ICON PLC (ICLR) 2003 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the ICON Clinical Research first quarter fiscal year 2003 results conference call. During the presentation all participants will be in a listen only mode. Afterwards we will conduct a question and answer session. At that time if you have a question, please press the one followed by the four on your telephone. As a reminder, this conference is being recorded, Tuesday, October 8th, 2002.

I would now like to turn the conference over to Mr. Sean Leech (ph), Chief Financial Officer. Please go ahead, sir.

Sean Leech (ph): Thank you. Thank you for joining us on our first quarter 2003 conference call. Joining us on the call today we have Dr. Ronan Lambe, our Chairman, our CEO Dr. John Climax (ph), and Peter Gray (ph), our Chief Operating Officer. Before I hand it over to John I'd like to make the cautionary statements in regard to forward looking statements.

(inaudible) company's operation, performance, in addition and prospects. (inaudible) statement involved known and unknown risks and uncertainties. Actual results may differ materially (inaudible) forward looking statements. (inaudible)

John Climax (ph): Thanks, Sean.

Good day, ladies and gentlemen. Thank you for joining our conference call covering the results for the quarter ended 31st, August, 2002. Net revenue in the quarter was $46.9 million, an increase of 29 percent over the same period last year. Of this increase, net revenues in the U.S. were up 34 percent on the compatible quarter while Europe and the rest of the world grew by 19 percent over the same period. Direct costs were $25.4 million for the quarter, representing 54.3 percent of net revenue compared to 52.3 percent in the compatible period. SG and A (ph) costs were 34.6 percent of net revenues for the quarter, compared to 36.4 percent in the same quarter last year. Operating income grew by 27 percent over the same quarter last year from $4.1 million to $5.2 million. Operating margins were 11.1 percent compared with 11.3 percent for the same quarter last year, and 11.8 percent in the prior quarter.

The primary reason for this decline was an averse average level of cancellation in our central laboratory which led to a decline of over 2 percent in their margin this quarter. We expect similar margins for the lab in the current quarter, but with business flows currently strong, we anticipate significant improvement as the year progresses. Taxation (ph) was 26.5 percent of pretax income for the quarter, in line with previous guidance, compared to 25.1 percent for the compatible quarter last year. As a result, net income for the quarter was 4.0, $4 million or 33 percent (inaudible) per share compared $3.3 million or 27 cents per share last year. Payments made under earn out obligations in relation to the laboratory were $3.1 million in the quarter. Our investment in days sales outstanding commonly referred to as DSO's were 63 days compared to 67 days at the end of the previous quarter, and 73 days at 31st August, 2001. As a result of these and other normal cash flow items, net cash at 31st August 2002 was $38.9 million compared to $43.1 million at the end of fiscal 2002. New business awards in the quarter were $66 million gross compared with $16 million last quarter. With a cancellation rate of 18 percent, this resulted in record net business awards of $54 million in the quarter compared to $53 million in the prior quarter.

Consequently, the portion of our backlog expected to be earned in the next four quarters is approximately $153 million, up 30 percent on the same quarter last year. And this represents 78 percent of forecast (ph). This is at the higher end of the range of forward revenue cover we like to see, and indicates that we are in good position to meet revenue forecast for the coming 12 months. This has been an excellent quarter, and in particular we are very pleased with the strong levels of levels of business (inaudible) and our continued strong revenue growth. Obviously we are a little disappointed with the margin performance, but expect to resume margin growth in the coming quarters. Year to date, we announced the acquisition of (inaudible) , Inc., BNP, and a sister company Managed Clinical Solutions, MCS. The addition of the BNP operation which had revenues of approximately $10 million in 2001 allowed ICON to further broaden its therapeutic expertise especially in the area of transplant research. BNP will add several new clients to ICON with whom we hope we can increase our sales in the years ahead. In addition, its sister company MCS, which had revenues of approximately $11 million in 2001, brings a new service into ICON's portfolio and also provides us with an excellent platform to enhance the flexibility of our operations. We expect that in our current fiscal year, BNP and MCS will add approximately $16 million in revenue. In fiscal 2004 we project that they will add between 25 and $29 million. In terms of EPS, we expect that this acquisition will add 3 cents to 2003 and contribute between eight and ten cents in the next fiscal year.

We are pleased with this acquisition, as it makes sense both strategically and financially. It represents both an opportunity which we believe will enable it to be integrated successfully into ICON. We continue to look at other acquisitions, opportunities, and remain very positive in the outlook for the future.

