Company Posts Strong Contract Revenue and EPS Growth; Increases 2008

Contract Revenue and EPS Guidance

ALBANY, N.Y.–(EMWNews)–AMRI (NASDAQ: AMRI) today reported financial and operating results for

the second quarter ended June 30, 2008.

Financial highlights for the quarter and other recent events include:

• Adjusted Diluted EPS of $0.24, compared to $0.14 in the second quarter

  of 2007.

• Double-digit year-over-year contract revenue growth in both Discovery

  Services and Development/Small Scale. The combined gross margin for

  this segment increased to 36% from 26% on a year-over-year basis.

• Year-over-year increase in adjusted operating income to $11.0 million

  from $6.6 million, a 68% increase.

• The submission of a Canadian Clinical Trial Application (CTA) by

  Bristol-Myers Squibb (BMS) triggering a $4.0 million milestone payment.

• Restructuring of European operations based in Hungary, resulting in

  charges of $2.0 million.

• Submission in July of an Investigational New Drug (IND) application to

  the U.S. Food and Drug Administration (FDA) to initiate Phase I

  clinical studies on an AMRI developed compound from its proprietary

  oncology program.

Second Quarter Results

Total revenue for the second quarter of 2008 was $57.9 million, an

increase of $8.6 million or 17%, compared to the second quarter of 2007.

Total contract revenue for the second quarter of 2008 was $46.4 million,

an increase of $6.4 million or 16% over the second quarter of 2007.

Total contract revenue encompasses revenue from AMRI’s

Discovery Services, Development and Small Scale Manufacturing, and Large

Scale Manufacturing business components.

• Contract revenue for Discovery Services in the second quarter of 2008

  was $14.8 million or 54% higher than the second quarter of 2007

  revenues of $9.7 million.

• Contract revenue for Development/Small Scale Manufacturing in the

  second quarter was $15.3 million, an increase of $4.6 million, or 43%

  compared to the second quarter of 2007.

• Contract revenue for Large Scale Manufacturing in the second quarter

  of 2008 was $16.3 million compared to $19.6 million in the second

  quarter of 2007, a decrease of 17%.

Recurring royalties from Allegra^®

in the second quarter of 2008 were $7.6 million, down slightly from $7.8

million in the second quarter of 2007. AMRI earns royalties from

worldwide sales of the non-sedating antihistamine Allegra^®

(Telfast^® outside the

United States), as well as the authorized generic, for patents relating

to the active ingredient in Allegra^®.

Milestone revenue resulting from the company’s 2005 licensing agreement

with BMS, in the second quarter of 2008, was $4.0 million. In June, AMRI

announced that a Clinical Trial Application (CTA) had been filed in

Canada related to an AMRI compound being developed under its license and

research agreement with BMS, triggering the payment to AMRI.

Net income under U.S. Generally Accepted Accounting Principles (U.S.

GAAP) in the second quarter of 2008 was $5.7 million or $0.18 per basic

and diluted share, compared to net income of $4.6 million or $0.14 per

basic and diluted share in the second quarter of 2007, a 24% increase.

Net income in the second quarter of 2008 includes the impact of a $2.0

million charge, or $.06 per diluted share, from the restructuring

undertaken at our European operations. The charge includes $1.8 million

of restructuring related costs and $0.2 million of accelerated

amortization of an intangible asset. Excluding the restructuring charge,

net income on an adjusted basis in the second quarter of 2008 was $7.7

million, or $0.24 per diluted share, a 68% increase compared to the

second quarter of 2007.

Year-to-Date

Total revenue for the six-month period ended June 30, 2008 was $111.5

million, an increase of $13.8 million or 14% compared to $97.7 million

for the same period in 2007.

Total contract revenue for the first six months of 2008 of $91.7 million

represented an increase of $10.5 million or 13% over the same period in

2007.

• Contract revenue for Discovery Services in the six-month period ended

  June 30, 2008 was $28.2 million, an increase of 44% from $19.6 million

  in 2007.

• Contract revenue for Development/Small Scale Manufacturing in the

  six-month period ended June 30, 2008 was $28.5 million, an increase of

  36% from $20.9 million in 2007.

• Contract revenue for Large Scale Manufacturing in the six-month period

  ended June 30, 2008 was $35.0 million, a decrease of 14% compared to

  $40.7 million in the six-month period ended June 30, 2007.

Milestone revenue resulting from the company’s 2005 licensing agreement

with BMS for the first half of 2008 was $4.0 million, compared to total

milestone revenue of $1.6 million in the first half of 2007.

