
        
          Earnings (Loss) from discontinued operations, net of tax
        
        
           
        
        
           
        
        
          640,349 
        
        
           
        
        
           
        
        
          (7,438,695)
        
      
      
        
          NET EARNINGS (LOSS)
        
        
           
        
        
          $
        
        
          6,632,152 
        
        
           
        
        
          $
        
        
          (4,134,380)
        
      
      
        
           
        
        
           
        
        
           
        
        
           
        
        
           
        
      
      
        
          BASIC EARNINGS (LOSS) PER SHARE:
        
        
           
        
        
           
        
        
           
        
        
           
        
      
      
        
          Continuing operations
        
        
        
        
          $
        
        
          0.32 
        
        
        
        
          $
        
        
          0.18 
        
      
      
        
          Discontinued operations
        
        
        
        
          $
        
        
          0.04 
        
        
        
        
          $
        
        
          (0.41)
        
      
      
        
          Net earnings (loss)
        
        
           
        
        
          $
        
        
          0.36 
        
        
           
        
        
          $
        
        
          (0.23)
        
      
      
        
          DILUTED EARNINGS (LOSS) PER SHARE:
        
        
           
        
        
           
        
        
           
        
        
           
        
      
      
        
          Continuing operations
        
        
        
        
          $
        
        
          0.32 
        
        
        
        
          $
        
        
          0.18 
        
      
      
        
          Discontinued operations
        
        
        
        
          $
        
        
          0.03 
        
        
        
        
          $
        
        
          (0.41)
        
      
      
        
          Net earnings (loss)
        
        
           
        
        
          $
        
        
          0.35 
        
        
           
        
        
          $
        
        
          (0.23)
        
      
      
        
          SHARES USED IN COMPUTING EPS:
        
        
           
        
        
          
             
          
        
        
           
        
        
           
        
      
      
        
          Basic
        
        
        
        
        
        
          18,630,234 
        
        
        
        
        
        
          17,947,477 
        
      
      
        
          Diluted
        
        
           
        
        
           
        
        
          18,857,543 
        
        
           
        
        
           
        
        
          18,316,002 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            (1) Prior year balances have been revised to reflect discontinued 
            operations.
          
        
      
    
    
      
        
          PHARMANET DEVELOPMENT GROUP, INC. AND SUBSIDIARIES
        
      
      
        
          Reconciliation of GAAP Operating Margin for Continuing Operations 
          to Non GAAP
        
      
      
        
          Operating Margins for Continuing Operations - Unaudited
        
      
      
        
          For the Three Months Ended March 31, 2007 and 2006
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
          2007 
        
        
        
        
        
        
          2006(1)
        
      
      
        
        
        
        
        
        
        
        
        
          (revised)
        
      
      
        
           
        
        
           
        
        
           
        
        
           
        
        
           
        
      
      
        
          DIRECT REVENUE
        
        
           
        
        
          $
        
        
          84,781,481 
        
        
           
        
        
          $
        
        
          74,423,994 
        
      
      
        
           
        
        
           
        
        
           
        
        
           
        
        
           
        
      
      
        
          
            EARNINGS FOR CONTINUING OPERATIONS GAAP
          
        
        
           
        
        
           
        
        
          8,613,072 
        
        
           
        
        
           
        
        
          6,236,647 
        
      
      
        
           
        
        
           
        
        
           
        
        
           
        
        
           
        
      
      
        
          OPERATING MARGIN GAAP
        
        
           
        
        
           
        
        
          10.2%
        
        
           
        
        
           
        
        
          8.4%
        
      
      
        
           
        
        
           
        
        
           
        
        
           
        
        
           
        
      
      
        
          ADD BACK:
        
        
           
        
        
           
        
        
           
        
        
           
        
      
      
        
          Share based compensation expense
        
        
        
        
        
        
          165,190 
        
        
        
        
        
        
          524,296 
        
      
      
        
          Amortization of intangible assets
        
        
           
        
        
           
        
        
          688,774 
        
        
           
        
        
           
        
        
          801,993 
        
      
      
        
          NON GAAP OPERATING EARNINGS
        
        
           
        
        
          $
        
        
          9,467,036 
        
        
           
        
        
          $
        
        
          7,562,936 
        
      
      
        
           
        
        
           
        
        
           
        
        
           
        
        
           
        
      
      
        
          NON GAAP OPERATING MARGIN
        
        
           
        
        
           
        
        
          11.2%
        
        
           
        
        
           
        
        
          10.2%
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          (1) Prior year balances have been revised to reflect discontinued 
          operations.
        