Before we go into question and answers, you will have seen in the press release that (inaudible) is retiring as chairman and that I will take over as executive chairman and Peter will become CEO. Firstly, I would like to acknowledge the huge role Ronan (ph) has played in the development of ICON since its inception. As I said, in the press release, I am glad that he will continue to provide his counsel and his expertise, albeit on a part-time basis. I am also pleased that we have prepared for this day over a considerable period of time and have built a strong (inaudible) management team throughout the organization. Peter's promotion to CEO represents a natural progression in his development in the company, and I look forward to working closely with him in the years ahead.

That concludes my opening remarks and I would like now to open the call to questions.

Ladies and gentlemen, if you would like to register a question, please press the one followed by the four on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you'd like to withdraw your request, you may do so by pressing the one followed by the three. If you are using a speakerphone, please lift your handset before entering your request.

Our first question comes from Peter Fallie (ph) with Marion Stockbrokers (ph). Please go ahead, sir.

Peter Fallie (ph): Hi, gentlemen. Great quarter. And can I just find out what the reason for the cancellations and the (inaudible) were? Were they related to (inaudible) acquisitions or just a product specific reasons? And also they seem to happen late in the quarter. Was there any particular reason for that?

Peter Gray (ph): Peter, Peter Gray (ph) here. The reason, as all of these cancellations were pretty varied. As John mentioned in his comments there, we had some in the lab which did come late in the quarter, and they were from I think three different companies, reasons all related to products as opposed to any M and A activity. No company that we're aware of being involved in M and A were involved in that. And within ICON itself, we also had a couple of cancellations towards the end of the quarter which, again, were with companies where there's certainly no M and A speculation at the present time. The reasons for cancellation were related to drug performance in both cases.

Peter Fallie (ph): Okay. Thank you for that.

The next question comes from David Marshal (ph) N C P stock brokers.

David Marshal (ph): Good afternoon, gentlemen. And if I could ask on the margins in the quarter, what is the split between the European and U.S. margins and maybe follow-up on the utilization rates if you can (inaudible)?

Sean, will you take that?

Sure. Margins in the Europe (inaudible). We've had a number of (inaudible) that have continued our utilization level (inaudible), 83 percent, (inaudible). The decline in margins (inaudible) primarily due to (inaudible) in the European numbers. There was no great improvement in the European utilization in the current quarter. That trend (inaudible) in the coming quarter, strong growth level of business or (ph) early on in the quarter for Europe. We expect to see that trend reversed in the coming quarter. And that should be (inaudible) combined with the lab cancellations contributed to the lower operating margins in the current quarter.

David Marshal (ph): And for the second half of the year, would you say the margins are covered to the mid 11, 11 and a half plus?

I think where we see Q2 David is probably somewhere slightly north of 11 and a half, 11, 11 and a half is probably achievable for the quarter and I think then we should be back on track in terms of Q3and Q4.

Thank you.

Ian Hunter (ph) with Goodbody Stockbrokers (ph).

Ian Hunter (ph): Good afternoon, gentlemen. First if you could give more details on the (inaudible). Will there be any overlap with the existing business? I know you say it's a tag on thing, but will there be some overlap and any kind of rationalization costs coming out of this year that could be (inaudible) raised over the whole year? And what are the implications for the tax (inaudible)?

Peter Gray (ph): Ian, Peter Gray (ph) here. In terms of rationalization, no, there won't be rationalization as such. B and P is in essentially the same business as ICON's core business worldwide and in the United States, but it is in a separate location. It's an attractive location, actually, in Manhattan. Our nearest office to that in our clinical business is down in Philadelphia. So we've been interested in having a presence in that part of the U.S. for some time, so we won't be rationalizing the office. Indeed our plan would be to build on the office. Nevertheless, as we integrated into our organization, there will be changes to be made in terms of their IT systems, their quality systems and so on, so there will be costs that we anticipate we'll incur in the next quarter or two as we spend money to bring it into the ICON fold, so to speak, but they're not rationalization costs.

Did you have an idea what the level of those costs will be? And then as my second part was, what do you think will happen to the tax rate with this U.S. acquisition?

We haven't estimated what the level of those costs would be. As you've seen and as you've heard from John, we've given guidance on expecting about 3 cents per share in earnings for the remainder of this year. That's probably going to breakdown in no contribution to EPS in the current quarter and maybe a sent in the following quarter and the two cents in the quarter after that. That's broadly what we've projected, Sean ; isn't that correct?