Recurring royalties from Allegra® for the

first six months of 2008 were $15.8 million, an increase of 6% compared

to royalty revenue of $15.0 million in 2007.

Net income under U.S. GAAP in the first half of 2008 was $10.4 million

or $0.33 per basic and diluted share, compared to net income of $7.8

million or $0.24 per basic and diluted share in the first half of 2007,

a 34% increase. Net income in the first six months of 2008 includes the

impact of a $2.0 million charge, or $.06 per diluted share, from the

restructuring undertaken at our European operations, as well as a $1.6

million, or $0.05 per diluted share, adjustment to decrease income tax

expense due to the resolution of previously uncertain tax positions.

Excluding the restructuring charge and adjustments, net income in the

first half of 2008 on an adjusted basis was $10.8 million, or $0.34 per

diluted share. Net income in the first six months of 2007 included Large

Scale Manufacturing restructuring charges of $0.2 million (net of

taxes). Excluding these charges, the net income on an adjusted basis for

the first half of 2007 was $8.0 million or $0.25 per basic and diluted

share.

For a reconciliation of net income and earnings per diluted share as

reported to adjusted net income and earnings per diluted share for the

2008 and 2007 reporting periods, please see Table 1 at the end of this

press release.

AMRI Chairman, President and CEO Thomas E. D’Ambra said, “We

are pleased today to present our second quarter results, which reflect

continued strength in our Discovery Services and Development/Small Scale

business components. Contract revenue for these components grew at rates

greater than 40%. The filing of the Canadian equivalent of an IND by our

partner Bristol-Myers Squibb on our CNS program resulted in $4.0 million

in milestone revenue and further reflects upon the value of our

strategic technology platform. Furthermore, we have continued to

progress our anti-cancer program and submitted our own IND in July for

Phase I testing.”

Dr. D’Ambra continued, “Our

Large Scale business reported gross margin improvement from quarter one

to quarter two of this year, even with reduced revenue. As we reflect

back on the first half of 2008 and look forward to the remainder of the

year, we are pleased with the margin results achieved to date from this

business component and are optimistic that the trend of improving

margins will continue for the second half of 2008.”

European Restructuring Initiative

AMRI also announced the completion of a restructuring of its European

operations. The goal of the restructuring, initiated in early May, has

been to realign the business model for these operations to better

support AMRI’s long-term strategy for

providing Discovery Services in the European marketplace. The

restructuring is expected to result in annual pre-tax savings of $1.1

million, largely a result of the reduction of 22 positions that occurred

in June. Total restructuring charges are expected to be $1.8 million

with the majority of charges recorded in the second quarter of 2008.

“AMRI’s commitment

to the success of its business in Hungary was a key driver for this

initiative,” said D’Ambra.

“The restructuring initiatives instituted now

are in preparation of a longer term plan for financial growth and future

expansion. This is further supported by the recent hire and promotion of

Dr. Philip Small as managing director of European operations. Dr. Small

and his leadership team will play a critical role in managing the site’s

efforts and focus on increasing profitability and accelerating growth of

the business as AMRI seeks to expand its presence in the European

marketplace. I am confident that we have the resources in place to

achieve our high expectations for AMRI’s

presence in Europe.”

Liquidity and Capital Resources

At June 30, 2008, AMRI had cash, cash equivalents and investments of

$91.0 million, compared to $107.7 million at December 31, 2007.

For the first half of 2008, the net decrease of $16.7 million in cash,

cash equivalents and investments was primarily due to operating cash

flow of $11.8 million offset by treasury share purchases of $16.2

million and capital investments of $11.3 million.

Cash from operations increased $13.8 million in second quarter compared

to the first quarter of 2008. This increase was driven by net income and

improvements in working capital items.

Total debt at June 30, 2008 was $13.7 million. Cash, cash equivalents,

and investments, net of debt, were $77.3 million at June 30, 2008, an

increase of $4.7 million compared to March 31, 2008. Total common shares

outstanding, net of treasury shares, were 31,676,540 at June 30, 2008.

2008 Financial Guidance Update

AMRI Chief Financial Officer Mark T. Frost provided contract revenue and

EPS guidance for the third quarter and revised upward previous guidance

for the full year 2008. “In the third

quarter, we currently expect contract revenue to range from $47 million

to $49 million, an increase of up to 18% from the third quarter of 2007.

For the full year 2008, we expect contract revenue to range from $186

million to $190 million, an increase of up to 16% versus 2007.”

