RESTON, Va., Nov. 7 PRA International(Nasdaq: PRAI), a leading global clinical research organization, todayannounced operating results for the third quarter ended September 30, 2007.All comparisons are with prior-year periods.
On July 25, 2007, the Company announced that it had entered into adefinitive merger agreement to be acquired by affiliates of Genstar Capital,LLC ("Genstar"), a private equity firm, for approximately $790 million.Affiliates of Genstar beneficially own 12.6 percent of the outstanding sharesof the Company. The Company's stockholders will be entitled to receive $30.50in cash for each share of the Company's stock. Subject to the receipt ofstockholder approval and other customary closing conditions, the transactionis expected to be completed in the fourth quarter of 2007.
In September 2007, the Company announced a plan to move its corporateheadquarters to Raleigh, North Carolina. The move is already underway and isexpected to be completed by the end of the first quarter 2008.
Third Quarter and Nine Month Results
For the three-month period ended September 30, 2007, PRA generated servicerevenue of $96.7 million compared to $81.5 million in the third quarter of2006. Service revenue excludes from total revenue the reimbursedout-of-pocket costs associated with client projects and programs.Reimbursement revenue was $10.8 million during the quarter compared to$8.1 million in the same period a year ago. Third quarter income fromoperations was $9.6 million compared to $11.0 million in the same quarter in2006. The period's operating margin, based on service revenue, was9.9 percent or an adjusted 11.0 percent after accounting for approximately$400,000 in restructuring charges primarily related to the closure of twooffices and $624,000 for the non-cash amortization relating to theidentifiable intangible assets from the July 2006 Pharma Bio-Researchacquisition. Net income for the quarter was $6.5 million, or $0.26 perdiluted share. Earnings per share figures are based on diluted sharesoutstanding of 25.5 million. PRA's third quarter cash flow from operationswas $26,000 compared to $4.1 million in the year-ago quarter.
Gross new business awards for the quarter rose 20.7 percent to$204.4 million, up from $169.4 million during the same period last year.Gross book-to-bill ratio for the third quarter was 2.11 compared to 2.08 inthe same period of 2006. Backlog at third quarter-end was approximately$753 million, up from about $605 million on September 30, 2006. Cancellationsfor the quarter were $48.2 million compared to $21.0 million a year ago. Thenet book-to-bill ratio was 1.62 compared to 1.82 in the same quarter of lastyear. Days sales outstanding, which includes accounts receivable and unbilledservices less advanced billings, totaled eight days, compared to 27 daysduring the third quarter of 2006.
For the nine month period ended September 30, 2007, service revenuetotaled $271.9 million compared to $220.8 million in the first nine months of2006. Reimbursement revenue was $35.3 million compared to $24.8 million inthe same period in 2006. Income from operations in the first nine months 2007was $14.3 million compared to $26.6 million a year ago. Net income for thefirst nine months of 2007 was $10.2 million, or $0.40 per diluted share,compared to $21.1 million or $0.86 per diluted share a year ago. Excludingrestructuring charges of approximately $8.0 million and $2.0 million for thenon-cash amortization relating to the identifiable intangible assets adjustednet income was approximately $17.4 million.
Cash flow from operations was $19.1 million for the nine-month period,compared with $15.3 million a year ago. As of September 30, 2007, PRAmaintained cash and cash equivalents of $38.4 million and no debt.
The Company does not intend to hold a quarterly investor conference call.