Correct. We would envision an up tick in the effective tax rate probably 11 (ph) to (ph) 30 percent.

Okay. Thanks very much.

John Kreiger (ph) with William Blair.

John Kreiger (ph): Thank you. A few questions on your last business. First of all I know you said cancellations have picked up a bit. Can you give us what a normal level of cancellations would be in the lab? And then secondly are you starting to see any cross over between your lab and traditional CRO business?

John, hi. In terms of normal cancellation level in the lab, Sean, I'm going to defer that one to you. I think it's pretty much the same as in the clinical business.

It probably ticked a little 2 percent behind the clinical business so where we would expect ten to 15 percent in the clinical side we would have traditionally seen between eight and 13, John. Very little difference in terms of up (ph) level (ph) ...

And I think it's also, you know, worth mentioning. Again, we see the same level of volatility in cancellations in the lab as we've seen in the clinical business. Not surprisingly, because the lab is servicing exactly the same activities, albeit it's providing the lab services where we're providing in our core business the clinical trial management. Of the same project, so the cancellation activity or experience should be similar in the two businesses which is what Sean has said. In terms of cross over between the lab and the clinical business, it continues to be there, John, albeit if not -- there's no sign yet that pharma has decided that it's going to bundle those services. And if they're outsourcing a clinical trial that they will outsource the entire package to one CRO. There are pockets of that happening, but it is not a consistent trend by any means. We have, as you know, said that we believe in the long term that is what will happen, but the long term is probably a long term and (inaudible) I know has predicted it for a long time, and it has been slow to happen. We think it's going to be quite slow to happen.

Great. Thanks. One other follow-up question. Your results certainly indicate you're doing well competitively, but can you give us an update what kind of industry environment you're seeing? Are you seeing a shift in the behavior of your clients and the tough environment they're facing?

Not at all (inaudible).

Hello?

... Sorry. Heather?

Yes, sir.

Have we lost the line there?

Mr. Climax (ph)?

They've gone?

I'm still showing the line connected. Let me redial back out to him.

Sorry. Just bear with us. I'm actually joining the call today from Philadelphia, so my apologies. Just bear with us for one moment.

Ladies and gentlemen, please continue to stand by. Your conference will resume momentarily. We thank you for your patience and please continue to stand by.

Ladies and gentlemen, please continue to stand by. Your conference call will resume momentarily. Once again, please continue to stand by and thank you for your patience.

Ladies and gentlemen, once again, please continue to stand by. Your conference call will resume momentarily. Once again, please continue to stand by and thank you for your patience.

John Kreiger was asking a question. John, are you still there?

I'm still here, thank you.

Apologies for that. I can't even remember -- oh, yes. You asked a further question in relation to the business climate at the moment.

Correct.

We find the business climate to be very positive still. The flow of business continues to be strong. We don't see anything in our client's (ph) behavior that would indicate that they are cutting back or feeling negative. If anything, there seems to be an added impetus to their desire to get projects going client's (ph) behavior and to obviously address the issues if there are issues for them.

Great to hear. Thank you.

Steve Unger (ph) with Bear Stearns.

Steve Unger (ph): Hi, good morning. Could you comment on the profit profile of B and P and MCS?

Yes, Steve. Peter again. As John said in his comments, in 2001 both companies had -- BNP had ten revenues, MCS had 11 million in revenues combined 21. Combined they made operating margins around 12 percent. And because while they're sister companies they are run as one operation, difficult to break it down between the two as to whether that was a fair reflection of both businesses. Our belief is it is, but when we separate them, which we'll be doing in the coming months, we'll see more clearly whether it's slightly higher margin in one or the other. But we don't believe that's the case.

Steve Unger (ph): Okay. Can you comment on the attractiveness of being in the staffing business from a leverage standpoint of your existing overhead and so forth?

Yes. Well, the number of different aspects to this. In the first instance, 30 percent of clinical trials are outsourced to 70 percent aren't. It's estimated 30 percent of clinical trials are outsourced. The 70 percent that aren't are supported by contract staff, and (inaudible) a significant market in our view, and we see the MCS an attractive opportunity for us to service that segment of the market. We see two benefits for ICON. In times when we are rapidly trying to acquire staff which we have been doing in the United States for the last six months and MCS will provide another vehicle for us to quickly hire experienced staff, we hope. In times when ICON had surplus staff, which fortunately in the U.S. hasn't been very frequent, but nonetheless if that happens, MCS may be in a position to place them on short term contract with clients. So what we think it can do for us is it gives us a new segment. It addresses a new market for us. But at the same time it potentially gives us flexibility in our own staffing needs, both on the up side and the downside.

