Albany Molecular Research, Inc. Announces Third Quarter Results; Board Authorizes Second Stock Repurchase Program.

Business Editors

ALBANY, N.Y.--(BUSINESS WIRE)--Nov. 4, 2002

Contract Revenue Up 24%; Recurring Royalties up 32%; and

Net Income up 20%

Albany Molecular Research, Inc. (Nasdaq: AMRI) today reported financial results for the quarter and nine-month period ending September 30, 2002.

Total revenue for the third quarter of 2002 increased to $32.1 million, a 27% increase over the same period in 2001. Contract revenue for the third quarter of 2002 increased to $19.0 million, representing a 24% growth compared to contract revenue of $15.4 million during the third quarter of last year. Recurring royalties for the third quarter of 2002 were $13.1 million, a 32% increase over recurring royalties of $9.9 million in the third quarter of 2001. 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.

Net income for the third quarter of 2002 increased to $10.2 million, or $0.31 per share on a diluted basis, an increase of 20% compared to net income for the third quarter of 2001 of $8.5 million, or $0.25 per share on a diluted basis.

"We are pleased to report another quarter in which AMRI experienced solid earnings growth, fueled by increases in both contract services operating profit and increasing royalties," said AMRI Chairman and Chief Executive Officer Thomas E. D'Ambra, Ph.D. "Allegra has quietly become the largest selling prescription drug in its class, with sales growing 30% during the quarter and 28% for the first nine months of 2002. We remain optimistic on the future for this product."

D'Ambra added, "The continued growth in contract revenue is particularly noteworthy, given the current climate. We are seeing increased cost-saving initiatives at many companies in our customer base. The continued growth in AMRI's contract revenue during this challenging environment is a positive statement on the value and breadth of AMRI's services and contributions to the many companies with which we work. While we expect economic pressures to continue in the short-term, we are being awarded new business and have had reaffirmations of our relationships with some of our largest clients. As a result, we feel our contract business is well-positioned for 2003 as well as in the long term."

Year-to-Date

Total revenue for the nine-month period ending September 30, 2002 increased to $91.3 million, an increase of $18.6 million, or 26%, compared to total revenue of $72.7 million during the same period in 2001. Contract revenue for the first nine months of 2002 increased 23% to $53.5 million, compared to contract revenue of $43.4 million for the comparable period in 2001. Recurring royalty revenue for the first nine months of 2002 increased by 29% to $37.9 million, compared to recurring royalty revenue of $29.3 million during the first nine months of 2001.

Net income for the nine-month period ending September 30, 2002 was $29.5 million, or $0.88 per share on a diluted basis, representing a 17% increase compared to net income during the first nine months of 2001. Net income for the comparable period in 2001 was $25.1 million, or $0.74 per share on a diluted basis.

During the third quarter of 2002, AMRI added a net of 23 scientists. The total number of employees at AMRI's five locations at the end of September 2002 was 600, including 403 scientists.

At September 30, 2002, AMRI had cash, cash equivalents and investments of $121.2 million, compared to $114.5 million at June 30, 2002. The net increase of $6.7 million in cash, cash equivalents and investments in the third quarter of 2002 was due primarily to cash generated from operations of $11.2 million, offset by the repurchase of 83,773 shares of AMRI stock at a cost of $1.6 million and $3.6 million in purchases of property plant and equipment. Total common shares outstanding at September 30, 2002 were 32,404,749.

Organichem

Total revenue at Organichem Corporation, an unconsolidated affiliate of AMRI, was $16.1 million in the third quarter of 2002, a 15% decrease compared to the third quarter of 2001. Total revenue at Organichem for the nine-month period ending September 30, 2002 was $62.9 million, a 17% increase over the same period in 2001. Net income at Organichem decreased 18% to $933,000 in the third quarter of 2002, and increased 16% to $4.5 million for the nine-month period ending September 30, 2002. Organichem's results for the third quarter of 2002 were impacted by the timing of certain customer projects that were anticipated to be completed in the third quarter of 2002. Those projects are now expected to be completed in the fourth quarter of 2002, with no change to the previously provided full-year 2002 net income guidance of approximately $7.0 million. In its current status as a minority shareholder, AMRI does not include Organichem's revenues in its total revenues stated above. AMRI includes its proportionate share of Organichem's net income in its income statement as equity in income of unconsolidated affiliates.