Mr. Frost continued, “For the third quarter

we expect EPS to range from $0.08 to $0.10, up from $0.06 in the third

quarter of 2007. For the full year we expect adjusted EPS to range from

$0.48 to $0.52, which would represent up to 86% adjusted EPS growth and

an increase over our previous guidance of $0.38 to $0.42.”

Recent Highlights

Recent noteworthy announcements or milestones at AMRI include the

following:

• Bristol-Myers Squibb’s submission of a

  Clinical Trial Application (CTA) to Health Canada to initiate Phase I

  studies on an AMRI compound exclusively licensed to Bristol-Myers

  Squibb, which triggered a $4 million milestone payment from

  Bristol-Myers Squibb to AMRI.

• The opening of an in vitro biology laboratory in

  Singapore as well as the completion of a 10,000 square foot laboratory

  expansion for medicinal chemistry discovery services, more than

  doubling the capacity of our Science Park III facility.

• The promotion of Dr. Philip William Small to managing director of

  European operations. Dr. Small, hired in late 2007, brings over 20

  years of experience gained at leading combinatorial chemistry/drug

  discovery companies.

• The filing in July of the company’s

  Investigational New Drug (IND) application to the U.S. Food and Drug

  Administration (FDA) to initiate Phase I studies on an AMRI developed

  and manufactured compound from its proprietary oncology research

  program. Pending feedback from the FDA, AMRI expects to begin human

  dosing of this compound during the third quarter.

Second Quarter Conference Call

The company will hold a conference call at 10:00 a.m. EDT on August 6,

2008 to discuss its quarterly results, business highlights and

prospects. During the conference call, the company may discuss

information not previously disclosed to the public. Individuals

interested in listening to the conference call should dial 888-221-9576

(for domestic calls) or 913-312-0391(for international calls) at 9:45

a.m. EDT and provide conference code 4082753. In addition, the call is

being webcast on the Internet and can be accessed on the company’s

website at www.amriglobal.com.

Replays of the call will be available for seven days following the call

beginning at noon EDT on August 6, 2008. To access the replay by

telephone, call 888-203-1112 (for domestic calls) or 719-457-0820 (for

international calls) and use passcode 4082753. In addition, replays of

the call will be available for three months on the company’s

website at www.amriglobal.com/investor_relations/.

About AMRI

Founded in 1991, Albany Molecular Research, Inc. (AMRI) provides

scientific services, products and technologies focused on improving the

quality of life. AMRI works on drug discovery and development projects

and conducts manufacturing of active ingredients and pharmaceutical

intermediates for many of the world’s leading healthcare companies. As

an additional value added service to its customers, the company is also

investing in R&D in order to expand its contract services and to

identify novel early stage drug candidates with the goal to outlicense

to a strategic partner. With locations in the U.S., Europe, and Asia,

AMRI provides customers with a wide range of services, technologies and

cost models.

Forward-Looking Statements

This press release includes forward-looking statements within the

meaning of the Private Securities Litigation Reform Act of 1995 that

involve risks and uncertainties. These statements include, but are not

limited to, statements regarding the company’s estimates of revenue and

earnings per share for the third quarter and full year 2008, statements

made about the expected results of the European restructuring

initiative, statements made by the company’s chief executive officer and

chief financial officer, including statements under the caption “2008

Financial Guidance Update” regarding the

strength of the company’s business and prospects. Readers should not

place undue reliance on our forward-looking statements. The company’s

actual results may differ materially from such forward-looking

statements as a result of numerous factors, some of which the company

may not be able to predict and may not be within the company’s control.

Factors that could cause such differences include, but are not limited

to, the company’s ability to attract and retain experienced scientists,

trends in pharmaceutical and biotechnology companies’ outsourcing of

chemical research and development, sales of Allegra^®

the risk of an “at-risk”

launch of generic Allegra-D^®

and the impact of that on the company’s

receipt of significant royalties under the Allegra^®

license agreement, the risk that Allegra^®

may be approved for over-the-counter use, the success of the company’s

collaborations with customers including the collaboration with

Bristol-Myers Squibb Company related to biogenic amine reuptake

inhibitors, the company’s ability to enforce its intellectual property

and technology rights, the company’s ability to successfully develop

novel compounds and lead candidates in its collaborative arrangements,

the company’s ability to take advantage of proprietary technology and

expand the scientific tools available to it, the ability of the

company’s strategic investments and acquisitions to perform as expected,

the introduction of new services by competitors or the entry of new

competitors into the markets for the company’s, failure to achieve

anticipated revenues and earnings, costs related to the acquisition and

any goodwill impairment related to such investments and acquisitions,

the risks posed by international operations to the company, the

existence of deficiencies and/or material weaknesses in the company’s

internal controls over financial reporting, risks related to the

company’s implementation of its enterprise resource planning (ERP)