That's great. Could you comment, I guess, on the backlog contribution that you're expecting these acquisitions to have for you? Does staffing business have backlog? And then comment on -- whether this will be a separate reporting segment?

Good questions. It won't be a separate reporting segments because it's very similar to what we do in terms of when a client out sources a project, they outsource a project and we provide a number of staff to it when they outsource part of a project by hiring in-house staff, they're doing something close to the same. So we regard it as a single segment. We will do so. You are correct, though, that the backlog (inaudible) part of this business is (inaudible) profile of our core business because the typical contract for a contractor is between -- was between six and nine months duration and therefore visibility of backlog in this business is not as great as it is in ours for a typically contract duration for two years or more. So it will have some impact on the percentage of backlog numbers will be typically close, it will have some -- it will have the impact of perhaps reducing the percentage somewhat. Again, until we get a little bit of experience under our belt in working with the business, we're not sure how significant our what magnitude that impact will be. The other part of the business, BNP business as I said similar to our own and the background profile is very similar to our own. In fact a little stronger perhaps as we go into this acquisition than 78 percent.

Okay. And just a housekeeping question, Sean, could you split the clinical and central laboratory revenue and/or operating income for the quarter?

Sure, no problem. The revenues in the lab were 7.2 million with 39.7 million for the core business. Our margins were 11.two with the lab at 11.1.

Okay. And then congratulations to you, Peter, that's well deserved.

Thank you, Steve.

Chris McFadden (ph) with Goldman Sachs, please go ahead.

Thank you. Good morning. And let me add, Peter, my congratulations on your expanded responsibilities.

Thanks, Chris.

A couple questions, if we might. First of all, could you update us on kind of the profile in Japan? We've heard about some opportunities there. Could you kind of refresh us on what you're seeing? Secondly, would you mind just reviewing again both the tax result in the quarter, understanding it was in line with your expectations? And again a chronology of the balance with the fiscal year of how you expect the tax rate to play out including the impact of the acquisition? And then finally, any more granular discussion you might have on the market, particularly in some of the later phase projects and I guess just trying to get your sense of tone of contracting with any particular sort of comment on pricing and how you think stability and pricing is in the marketplace right now? Thanks.

Chris, I'll take Japan. As you know, we have only very recently opened an operational group. It's still at its infancy. However, having said that, the Japanese market is broadly accepting I C H in a very rapid manner, and we are seeing more and more outsourcing taking place in Japan and they are focusing on trying to do a quality job. So the opportunities look very good for us. I believe we have entered the Japanese market in the right time. The next couple of quarters will bear fruit for us, so watch (ph) your (ph) space (ph).

Is it reasonable to put a sense on 24 months from now what Japan could represent as a percentage of revenue and not trying to box you in the corner, but trying to get a sense of how long significant how significant this could be for your overall business?

Chris, you know us pretty well by now. We are not in the business of predicting the future. So I will take a rain check on that, but we are very, very optimistic what Japan will do in the near future.

Fair enough. Thank you.

In terms of the tax result (ph), Sean, maybe you'll take that one.

Sure. It's hard to quantify exactly why it was not exactly 27 percent, Chris, the difference between 26 and a half and 27 is like $25,000. So there's nothing, you know, effectively the tax rate was within plan for the current quarter. Excluding the impact of the acquisition, I would have still been comfortable with the guidance that I had given on the 27 percent for the year as a whole. I was optimistic that we would come in below that. As you can see the first quarter would have validated that optimism. Because of the tax structure we have in the U.S. and we've indicated in the past where we do an acquisition, it does have an impact on the overall effective rate of the organization. And we have estimated that that will be about 30 percent. So it is uptake by about 3 percent following the acquisition but it is only because of the acquisition. We will obviously continue to work to bring that down, but at this stage the guidance I would set would be about 30 percent.

Great. Thank you.

