UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 26, 2011
PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.
(Exact name of Registrant as specified in its charter)
North Carolina
(State or other jurisdiction of incorporation)
| 0-27570 | 56-1640186 | |
| (Commission file Number) | (IRS Employer ID Number) |
| 929 North Front Street, Wilmington, North Carolina 28401 |
| (Address of principal executive offices) (Zip Code) |
Registrant’s telephone number, including area code 910-251-0081
NA
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act |
| ¨ | Pre-commencement communications material pursuant to Rule 14d-2(b) under the Exchange Act |
| ¨ | Pre-commencement communications material pursuant to Rule 13e-4(c) under the Exchange Act |
Item 2.02 Results of Operations and Financial Condition.
On July 26, 2011, the Company issued a press release announcing its financial and operating results for the three months and six months ended June 30, 2011. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein in its entirety by reference.
The information furnished in this Item, including the exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. |
Description | |
| 99.1 | Press release dated July 26, 2011 of Pharmaceutical Product Development, Inc. announcing its financial and operating results for the three months and six months ended June 30, 2011. (Furnished pursuant to Item 2.02, not filed; see Item 2.02 above.) | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Pharmaceutical Product Development, Inc. | ||||
| Date: July 26, 2011 | By: | /s/ Daniel Darazsdi | ||
| Name: Daniel Darazsdi | ||||
| Title: Chief Financial Officer | ||||
Exhibit 99.1
| Contacts: | ||||
| Dan Darazsdi | ||||
| +1 910 558 7915 daniel.darazsdi@ppdi.com | ||||
| Luke Heagle | ||||
| +1 910 558 7585 luke.heagle@ppdi.com | ||||
FOR IMMEDIATE RELEASE
PPD Reports Second Quarter 2011 Financial Results
Highlights:
| • | Gross authorizations of $753 million |
| • | Net book-to-bill ratio of 1.29 |
| • | Clinical Development Services segment net revenue growth of 14.1% over Q2 2010 |
| • | Sequential Laboratory Services segment operating margin expansion |
| • | Diluted EPS of $0.41 |
WILMINGTON, N.C. (July 26, 2011) - PPD, Inc. (Nasdaq: PPDI) today reported its financial and operating results for the second quarter ended June 30, 2011.
PPD recorded net revenue of $407.7 million for the second quarter of 2011, an increase of 10.2% over net revenue of $369.9 million for the second quarter of 2010. Second quarter 2011 income from operations was $57.1 million, compared to $40.1 million for the second quarter of 2010. Income from operations for the second quarter of 2011 was higher than the same period last year due primarily to higher net revenue and a decrease in research and development and operating expenses due to the June 2010 spin-off of Furiex Pharmaceuticals, Inc.
Diluted earnings per share for the second quarter of 2011 were $0.41, compared to $0.18 for the second quarter of 2010. Second quarter 2011 diluted earnings per share included income of $10.6 million related to the company’s investment in Celtic Therapeutics and a $1.3 million loss on investments.
“Strong client demand for our services resulted in record high request for proposal levels, gross authorizations of $752.6 million, and a net book-to-bill ratio of 1.29 for the second quarter,” said Fred Eshelman, executive chairman of PPD. “While cancellations were higher than we expected, we continued to deliver solid backlog growth of 14% and double-digit percentage net revenue growth year-over-year in the quarter. We intend to remain focused on high-quality operational execution and cost control to drive value for our clients and shareholders.”
Clinical Development Services
Clinical Development Services segment net revenue for the second quarter of 2011 grew 14.1% year-over-year to $291.5 million, compared to $255.4 million for the second quarter of 2010. Second quarter 2011 income from operations for this segment was $48.5 million, compared to $31.1 million for the second quarter of 2010.
Laboratory Services
Laboratory Services segment net revenue for the second quarter of 2011 increased 8.1% year-over-year to $84.7 million, compared to $78.3 million for the second quarter of 2010. Second quarter 2011 income from operations for this segment was $8.7 million, compared to $11.9 million for the second quarter of 2010.
Other Financial Information
Gross authorizations for the second quarter of 2011 totaled $752.6 million. Backlog at June 30, 2011 was $3.7 billion. Contract cancellations and adjustments for the second quarter of 2011 were $268.6 million, including a $43.2 million cancellation for a global clinical trial.