Stock Repurchase Program

The company also announced today that its board of directors authorized a second stock repurchase program. Under the newly approved program, the company is authorized to repurchase up to $15.0 million of the issued and outstanding shares of its Common Stock in the open market or in private transactions during the next 12 months. Shares may be repurchased from time to time and in such amounts as market conditions warrant, subject to regulatory considerations. In September 2001, the board of directors approved a one million-share repurchase program. During the third quarter of 2002, the company completed the cumulative repurchase of one million of its shares under the September 2001 stock repurchase program.

Earnings Guidance

AMRI Chief Financial Officer David P. Waldek reiterated earnings guidance for the remainder of 2002 and the full year 2003. Said Mr. Waldek, "We continue to project full year 2002 diluted earnings per share growth of 20%, consistent with the analyst consensus estimates of $1.22 per share."

Mr. Waldek remarked, "We are also confirming our guidance for the full year 2003 of 16% to 24% growth in diluted earnings per share, or $1.42 to $1.51 per share. This guidance continues to assume we complete the full merger with Organichem Corporation at the end of the first quarter 2003. Under our December 1999 investment agreement with Organichem, AMRI has the option to purchase the remaining Organichem shares in early 2003, subsequent to the completion of Organichem's 2002 audited financial statements. The purchase price is to be determined based on Organichem's financial performance in the year 2002. At this time it is estimated that the purchase price would be $30 million."

Other Highlights

Other noteworthy items and company announcements during the third quarter of 2002 include the following:

-- The company was ranked 16th on the Forbes list of the 200 Best Small Companies, marking the third consecutive year that AMRI has made the list--and the third consecutive year that AMRI has ranked in the top ten percent of companies on the list. In addition, the company was ranked number 59 on Fortune magazine's list of the 100 Fastest-Growing Companies.

-- The repurchase by AMRI of 83,773 shares of its common stock under the Stock Repurchase Program approved by the board of directors in September 2001. AMRI has now repurchased a cumulative total of 1,000,000 shares of its stock, which represents the maximum shares authorized under the Stock Repurchase Program adopted in September 2001.

-- The adoption of a Shareholder Rights Plan designed to enhance the board of directors' ability to protect shareholder interests and ensure that shareholders receive fair treatment in the event that any coercive takeover attempt of AMRI is made in the future.

-- The announcement of two new drug discovery technologies: a series of unique small molecule, synthetic combinatorial chemistry libraries that will be available semi-exclusively for drug discovery purposes to a limited number of subscribers; and drug metabolism screening, metabolite profiling and scale-up capabilities. Both announcements were made in conjunction with the 7th Annual Drug Discovery Technology(TM) World Congress in Boston, MA during August.

-- The company was number 317 on the 2002 Deloitte & Touche Technology Fast 500, a listing of the fastest-growing technology companies in the United States and Canada. The list is based on percentage increase in operating revenues from the period of 1997 to 2001.

-- The company recently expanded its analytical technologies to include physical characterization of pharmaceutical solids. These additional capabilities allow AMRI to assess polymorphism in pharmaceutically active compounds as well as various salt forms of these compounds.

Third Quarter Conference Call

The company will hold a conference call at 10:00 a.m. Eastern Time on November 4, 2002 to discuss its quarterly results and business highlights and prospects. Individuals interested in listening to the conference call should dial 888-273-9886 (for domestic calls) or 651-224-7472 (for international calls) at 9:45 a.m. and reference the AMRI Third Quarter 2002 Earnings Release conference call. Replays of the call will be available for seven days following the call beginning at 3:15 p.m. on November 4, 2002. To access the replay by telephone, please call 800-475-6701 (for domestic calls) or 320-365-3844 (for international calls) and use access code #656470.

