Albany Molecular Research, Inc. Announces Fourth Quarter, Full Year 2005 Results; Posts Full Year Contract Revenue Growth of 13%

Business Wire, Feb 13, 2006

ALBANY, N.Y. -- Albany Molecular Research, Inc. (Nasdaq: AMRI) today reported financial results for the quarter and year ending December 31, 2005.

Financial and operating highlights from the fourth quarter and full year include:

--Total contract revenue in the fourth quarter of $32.9 million, exceeding the company's estimated range of $28 to $31 million.

--A return to growth in discovery services: 18% year-over-year revenue increase in the fourth quarter, ending several consecutive quarters of decline.

--The signing of a licensing agreement with Bristol-Myers Squibb for AMRI's proprietary biogenic amine technology.

--Continued strength in chemical development/small scale manufacturing: 19% revenue growth in the fourth quarter and 21% for the full year.

--Revenue growth at international facilities, including the initiation of customer projects at AMRI's India facility.

--A $1.7 million year-over-year quarterly increase in revenue from manufacturing of clinical trial materials, which represented 30% of AMRI's large scale manufacturing revenue in the fourth quarter.

--A 20% growth for the year in large scale manufacturing and 13% growth in total contract revenue for the year.

--U.S. GAAP earnings negatively impacted by the at-risk launch of generic fexofenadine.

Fourth Quarter Results

Total contract revenue for the fourth quarter of 2005 was $32.9 million, a decrease of 3% compared to total contract revenue of $33.9 million in the fourth quarter of 2004. Total contract revenue encompasses revenue from AMRI's large scale manufacturing, development and small scale manufacturing, and discovery services.

Contract revenue from discovery services in the fourth quarter of 2005 was $8.3 million, an increase of 18% from $7.0 million in 2004. Contract revenue from development and small scale manufacturing services in the fourth quarter of 2005 was $7.5 million, an increase of 19% compared to $6.3 million in the fourth quarter of 2004.

Contract revenue from large scale manufacturing in the fourth quarter of 2005 was $17.1 million, a decrease of 17% compared to $20.6 million in the fourth quarter of 2004. Contract revenue from large scale manufacturing in the fourth quarter of 2005 was adversely impacted by $4.2 million as a result of a request for accelerated delivery of one product to GE Healthcare in 2005. As previously disclosed, the accelerated delivery of this product resulted in a shift of all contract revenue for this product for the full year 2005 to the first half of the year. When revenue for the GE Healthcare product is leveled across the full year, large scale manufacturing contract revenue in the fourth quarter of 2005 would have increased by 21% over the same period in 2004. AMRI is no longer supplying this product to GE Healthcare.

Recurring royalties from Allegra(R) in the fourth quarter of 2005 were $6.2 million, a 49% decrease from $12.2 million in the fourth quarter of 2004. AMRI earns royalties from worldwide sales of the non-sedating antihistamine Allegra(R) (Telfast(R) outside the United States) for patents relating to the active ingredient in Allegra(R). Recurring royalties in the fourth quarter were adversely impacted by the at-risk launch of generic fexofenadine.

Total revenue for the fourth quarter of 2005 was $39.1 million, a decrease of 15% compared to total revenue of $46.1 million in the fourth quarter of 2004.

During the fourth quarter, the company determined that a write-down in the carrying value of its chemical library inventories was required. The reduction in carrying value was based on less favorable market conditions than projected and an excess quantity and carrying value of inventory on-hand compared to projected future sales revenue. Based on its review, the company recorded a charge of $1.3 million (net of tax related effects), or ($0.04) per diluted share, to reduce the carrying value of its chemical library inventory. As of December 31, 2005, the carrying value of the company's chemical library inventory was zero. Also during the fourth quarter, cost of contract revenue was positively impacted by a $1.3 million (net of related tax effects), or $0.04 per diluted share, real property tax credit. In future periods, the company expects this recurring credit to positively impact its cost structure by $1.0 million annually.

Additionally, income tax expense was negatively impacted by $0.8 million, or ($0.02) per diluted share, for the write-off of a deferred tax asset related to cancellation of warrants as part of the out licensing of AMRI's central nervous system technology to Bristol-Myers Squibb.

Net loss under U.S. Generally Accepted Accounting Principles (U.S. GAAP) in the fourth quarter of 2005 was ($942,000), or ($0.03) per basic and diluted share, compared to net income of $3.4 million, or $0.11 per diluted share, in the fourth quarter of 2004. Excluding charges related to the chemical library inventory impairment and a deferred tax asset impairment and the real estate tax credit described earlier, net loss in the fourth quarter of 2005 on an adjusted basis was ($0.2 million), or ($0.01) per basic and diluted share, compared to net income in the fourth quarter of 2004 on an adjusted basis of $5.4 million, or $0.17 per diluted share (see Tables 1 and 2 at the end of this press release for a reconciliation of net income (loss) and earnings (loss) per share for 2005 and 2004 reporting periods).