      
    
    
      
        
          PHARMANET DEVELOPMENT GROUP, INC. AND SUBSIDIARIES
        
      
      
        
          Reconciliation of GAAP Net Earnings for Continuing Operations to 
          Non GAAP
        
      
      
        
          Net Earnings for Continuing Operations - Unaudited
        
      
      
        
          For the Three Months Ended March 31, 2007 and 2006
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
          2007 
        
        
        
        
        
        
          2006(1)
        
      
      
        
          
             
          
        
        
        
        
        
        
        
        
          (revised)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net earnings from continuing operations GAAP
        
        
        
        
          $
        
        
          5,991,803 
        
        
        
        
          $
        
        
          3,304,315 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Add: Non-cash share based compensation
        
        
        
        
        
        
          165,190 
        
        
        
        
        
        
          524,296 
        
      
      
        
          expenses
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Add: Non-cash intangible assets amortization
        
        
        
        
        
        
          688,774 
        
        
        
        
        
        
          801,993 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Subtotal
        
        
        
        
        
        
          6,845,767 
        
        
        
        
        
        
          4,630,604 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Less: Tax effect of non-GAAP adjustments
        
        
        
        
        
        
          192,652 
        
        
        
        
        
        
          243,672 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Non-GAAP net earnings from continuing operations
        
        
        
        
          $
        
        
          6,653,115 
        
        
        
        
          $
        
        
          4,386,932 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Diluted non-GAAP net earnings per share
        
        
        
        
          $
        
        
          0.35 
        
        
        
        
          $
        
        
          0.24 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            Number of shares used in computing diluted non-GAAP earnings per 
            share
          
        
        
        
        
        
        
          18,857,543 
        
        
        
        
        
        
          18,316,002 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          (1) Prior year balances have been revised to reflect discontinued 
          operations.
        
      
    
    
      
        
          PHARMANET DEVELOPMENT GROUP, INC. AND SUBSIDIARIES
        
      
      
        
          Summary of Operations of Early and Late Stage Segments
        
      
      
        
          For the Three Months Ended March 31, 2007 and 2006
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          EARLY STAGE
        
        
        
        
        
        
          2007 
        
        
        
        
        
        
          2006 
        
        
        
        
          % variation
        
      
      
        
           
        
        
           
        
        
           
        
        
           
        
        
          (revised)
        
        
           
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Direct revenues
        
        
        
        
          $
        
        
          29,704,489 
        
        
        
        
          $
        
        
          26,066,047 
        
        
        
        
          14.0%
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          GAAP operating earnings
        
        
        
        
        
        
          5,041,080 
        
        
        
        
        
        
          3,196,464 
        
        
        
        
          57.7%
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Amortization of intangibles
        
        
        
        
        
        
          133,717 
        
        
        
        
        
        
          226,993 
        
        
        
        
          -41.1%
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Non-GAAP operating earnings
        
        
        
        
          $
        
        
          5,174,797 
        
        
        
        
          $
        
        
          3,423,457 
        
        
        
        
          51.2%
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            GAAP operating margin
          
        
        
        
        
        
        
          17.0%
        
        
        
        
        
        
          12.3%
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Non-GAAP operating margin
        
        
        
        
        
        
          17.4%
        
        
        
        
        
        
          13.1%
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          LATE STAGE
        
        
        
        
        
        
          2007 
        
        
        
        
        
        
          2006 
        
        
        
        
          % variation
        
      
      
        
           
        
        
           
        
        
           
        
        
           
        
        
          (revised)
        
        
           
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Direct revenues
        
        
        
        
          $
        
        
          55,076,992 
        
        
        
        
          $
        
        
          48,357,947 
        
        
        
        
          13.9%
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          GAAP operating earnings
        
        
        
        
        
        
          8,789,878 
        
        
        
        
        
        
          8,180,019 
        
        
        
        
          7.5%
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Amortization of intangibles
        
        
        
        
        
        
          555,057 
        
        
        
        
        
        
          575,000 
        
        
        
        
          -3.5%
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Non-GAAP operating earnings
        
        
        
        
          $
        
        
          9,344,935 
        
        
        
        
          $
        
        
          8,755,019 
        
        
        
        
          6.7%
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            GAAP operating margin
          
        
        
        
        
        
        
          16.0%
        
        
        
        
        
        
          16.9%
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Non-GAAP operating margin
        
        
        
        
        
        
          17.0%
        
        
        
        
        
        
          18.1%
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          SPS OPERATING RESULTS(1)
        
        
        
        
        
        
          2007(3)
        
        
        
        
        
        
          2006(2)
        
        
        
        
          % variation
        
      
      
        
           
        
        
           
        
        
           
        
        
           
        
        
           
        
        
           
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Direct revenues
        
        
        
        
          $
        
        
          921,394 
        
        
        
        
          $
        
        
          1,264,508 
        
        
        
        
          -27.1%
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          GAAP operating earnings
        
        
        
        
        
        
          206,778 
        
        
        
        
        
        
          567,150 
        
        
        
        
          -63.5%
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Amortization of intangibles
        
        
        
        
        
        
          - 
        
        
        
        
        
        
          - 
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            GAAP operating margin
          
        
        
        
        
        
        
          22.4%
        
        
        
        
        
        
          44.9%
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          (1) This information is provided to assist investors in determining 
          the impact of the reclassification of SPS operating results from the 
          early stage segment as originally reported in 2006, to the late 
          stage segment as revised for 2006.
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          (2) SPS operating results for 2006 have been reclassified from the 
          early stage segment to the late stage segment and are included in 
          the operating results noted above.
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          (3) Included in 2007 late stage segment operating results noted 
          above.
        