Cash flow from operations for the six months ended June 30, 2011 was $59.6 million. At June 30, 2011, PPD had $440.1 million in cash and investments. The effective tax rate in the second quarter of 2011 was 32.0 percent.
PPD will conduct a live conference call and webcast tomorrow, July 27, 2011, at 9:00 a.m. ET to discuss its second quarter 2011 results. A Q&A session will follow. All interested parties can access the webcast through the Presentations & Events link in the Investors section of the PPD Web site at www.ppdi.com. The webcast will be archived shortly after the call for on-demand replay. The conference call will be broadcast live over the Internet, and the live call may be accessed via the following direct dial numbers:
| Participant dial-in: | +1 877 644 0692 (U.S./Canada) +1 973 200 3387 (International) | |
| Conference ID: | 53360865 |
PPD is a leading global contract research organization providing drug discovery, development and lifecycle management services. Our clients and partners include pharmaceutical, biotechnology, medical device, academic and government organizations. With offices in 44 countries and more than 11,000 professionals worldwide, PPD applies innovative technologies, therapeutic expertise and a commitment to quality to help clients and partners accelerate the delivery of safe and effective therapeutics and maximize the returns on their R&D investments. For more information, visit www.ppdi.com.
Except for historical information, all of the statements, expectations and assumptions, including statements, expectations and assumptions relating to PPD’s second quarter 2011 financial results and the rest of 2011, contained in this news release are forward-looking statements that involve a number of risks and uncertainties. Although PPD attempts to be accurate in making these forward-looking statements, it is possible that future circumstances might differ from the assumptions on which such statements are based and could cause actual results to differ materially from the forward-looking
statements. Other important factors which could cause future results to differ materially include the following: economic conditions, R&D spending levels and outsourcing trends in the pharmaceutical, biotechnology and government-sponsored research sectors; overall global economic conditions; competition in the outsourcing industry; PPD’s ability to win new business; the rate of conversion of backlog into revenue; loss, delay or modification of large contracts; higher-than-expected cancellation rates; actual operating performance; fluctuations in currency exchange rates; risks associated with and dependence on strategic relationships; our ability to implement and risks associated with stock repurchases; rapid technological advances that make our services less competitive; risks associated with acquisitions and investments, such as impairments and integration, including PPD’s investment in Celtic Therapeutics; the ability to attract, integrate and retain key personnel, including a new CEO; our ability to control SG&A spending; risks associated with fixed price contracts and cost overruns; consolidation in the pharmaceutical and biotechnology industries; and risks that we may increase, reduce or discontinue our dividend policy. These and other PPD risk factors are set forth in more detail from time to time in our SEC filings, copies of which are available free of charge upon request from PPD’s investor relations department. PPD assumes no obligation and expressly disclaims any duty to update these forward-looking statements in the future, except as required by applicable securities laws. These forward-looking statements should not be relied upon as representing PPD’s estimates or views as of any date subsequent to the date hereof.
PPD, Inc.
Statement of Operations Data
(in thousands, except per share amounts)
(unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2010 | 2011 | 2010 | 2011 | |||||||||||||
| Net revenue: |
||||||||||||||||
| Service revenue |
$ | 341,496 | $ | 376,199 | $ | 665,616 | $ | 732,364 | ||||||||