Albany Molecular Research, Inc. is a leading research, drug discovery and development company built on a chemistry platform of comprehensive and integrated technologies, resources and capabilities. The company conducts pharmaceutical research and development with many leading pharmaceutical and biotechnology companies and for its own internal discovery programs.

Statements in this press release that are not historical facts are 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 earnings in each quarter of 2002 and earnings guidance for the full year 2002 and full year 2003, statements regarding the company's ability to acquire and develop value-added discovery technologies, statements regarding the company's prospects for the remainder of 2002, 2003 and beyond, statements regarding the development of new technology, trends in pharmaceutical and biotech outsourcing and the positioning of the Company's contract business for 2003, and statements regarding the acquisition and expected performance of Organichem Corporation. These statements may also be identified by forward-looking words such as "may," "could," "should," "would," "will," "intend," "expect," "anticipate," "believe," and "continue" or similar words. 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 chemical research and development, including continued softness in these markets, sales of Allegra (including any deviations in estimates provided by Aventis) and the company's receipt of significant royalties from the Allegra license agreement, the risk that Allegra or a competing drug may be approved for over-the-counter use, the company's ability to enforce its intellectual property and technology, 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 company's ability to successfully complete its ongoing expansion projects on schedule and integrate acquired companies, and the company's ability to effectively manage its growth, as well as those discussed in the company's Annual Report on Form 10-K for the year ended December 31, 2001 as filed with the Securities and Exchange Commission on April 1, 2002 and in the company's other SEC filings. Earnings guidance offered by senior management today represents 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. In addition, as noted above, there are numerous factors which 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.

                    Albany Molecular Research, Inc.
              Condensed Consolidated Statements of Income
                              (unaudited)

(Dollars in thousands, except per share data)

                      Three Months Ended       Nine Months Ended
                   Sept. 30,    Sept. 30,  Sept. 30,      Sept. 30,
                     2002          2001      2002            2001

Contract revenue    $19,015      $15,359    $53,451         43,388
Recurring royalties  13,061        9,918     37,861         29,326
  Total revenue      32,076       25,277     91,312         72,714

Cost of contract
 revenue             10,893        8,793     30,747         25,187
Technology incentive
 award                1,306          990      3,780          2,930
Research and
 development          1,893        1,099      5,609          3,023
Selling, general and
 administrative       3,364        2,988      9,676          8,467
  Total costs and
   expenses          17,456       13,870     49,812         39,607

Income from
 operations          14,620       11,407     41,500         33,107

Equity in income of
 unconsolidated
 affiliates             260          341      1,529          1,242
Other income, net     1,029        1,551      3,219          5,396

Income before income
 tax expense         15,909       13,299     46,248         39,745

Income tax expense    5,698        4,819     16,710         14,605

Net income          $10,211      $ 8,480    $29,538        $25,140

Basic earnings per
 share              $  0.32      $  0.26    $  0.90        $  0.76

Diluted earnings
 per share          $  0.31      $  0.25    $  0.88        $  0.74


                    Albany Molecular Research, Inc.
               Selected Consolidated Balance Sheet Data
                              (Unaudited)

         In thousands
                                       September 30,    December 31,
                                           2002            2001

Cash, Cash Equivalents and Investments   $121,239        $135,865
Accounts receivable, net                   14,167           9,965
Royalty income receivable                  13,025          12,361
Total current assets                      163,260         167,801
Net property, plant and equipment          68,840          59,756
Total assets                              290,716         284,059

Current liabilities                        10,943          12,525
Long-term debt                              5,323           5,930
Stockholders' equity                      272,627         263,633
Total liabilities and stockholders'
 equity                                   290,716         284,059