      
    
    
      
        
          PHARMANET DEVELOPMENT GROUP, INC. AND SUBSIDIARIES
        
      
      
        
          Selected Consolidated Balance Sheet Information - Unaudited
        
      
      
        
          March 31, 2007 and December 31, 2006
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          The allocation of assets and liabilities between continuing and 
          discontinued operations, in this selected balance sheet 
          information is preliminary and may change upon the company's 
          filing of its Form 10-Q for the period ended March 31, 2007
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          March 31,
        
        
        
        
          December 31,
        
      
      
        
        
        
        
        
        
        
          2007 
        
        
        
        
        
        
          2006 
        
      
      
        
           
        
        
           
        
        
           
        
        
           
        
        
          (revised)
        
      
      
        
          ASSETS
        
        
           
        
        
           
        
        
           
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Cash, equivalents, and investments in marketable securities
        
        
        
        
          
            $
          
        
        
          47,393,503 
        
        
        
        
          
            $
          
        
        
          53,754,183 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Accounts receivable from continuing operations
        
        
        
        
        
        
          128,667,339 
        
        
        
        
        
        
          109,187,958 
        
      
      
        
          Accounts receivable from discontinued operations
        
        
        
        
           
        
        
          2,017,977 
        
        
        
        
           
        
        
          3,572,556 
        
      
      
        
          Accounts receivable
        
        
        
        
        
        
          130,685,316 
        
        
        
        
        
        
          112,760,514 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Current assets from continuing operations
        
        
        
        
        
        
          211,355,830 
        
        
        
        
        
        
          192,048,195 
        
      
      
        
          Current assets from discontinued operations
        
        
        
        
           
        
        
          2,335,308 
        
        
        
        
           
        
        
          3,889,887 
        
      
      
        
          Total current assets
        
        
        
        
        
        
          213,691,138 
        
        
        
        
        
        
          195,938,082 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Fixed assets from continuing operations
        
        
        
        
        
        
          55,232,340 
        
        
        
        
        
        
          52,234,890 
        
      
      
        
          Land held for sale from discontinued operations
        
        
        
        
           
        
        
          3,046,619 
        
        
        
        
           
        
        
          3,286,619 
        
      
      
        
          Total fixed assets and land
        
        
        
        
        
        
          58,278,959 
        
        
        
        
        
        
          55,521,509 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total assets from continuing operations
        
        
        
        
        
        
          570,652,130 
        
        
        
        
        
        
          548,824,032 
        
      
      
        
          Total assets from discontinued operations
        
        
        
        
           
        
        
          5,381,927 
        
        
        
        
           
        
        
          7,176,506 
        
      
      
        
          Total assets
        
        
        
        
          $
        
        
          576,034,057 
        
        
        
        
          $
        
        
          556,000,538 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
           
        
        
           
        
        
           
        
        
           
        
        
           
        
      
      
        
          LIABILITIES AND STOCKHOLDERS' EQUITY
        
        
           
        
        
           
        
        
           
        
        
           
        
      
      
        
          Current liabilities from continuing operations
        
        
        
        
          $
        
        
          136,325,313 
        
        
        
        
          $
        
        
          131,212,217 
        
      
      
        
          Current liabilities from discontinued operations
        
        
        
        
           
        
        
          2,250,638 
        
        
        
        
           
        
        
          4,195,262 
        
      
      
        
          Total current liabilities
        
        
        
        
        
        
          138,575,951 
        
        
        
        
        
        
          135,407,479 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total liabilities from continuing operations
        
        
        
        
        
        
          308,740,082 
        
        
        
        
        
        
          293,726,169 
        
      
      
        
          Total liabilities from discontinued operations
        
        
        
        
           
        
        
          2,250,638 
        
        
        
        
           
        
        
          4,195,262 
        
      
      
        
          Total liabilities
        
        
        
        
        
        
          310,990,720 
        
        
        
        
        
        
          297,921,431 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Stockholders' equity
        
        
        
        
        
        
          265,043,337 
        
        
        
        
        
        
          258,079,107 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total liabilities and stockholders' equity
        
        
        
        
          $
        
        
          576,034,057 
        
        
        
        
          $
        
        
          556,000,538 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          (1) Prior year balances have been revised to reflect discontinued 
          operations.