The last question you had Chris was in relation again to more granular information on what's going on in the marketplace. You mentioned late stage projects and pricing. Not a lot I can add to (inaudible) saying earlier. Late stage projects, there's a lot of them going on and one of the hypotheses I have consistently given to you guys is that in times when pipeline is weak in the large farm accompanies, they tend to spend more money on phase three B studies trying to expand the claims for the drugs they already have on the market or that they are close to the market with and then in times when the pipeline is richer, they perhaps spend a little bit lesson that and spend more on the earlier stage development. But they continue to spend money because the company that stops spending on research and development is the company that in ten years' time won't be around. And that has been our experience for as long as we've been in business. There are cycles of what pipe lines look like come and go for different companies, but the level spending tends to be pretty constant and the commitment to development spending in particular tends to be pretty robust. In terms of pricing in the marketplace, given the environment I'm talking about, we have seen and no pressure on pricing whatsoever. We were very comfortable with the level of pricing we're achieving and are not seeing any indiscipline in the marketplace.

Thanks for the update. I appreciate it and congratulations on the quarter.

Thank you.

Our next question comes from Jeff Gorman (ph) with David Stock Brokers. Please go ahead.

Jeff Gorman (ph): Thank you. Just have two quick questions, please. Firstly as regards in flavor (ph) perhaps with project concentration in the quarter, and secondly just to go back to MCS and perhaps the rationale just to fill that out a little bit more. You mentioned it's effectively a new platform for the enhancement of the operation. How big do you think this business could be within an ICON context? Is it effectively a business that could be 20, 30 percent of overall revenues or will it be more like your consultant fee as a small yet essential service add on to what you already actually offer?

I'll take the last one first, Jack. I think it would be partly be larger, certainly in the immediate term than the consultancy business because as I mentioned earlier, as John mentioned earlier, revenues last year in the U.S. alone for MCS were $11 million. As you have seen from the press release we've done an earn out and the earn out is built around the performance of that business, and therefore clearly that earn out is not built and staying still. It's built on them growing the business pretty significantly. So we are projecting or expecting that that business can grow to in excess of $20 million of revenues and perhaps higher than that even just within the United States. We don't tend to regard our business as a single geographic region business. We try to take what we've done in one continent and bring it elsewhere. So we would also plan in due course to take the concept and try and develop the same concept within Europe. We have done an ad hoc basis in Europe any way, so it would be formalizing what we've already been doing within a separate structure. That's a long way of saying I think it can be perhaps 20 percent of our revenues in the future. That might be a little aggressive because we're going to continue to grow as a company, but certainly somewhere between ten and 20 percent of revenues would be disappointing if it wasn't that within two or three years.

Jeff Gorman (ph): And do you see, Peter, on that, is there any evidence that there is overlap between the MCS staffing and business and the purer CRO just from a kind of cannibalization point of view? Are you addressing very distinct separate segments of the outsourcing markets with these two businesses now?

As I said when I was talking to Steve Unger (ph) there earlier, only about 30 percent of chemical development is outsourced which means the 70 percent of what (inaudible) is outsourced, but is often supplemented by contract staff. So no, we don't expect this is going to cannibalize. This is different given CRO an entirely different protocol and asking them to go and execute that, is a completely different decision to saying I'm running this study, I'm short three people, two of them here and one of them in some other location and therefore bringing a few contractors. That's essentially what the MCS business does as opposed to providing a turnkey service on a project. the different market segments we don't believe there would be any cannibalization.

The first part of your question.

Jeff Gorman (ph): ... on project concentration, yes.

Project (inaudible)

Project you're asking about (inaudible).

Nine projects in the quarter had more than $1 million of revenues. 217 projects in total generated revenue in the quarter.

Okay. And would it be fair as we go forward to start asking for the number of projects over $2 million a quarter?

Might be fair to ask. I don't know if you would get an answer.

Fair enough. Thanks.

Okay, Jack.

Ladies and gentlemen, if there are any additional questions, please press the one followed by the four at this time.

Ian Hunter (ph) with Goodbody Stockbrokers (ph), please go ahead with your follow-up.

Ian Hunter (ph): Thank you, gentlemen. My second chance here. Follow-up on jack's question and ask about the client exposure. Can you give us some detail on the breakdown of your top three or top five clients and how they account for the revenue you had in the quarter?

Well, there is only two clients, Ian, that represents more than 10 percent. Of our revenues and they are Estrogenic and Pfizer. And if I take that also, we are looking at a total of 45 projects involving 23 drugs. And what I think mostly is more important is that with Estrogenic and Pfizer, over 97 percent and 84 percent of your respective revenues are earned from drugs for which we are carrying our phase three B and phase four studies. So they are pretty safe. So our client concentration is coming down, but we are quite comfortable where we are today.