system, and the company’s ability to effectively manage its growth, as

well as those risks discussed in the company’s Annual Report on Form

10-K for the year ended December 31, 2007 as filed with the Securities

and Exchange Commission on March 17, 2008, and the company’s other SEC

filings. Revenue and other earnings related guidance offered by senior

management today represent a point-in-time estimate and is based on

information as of the date of this press release. Senior management has

made numerous assumptions in providing this guidance which, while

believed to be reasonable, may not prove to be accurate. Numerous

factors, including those noted above, may cause actual results to differ

materially from the guidance provided. The company expressly disclaims

any current intention or obligation to update the guidance provided or

any other forward-looking statement in this press release to reflect

future events or changes in facts assumed for purposes of providing this

guidance or otherwise affecting the forward-looking statements contained

in this press release.

Non-GAAP Adjustment Items

To supplement our financial results prepared in accordance with U.S.

GAAP, we have presented non-GAAP measures of income from operations, net

income and earnings per diluted share adjusted to exclude certain income

tax related adjustments and restructuring charges which management

believes are outside our core operational results. We believe

presentation of these non-GAAP measures enhances an overall

understanding of our historical financial performance because we believe

they are an indication of the performance of our base business.

Management uses these non-GAAP measures as a basis for evaluating our

financial performance as well as for budgeting and forecasting of future

periods. For these reasons, we believe they can be useful to investors.

The presentation of this additional information should not be considered

in isolation or as a substitute for income from operations, net income

or earnings per diluted share prepared in accordance with U.S. GAAP.

Table 1: Reconciliation of second quarter and year to date 2008 and 2007

reported income from operations, net income, and earnings per diluted

share to adjusted income from operations, adjusted net income, and

adjusted earnings per share:

Table 1
		Second Quarter 2008			Second Quarter 2007			YTD June 30, 2008				YTD June 30, 2007
Income from operations, as reported		$	8,987		$	6,527		$	13,304			$	10,464
LS restructuring			–			42			–				285
AMR Hungary restructuring			1,833			–			1,833				–
Amortization of contract intangible			220			–			220				–
Income from operations, as adjusted		$	11,040		$	6,569		$	15,357			$	10,749
Net income, as reported		$	5,677		$	4,576		$	10,416			$	7,800
LS restructuring			–			23			–				185
AMR Hungary restructuring			1,833			–			1,833				–
Amortization of contract intangible			220			–			220				–
Income taxes			–			–			(1,640	)			–
Net income, as adjusted		$	7,730		$	4,599		$	10,829			$	7,985
Earnings per diluted share, as reported		$	0.18		$	0.14		$	0.33			$	0.24
LS restructuring			–			–			–				0.01
AMR Hungary restructuring			0.06			–			0.06				–
Amortization of contract intangible			–			–							–
Income taxes			–			–			(0.05	)			–
Earnings per diluted share, as adjusted		$	0.24		$	0.14		$	0.34			$	0.25

Albany Molecular Research, Inc. Condensed Consolidated Statements of Operations (unaudited)
		Three Months Ended							Six Months Ended
(Dollars in thousands, except for per share data)		June 30, 2008			June 30, 2007				June 30, 2008			June 30, 2007
Contract revenue		$	46,362		$	39,936			$	91,699		$	81,167
Recurring royalties			7,573			7,838				15,806			14,984
Milestone revenue			4,000			1,580				4,000			1,580
Total revenue			57,935			49,354				111,505			97,731
Cost of contract revenue			33,531			30,003				69,759			62,690
Technology incentive award			837			814				1,656			1,527
Research and development			2,935			3,737				5,844			6,118
Selling, general and administrative			9,812			8,231				Albany Molecular Research, Inc. Media: Andrea Schulz, 518-512-2226 AMRI Corporate Communications or Investors: Peter Jerome, 518-512-2220 AMRI Director of Investor Relations Major Newsire & Press Release Distribution with Basic Starting at only $19 and Complete OTCBB / Financial Distribution only $89 Get Unlimited Organic Website Traffic to your Website  TheNFG.com now offers Organic Lead Generation & Traffic Solutions