| Reimbursed revenue |
28,423 | 31,504 | 51,072 | 58,542 | ||||||||||||
| Total net revenue |
369,919 | 407,703 | 716,688 | 790,906 | ||||||||||||
| Direct costs |
192,170 | 221,390 | 374,972 | 428,213 | ||||||||||||
| Research and development |
8,445 | 1,792 | 14,783 | 4,012 | ||||||||||||
| Selling, general and administrative |
112,106 | 110,456 | 225,016 | 215,403 | ||||||||||||
| Depreciation and amortization |
17,114 | 16,919 | 34,151 | 33,683 | ||||||||||||
| Operating income |
40,084 | 57,146 | 67,766 | 109,595 | ||||||||||||
| (Loss) income from equity method investment |
(1,747 | ) | 10,639 | (3,789 | ) | 13,188 | ||||||||||
| Gain/(loss) on investments |
2,590 | (1,319 | ) | 2,541 | (1,105 | ) | ||||||||||
| Other income, net |
157 | 321 | 1,479 | 60 | ||||||||||||
| Income from continuing operations before income taxes |
41,084 | 66,787 | 67,997 | 121,738 | ||||||||||||
| Provision for income taxes |
17,522 | 21,372 | 26,153 | 38,956 | ||||||||||||
| Income from continuing operations |
23,562 | 45,415 | 41,844 | 82,782 | ||||||||||||
| Discontinued operations, net of taxes |
(2,585 | ) | — | (3,662 | ) | — | ||||||||||
| Net income |
20,977 | 45,415 | 38,182 | 82,782 | ||||||||||||
| Net loss attributable to non-controlling interest |
— | 1,091 | — | 1,338 | ||||||||||||
| Net income attributable to shareholders |
$ | 20,977 | $ | 46,506 | $ | 38,182 | $ | 84,120 | ||||||||
| Income per common share from continuing operations: |
||||||||||||||||
| Basic |
$ | 0.20 | $ | 0.41 | $ | 0.35 | $ | 0.73 | ||||||||
| Diluted |
$ | 0.20 | $ | 0.41 | $ | 0.35 | $ | 0.72 | ||||||||
| Basic and diluted loss per share from discontinued operations: |
$ | (0.02 | ) | $ | — | $ | (0.03 | ) | $ | — | ||||||
| Net income per common share: |
||||||||||||||||
| Basic |
$ | 0.18 | $ | 0.41 | $ | 0.32 | $ | 0.73 | ||||||||
| Diluted |
$ | 0.18 | $ | 0.41 | $ | 0.32 | $ | 0.72 | ||||||||
| Dividends declared per common share |
$ | 0.15 | $ | 0.15 | $ | 0.30 | $ | 0.30 | ||||||||
| Weighted average number of shares outstanding: |
||||||||||||||||
| Basic |
118,542 | 113,393 | 118,501 | 115,122 | ||||||||||||
| Diluted |
118,915 | 114,720 | 118,778 | 116,439 | ||||||||||||
PPD, Inc.
Segment Information
(in thousands)
(unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2010 | 2011 | 2010 | 2011 | |||||||||||||
| Net revenue: |
||||||||||||||||
| Clinical Development Services |
$ | 255,436 | $ | 291,547 | $ | 504,730 | $ | 571,205 | ||||||||
| Laboratory Services |
78,343 | 84,652 | 152,876 | 161,159 | ||||||||||||
| Development |
333,779 | 376,199 | 657,606 | 732,364 | ||||||||||||
| Discovery Sciences |
7,717 | — | 8,010 | — | ||||||||||||
| Reimbursed revenue |
28,423 | 31,504 | 51,072 | 58,542 | ||||||||||||
| Total |
$ | 369,919 | $ | 407,703 | $ | 716,688 | $ | 790,906 | ||||||||
| Operating income (loss): |
||||||||||||||||
| Clinical Development Services |
$ | 31,142 | $ | 48,484 | $ | 58,148 | $ | 94,978 | ||||||||
| Laboratory Services |
11,944 | 8,662 | 21,478 | 14,617 | ||||||||||||
| Development |
43,086 | 57,146 | 79,626 | 109,595 | ||||||||||||
| Discovery Sciences |
(3,002 | ) | — | (11,860 | ) | — | ||||||||||
| Total |
$ | 40,084 | $ | 57,146 | $ | 67,766 | $ | 109,595 | ||||||||
PPD, Inc.
Balance Sheet Data
(in thousands)
(unaudited)
| December 31, | June 30, | |||||||
| 2010 | 2011 | |||||||
| Cash, cash equivalents, short-term and long-term investments |
$ | 638,297 | $ | 440,123 | ||||
| Accounts receivable and unbilled services, net |
435,876 | 502,885 | ||||||
| Total assets |
1,992,046 | 1,910,180 | ||||||
| Unearned income |
317,191 | 335,454 | ||||||
| Shareholders’ equity |
1,289,010 | 1,190,020 | ||||||
Additional information
(in thousands)
(unaudited)
Cash, cash equivalents, short-term and long-term investments categories
| December 31, | June 30, | |||||||
| 2010 | 2011 | |||||||
| Cash and cash equivalents |
$ | 479,574 | $ | 370,864 | ||||
| Short-term investments |
79,976 | — | ||||||
| Long-term investments |
78,747 | 69,259 | ||||||
| $ | 638,297 | $ | 440,123 | |||||