Ian Hunter (ph): Okay. Maybe a secondary question here. I notice the revenue growth is stronger in the U.S. than the rest of the world and you said to David's question there was a softening in Europe. Are you seeing that the CRO (inaudible) is becoming more U.S. focused, more shipments can you having out to the U.S. or is it purely for the last few quarters that Europe has been kind of weak?

The last quarter I think, Ian, somebody was commenting on revenues in Europe had grown 47 percent last year, only 29 percent or thereabouts in the U.S. so I think the we are answer to your question is it swings back and forth. We don't think there are any particular trends here. We don't believe there is something going on in Europe versus the United States. We have strong bursts of activity currently enjoying, I think we've indicated over the last couple of quarters, that business in the U.S. in particular has been very strong in the first few quarters of calendar 2002. Europe has been a little softer, in particular the Europe suffered in the late last year from a higher level of cancellations, but that settled down and business wins in Europe have actually been very good in about the last three months and we're expecting again as Sean indicated earlier in terms of margin discussion, that we're expecting the performance in Europe to pick up in the quarter ahead and in the quarters after that. So no, there is no secular issues between Europe and the U.S.

Ian Hunter (ph): Okay. Thanks very much.

Steve Unger (ph) with Bear Stearns, please go ahead with your follow-up.

Steve Unger (ph): Hi, I'm sorry, I just have one quick follow-up. Over the last two quarters the subcontractor costs have increased quite substantially, almost double levels in the third quarter of fiscal '02. Can you just comment on what's driving that? Is that investigator fees? Is that reimbursable expenses, so forth? Timing?

Sean, do you want to take that?

Sure. Yes. I mean I don't think you'll find it's been the trend over the last three or four, Steve. Primarily as you've intimated, it's primarily investigator fees and as John has indicated the level of studies we're working on or sort of phase three, the phase four type studies (inaudible) Pfizer particularly. They tend to have higher end investigator fee content, if you like. And it's sparking -- it's obviously not Pfizer and (inaudible), that was the general trend we've seen. Not convinced (inaudible) the trends continuing in the future over the last quarter it's been dry. (inaudible). Impact in terms of the level of investment in our working capital. Obviously it's grown over 130 percent over the comparable period so it has some impact in the level of investment. We haven't worked it out. (inaudible) there's really no impact in the operation.

Okay. Thanks.

Peter Fallie (ph) with Marion Stock Brokers. Please go ahead with your follow-up.

Peter Fallie (ph): Two quick follow-up questions for am me. One on your acquisitions strategy. Obviously this is a new (inaudible) area, but it's not a new clinical trial phase and I'm just wondering, are we (inaudible) to see further acquisitions in say phase one or preclinical going forward? And secondly, then, with Ronan's retirement, are we possibly likely to see maybe a small change in the shareholder structure of the company going forward?

First question first, Peter. I think we've been indicating probably for too long now -- I think I've been doing the presentation for three years saying we're going to acquire phase one unit. It is certainly very, very high on our strategic priority list to try to acquire a phase I capability. And we're probably closer to fruition on that today than we've been for awhile, but that doesn't mean we get anything done. We have a few opportunities that we are optimistic about, but who knows. So if I was a betting man today, I'd say the next acquisition you'd see from ICON is a phase I facility. But I've lost many bets in my life. Please don't take me up on it.

Peter Fallie (ph): Any possible time line or is it too early to say?

It would be too early to say and probably be inappropriate to say.

Peter Fallie (ph): Okay.

In relation to Ronan's retirement, he's sitting here beside me. I think Roman continues to be a boon at ICON, and therefore I don't think at this stage he has any great desire or intention to unwind his investment in ICON, albeit except perhaps in small trenches like we've seen recently.

Peter Fallie (ph): Okay. Thank you for that.

Gentlemen, I am showing no further questions at this time.

There seem to be no further questions, I would like to thank all of you for joining us today. But before I leave, I'd just like to make a couple of points.

This has been a great quarter for ICON. The bolt on acquisition of B and P and MCS did extremely well with our strategic plans of a wider service offering in the development service of our business. Going forward we will be focusing on broadening our services in early phase arena through both organic growth and with appropriate acquisitions. The revenues forecast for fiscal 2003 will now be in excess of $200 million which is a significant milestone for ICON, considering that at our IPO in 1998, the revenues were only $42 million. The revenue expansion to date has been largely driven organically.

Finally, with Peter as CEO soon, Ronan still on the board and with a very strong and deep management team at ICON, that continues to focus on our clients, quality and performance, I'm very confident of the future. Thank you.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.